FATF Public Statement

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions*.

Iran

Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies** The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Bolivia
Cuba**
Ethiopia
Kenya
Myanmar
Sri Lanka
Syria
Turkey


* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.
**Cuba has not engaged with the FATF in the process.


Iran

The FATF remains concerned by Iran’s failure to meaningfully address the on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. The FATF remains particularly concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2011.

Cuba

Cuba has not committed to the AML/CFT international standards, nor has it constructively engaged with the FATF. The FATF has identified Cuba as having strategic AML/CFT deficiencies that pose a risk to the international financial system. The FATF urges Cuba to develop an AML/CFT regime in line with international standards, and is ready to work with the Cuban authorities to this end.

Bolivia

Despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Ethiopia

Despite Ethiopia’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Ethiopia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ethiopia should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework and procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Ethiopia to address its remaining deficiencies and continue the process of implementing its action plan.

Kenya

Despite Kenya’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Kenya should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Kenya to address its remaining deficiencies and continue the process of implementing its action plan, including by implementing the AML legislation and operationalising the new AML Advisory Board.

Myanmar

Myanmar has taken steps towards improving its AML/CFT regime, including by clarifying the scope of the ML offence. Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken steps towards improving its AML/CFT regime, including by improving the ML and TF offences. Despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by working on CFT legislation. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

Kenyan MPs pass money laundering law

The law on Proceeds of Crime and Anti-Money Laundering now awaits presidential assent after Parliament passed it with amendments on Thursday.

The Bill seeks to prevent earnings of crimes from entering into the Kenyan market. It also criminalizes all forms of money laundering, a process in which the origin of funds generated by illegal means such as drug trafficking, gun smuggling terrorism and corruption are concealed.

The chairman of the Parliamentary Committee on Administration of Justice and Legal Affairs Abdikadir Mohammed proposed changes to the Bill that include requiring police officers and other law enforcement agencies from carring out any searches without warrants or to falsify information.

Mr Abdikadir argued this measure would prevent police officers from harassing innocent people through the Financial Reporting Centre which is mandated with identification of proceeds of crimes and money laundering.

The Police Commissioner replaced the Law Society of Kenya on the Board which is established under the Bill.

Meanwhile, Parliament adjourned on Thursday for the Christmas recess but is expected to be recalled in early February to begin debate on the harmonised draft constitution.

Speaking earlier, Mr Abdikadir assured Kenyans that the parliamentary break would not delay the realisation of the new constitution within 12-month time frame.

“Assuming everything went like clockwork, the earliest we will require parliament is February 25 and Parliament will be there if that need comes… even earlier.”

He added: “I have heard that people feel Parliament is not interested in this process… they are even thinking of going on recess. Last time, we recalled Parliament in January although traditionally Parliament resumes in March so the PSC will work whether or not Parliament is in recess or not. The Parliamentary Committees don’t go on recess.”

The referendum on the new constitution will be held four months after the Abdikadir-led Parliamentary Select Committee on the Constitution tables the draft law for approval by Members of Parliament.

The timetable shows that the country may go into a referendum by June 2010.

Under the new roadmap, the negotiators envisaged that the review process would be completed within 12 months after the constitutional referendum law is initiated in Parliament.

Source: Capital News

KENYA: AML Bill Passes, But Does Govt Mean Business?

Kenya's Parliament finally passed the Proceeds of Crime and Anti-Money Laundering Bill in December. But while the passing of the bill is viewed as a highlight of the Tenth Parliament, many fear it may just be a gimmick by the government to appease international partners.

George Kegoro, the executive director of International Commission of Jurists - Kenya Chapter, says while the legislation is good, he doubts there is political will to completely stamp out money laundering in Kenya.

"The existence of the legislation is not sufficient to deter the vice neither are the stiff penalties that are recommended in the bill," he says. "There is need for genuine support from the government to enact this law. We need a good set of people to be put in place to interpret the legislation."

Kegoro, whose organisation undertakes advocacy and policy work aimed at strengthening the role of lawyers and judges in protecting human rights and the rule of law, argues that while the bill was government-sponsored, Kenya’s track-record on corruption is poor and he doubts the genuineness of the political class.

It is the fourth attempt since 2004 to pass a bill to prevent the concealment of large profits from drug trafficking and other organised crime, and even this time around it faced resistance from members of parliament who believed the bill was a sly back-door re-introduction of an Anti-Terrorism Bill which had been quashed.

