30 Nov 2015
The government of Kenya has announced a raft of new policies in a bid to target and eradicate corruption, money laundering and international crime operating within its borders. This has included the announcement that banks breaking anti-money laundering laws will, at a minimum, lose their licence, as will their directors. Transparency and accountability have been embedded into Kenya’s renewed efforts to combat money laundering and corruption by the promised publication of data on wrongdoing. An Anti-Bribery Bill, to be presented to the Kenyan Parliament in the New Year, will accompany these new reforms.
Corruption is endemic in the East African state – approximately 98.8% of the money spent by Kenya’s ministries in the 2013/2014 financial year could not be properly accounted for, with the Kenyan government labeling the problem as a ‘national security threat’.
Taking its work against corruption and money laundering onto an international level, Kenya has also signalled it will sign up for a programme of mutual assistance between itself and other countries to assist on international crimes, showing that a collegiate approach is required to tackle transnational crime of this scale.
While the talk is robust, the key issue now is whether the proposed policies will actually be implemented and enforced. Particularly in terms of revoking licences, very few regulators globally are willing or able to put banks out of business – add to this the entrenched corruption that Kenya needs to overcome, and the question mark over these reforms’ potential efficacy grows bigger.
That said, governments and financial institutions should look to these developments with interest – as the financial services economic powerhouse of the East African Community (EAC), Kenya’s stance on anti-money laundering is likely to set the tone for other East African nations. With banks such as Citibank, Barclays and Standard Chartered all operating out of Kenya, alongside local groups such as Equity Bank, this new policy could have wider reaching implications for global organisations.
Guidance for compliance when doing business in Kenya, and East Africa generally, includes:
- Ensuring you are clear on tax issues – there is a notorious lack of clarity with regards to tax rates, and also who is responsible to pay what, with a legal framework that can also be unhelpfully vague.
- Understanding that local contacts are essential for KYC (and ensuring your organisation is well-informed generally). There is relatively little media coming from the region, so the usual online searches are not necessarily going to provide sufficient information – meeting people in person is critical.
- Recognising that facts and figures about the region may be ‘creative’. If you need to understand the marketplace to make a decision regarding risk profiling, go direct to the source and do your own research.
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