Money laundering sees cut-off swift payments in east Africa
09 Nov 2017

Kenya, Uganda and Tanzania are among the countries in east Africa where international lenders have cut-off correspondent banking relationships for fear of being exposed to charges of money laundering and terrorism financing.

“The withdrawals of correspondent Bank relationships (CBRs) could result in longer payment chains, an increasing number of intermediaries involved in processing the same payment, an increasing number of restrictions, and higher concentration on the correspondent and respondent side,” said the International Monetary Fund in a statement.

The IMF said this action was likely to increase the cost of doing business and disrupt economic activities, especially in countries that receive high diaspora remittances such as Kenya.

Some international banks have been fined heavily over money laundering charges originating from failure by their correspondent banks to make payments and in order to protect themselves, the risk-averse ones chose to cut off relationships used for international payments.

Large withdrawals from Kenya are bound to arouse suspicion given the stringent measures put in place by the Central Bank to ensure compliance with international anti-money laundering (AML) standards.

Last year, several banks were penalised for laundering money associated with the multibillion National Youth Service scandal.

Uganda and Tanzania have also been strengthening their AML regulations, with Uganda convicting its first money laundering suspects in June.

– By George Kamau, All Africa

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