When the bill was tabled in November, an assistant minister in defiance of his own government, strongly opposed the tenets of the Bill. The assistant minister for public service, Aden Sugow, opposed the Bill saying it was an attack on the Muslim community. He argued implementing the Bill would be bowing to the interests of external interests and said that Kenya currently has adequate laws in place to deter money laundering.

While supporting the bill, defence minister Yusuf Hajji warned of a general feeling among the Muslim community that the legislation was targeting them. The Bill went forward after assurances from Prime Minister Raila Odinga that the government had no such intentions.

Once signed by the president, the law will establish a Financial Reporting Centre to assist in the identification of the proceeds of crime. An Asset Recovery Agency will be charged with tracing and recovering ill-gotten assets.

According to Job Ogonda executive director of international corruption watchdogs Transparency International, this would mean millions of dollars stashed in off-shore accounts swindled from Kenya could be recovered.

But Ogonda doubts the passage of new legislation will improve Kenya’s standing as a corrupt state internationally.

"At the moment it is embarrassing to be a Kenyan. Nigeria is improving with regards to corruption because they have shown tangible commitment of doing something about graft. However, the same cannot be said for Kenya," he says.

"We have previously had good pieces of legislation which would have helped fight graft, however, nothing has been done. How many ministers or former ministers have ever gone to prison because of corruption?" Ogonda wonders.

Ogonda is referring to anti-corruption legislation such as the Public Procurement and the Public Officers Ethics Act which require all public office holders to declare their wealth and origin of the same: this older legislation has had no noticeable effect.

Kenya’s record internationally as a corrupt state has for many years been bad and in the bribery and corruption index released by Transparency International, the country has kept the company of states such as Nigeria, Russia and Zimbabwe. Currently, Kenya is position 147 out of 180 on the global index of corruption.

Indeed the passing of the anti-money laundering bill comes in the wake of the release of a U.S. State Department report saying 93 million dollars of earnings from drug trafficking are laundered in the country’s financial system annually.

Another equally damning report by a UK firm, Kroll Associates, hired by the Kenyan government to track wealth acquired corruptly, revealed an estimated $1.7 billion is currently stashed in off-shore accounts. While the results of this 2004 report have remained confidential, the document was leaked: no action has been taken against any of the prominent figures named in its 110 pages.

But all the right noises were made when the bill was moved in Parliament by deputy Prime Minister Uhuru Kenyatta, who said that in view of the magnitude of the problem to the economy, the debate should focus on the quality of the legislation to ensure it was stringent enough.

Seconding the bill, Raila said, "The country risks becoming a pariah state unless the legislation is passed. We have suffered from the effects of money laundering especially in the property sector whose value has been skyrocketing due to the money being brought from the acts of piracy off the coast of Somalia".

A boom in property prices in Nairobi is preventing a majority of Kenyans from buying real estate, and in some cases even pricing locals out of the rental market. Media reports are linking the boom with profits from Somali pirates who seized numerous vessels during 2009, extracting handsome fees from their owners before releasing ships and crew members. In certain Nairobi neighbourhoods, Somalis are willing and able to pay rent up front for periods of even up to two years.

Ogonda states that for many years, Kenya has been a hub of money laundering with illegally acquired cash from Europe, South Africa, South America, Democratic Republic of Congo, Sudan, Rwanda, Burundi, Uganda and Tanzania finding its way into local financial markets.

"Due to our porous borders and poor implementation of legislation, people have simply walked in with huge amounts of cash, hired a lawyer to front for them who in turn invest the cash, especially in property," Ogonda says.

He says despite moves to assure the independence of the new watchdog agencies' leadership, and fresh monitoring requirements for the banking system, the version of the bill which is now awaiting presidential assent does not demand greater accountability from lawyers whose lawyer-client privileges remain intact.

Kegoro notes that the prescribed penalties are fairly high - jail terms of two to five years, with fines of up to $65,000 for individuals, and corporate penalties set as high as $330,000 or the value of the property. But, he argues, it is not the severity of the penalty that will make people fear it. It is the certainty of being caught, hence the need for genuine political will to implement the law.

Ogonda is in agreement. "Application of the bill is what will be the determining factor. The structure of governance has to support the law and if it remains the same the legislation can exist and nothing will change."

By Susan Anyangu-Amu

Source: IPS

Concerns over inactive money laundering law

BY SIMON NDONG'A

Corruption watchdog Transparency International -Kenya (TI) now wants the Proceeds of Crime and Anti-money Laundering Act fully operationalised.

Executive Director Samuel Kimeu said on Friday that the law which was assented to in December 2009 was yet to come into effect, which has hampered efforts to fight money laundering.

Mr Kimeu stated that the government needs to establish the institutions and processes necessary to fight money laundering and related crimes.

"It is worrying that the government is dragging its feet in putting into effect a law that will boost the war against corruption, piracy, drug and human trafficking and other similar crimes," he said.

"The legislation provides for a financial reporting centre to assist Kenya in the identification of the proceeds of crime as well as asset recovery agency."

He further urged the Ministry of Finance to devise a coordinated action plan to facilitate the implementation of the law in a bid to protect the economy and recover stolen assets.

"We are aware that the Central Bank of Kenya (CBK) has tasked one of its departments to pursue some provisions of this legislation. However for Kenya to fully combat money laundering activities, the institutions and processes provided for under the Act must be established," he stated.

"The continued delay in the implementation of the law allows corrupt individuals, drug traffickers and other individuals to benefit from this illicit activity."

The Proceeds of Crime and Anti-Money Laundering Act 2009 seeks to create a comprehensive legislative framework to combat the offence of money laundering in Kenya and to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime among other things.

Before the enactment of the Act, money laundering legislation in Kenya was weak and fragmented.

The Act, which repeals the anti-money laundering provision in the Narcotics Act, applies to all persons whether individual or corporate, and to the proceeds from any criminal activity.

The Central Bank of Kenya Guideline however remains in force and banking and financial institutions will therefore be required to comply with both the Act and the CBK Guideline.

Money laundering under the Act is wide and includes entering into a transaction involving property which one knows or ought to reasonably have known is or forms part of the proceeds of crime regardless of whether such transaction is legally enforceable or not, and which has the effect of concealing or disguising the nature or ownership of the property.

It also involves assisting a person who has committed an offence to avoid prosecution or concealing any proceeds of crime.

The definition also covers acquisition, use or possession of property which at the time of acquisition, use or possession, one knows or ought to reasonably have known that it is or forms part of the proceeds of a crime committed by another person.

Other related offences include assisting someone to benefit from proceeds of crime, malicious reporting, making false or fraudulent statement or entry, and failing to report suspicion of proceeds of crime.

Offences under the Act attract penalties of up to a 14-year jail term and/or a maximum fine of Sh5 million in the case of an individual and Sh25 million for a body corporate or the value of the property involved in the offence, whichever is higher.

Other penalties include criminal forfeiture of the proceeds of crime, civil forfeiture of property including civil proceedings for recovery of property.

Source: Capital

Kenya losing war on corruption-report

Kenya is still losing the war on corruption.

This is according to a report released Thursday by the Africa Policy Institute.

Speaking during the launch of the corruption report the institute's president Dr. Peter Kagwanja said the Grand Coalition Government was not doing enough to fight graft as it had concentrated its efforts on other issues.

According to the report, the rate of corruption had risen in the period after last year's election compared to the same period after the 2002 general election that brought in the NARC government.

"Kenya has slipped into a democratic recession, unable to create strong legal and political institutions to stamp out corruption and promote a culture of accountability and probity", says Dr Kagwanja.

Research reveals that the anti-corruption system in the country is less vibrant than it was five years ago.

The institute's findings also indicate that the power sharing deal brokered after the 2007 general elections has not made it any easier for the government to fight against corruption.

"For all the euphoria around power sharing, the power arrangement signifies the failure of democratic consolidation, which has given impetus to a new wave of corruption", Dr Kagwanja says.

"In order to win the war against corruption, the country needs to recommit to the vision of a strong democracy and civic citizenship to and undertake far reaching political reforms, including constitutional reforms", he adds.

The report also recommends that the country needs to embark on building strong state institutions and citizen's lobbies.

"There is also need for coordination and strengthening of counter-corruption institutions and recommitment to international instruments on combating corruption including implementing the Africa Peer Review Mechanism Kenya report", the report says.

Source: KBC

Kenya: Banks urged to unite in money laundering fight

Commercial banks and institutions involved in fighting crime should work together to help the country detect and block money laundering activities, a regional security think-tank has said.

The Institute of Security Studies (ISS) said this institutional cooperation should be extended to Eastern Africa region through improvement and harmonisation of anti-money laundering laws.

It has also called on Kenya to domesticate the anti-money laundering provisions contained in the UN Convention on Organised Crime.

Kenya has come under increasing pressure to implement money laundering laws in the face of rising crime posed by the drug traffickers, international terrorists and illicit arms traders operating in the country.

Failure to have an anti-money laundering law in Kenya has been cited as a possible reason behind the country’s failure to attract foreign direct investments despite having a relatively well developed financial system. Laundered money breeds unfair competition as genuine business persons borrow capital on interest hoping to repay such funds using business proceeds, while persons using laundered money pay no interest on the capital.

Source: The Business Daily

Kenya: CBK calls for laws to combat money laundering

Central Bank Governor Prof.Njuguna Ndung'u has rooted for an anti-money laundering legal and regulatory regime if the country's vision of being a regional trade and financial services hub is to be realized.

Prof.Ndung'u noted that Kenya is vulnerable to money laundering practice given its cash based economies and pitched for the enactment of an enabling legal and regulatory framework to combat the vice.

Speaking at the 16th task force meeting of senior officials of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) at a Mombasa hotel, the governor said the proceeds of Crime and Anti-money Laundering Bill 2008 is currently under consideration by parliament.

Prof.Ndung'u deplored the country's porous borders and weak institutions as a set back in the fight against the scam adding that the region has demonstrated through ESAAMLG its commitment to fight money laundering and financing of terrorism.

He noted that in the absence of a comprehensive legislation, Kenyan banking sector should embrace the necessary policies and procedures to deter and detect money launders.

Serwalo Tumelo, PS Ministry of Finance and Development Planning, Botswana and chairman of the ESAAMLG task force of senior officials said the rapidly changing technologies and the introduction of new financial products remains a major challenge, which requires institutions and regulatory bodies to guard against abuse by criminals.

Tumelo said they would continue to initiate dialogue between the region's private and public sector to ensure that both sectors' policy makers work in tandem.

200 foreign delegates including finance ministers, permanent secretaries and senior government officials drawn from ESSAMLG member countries and representatives from the co-operating and supporting nations and organizations converge in Mombasa for the weeklong meeting.

On Friday Kenya's minister for finance will assume the presidency of the ESSAMLG council of ministers while his PS will chair the meetings of the task force of senior officials.

The main objective of ESSAMLG is to combat money laundering and combating the financing of terrorism.

Source: KBC

Transfer cash, but at what cost or risk?

By Catherine Ndioo

In an era when geographical boundaries hardly matter in financial transactions, the use of money transfer services is becoming an everyday transaction.

For a commission, one can transfer funds overseas, send money upcountry, or pay for goods bought online.

"Money transfer is now a service that is part of many people’s lives, especially those who don’t have bank accounts," said Ms Nikki Spottiswood, MoneyGram International Regional Director.

Consequently, it is important to ensure that the money is safe till the transfer process is complete for users to gain confidence in the service.

A recent IMF report ranked Kenya as the second biggest recipient of foreign remittances in Sub-Saharan Africa after Nigeria due the growth of investment opportunities that have attracted the attention of the Diaspora.

World Bank statistics show that some Sh85 billion was wired into the country last year up from Sh67 billion the previous year.

Users should be sure about the reliability of the service provider when sending cash and be wary of offers that sound that sound too good.

Transaction Risks

Many fraudsters use transfer services for money laundering and other illegal activities like fraud, and one would not want to be caught in the web.

"To prevent unlawful transactions, money transfer providers usually seek clearance from the Central Bank when one is transferring huge amounts in a transaction," said Spottiswood.

When using the service, it is important to know the person who will receive money incase there is an error in the transaction.

Further, it is not advisable to use international money transfer services to pay for lotteries and online gambling because the money could end up in fraudsters pockets.

One should keep close tabs on transaction costs. These charges range from 0.5 per cent to 35 per cent of the amount being transferred.

For example, Western Union charges Sh1,150 to transfer less than Sh7,750 and Sh1,700 for amounts below Sh15,000. To send money to Uganda, Tanzania and Democratic Republic of Congo the charges are between Sh500 and Sh700.

PostaPay charges are determined by the amount and country the money is destined to. Sending Sh10,000 from Nairobi to the UK one pays a commission of Sh800, while Sh100,000 would attract a commission of Sh3,680.

Safaricom’s M-Pesa charges range between Sh30 and Sh400 for sending and receiving cash upto a maximum of Sh35,000.

MoneyGram charges a minimum of Sh480.

In all transactions, it is cheaper to transfer large amounts for both local and international transfers, due to a minimum fee charged for every transfer.

Commercial banks are major players in the electronic funds transfer (EFT) deals, servicing large users and to a smaller extent, low-income users.

EFT works is suitable for large transactions. The money is usually transferred directly into a bank account, making the money to be available to recipients at moments it has been wired.

Transaction Risks

To avoid penalties, always ensure that your account has sufficient funds instructing your bank to wire money and always keep an eye on commissions, which are usually a percentage of the money remitted.

It is also important to know the exchange rate used for international transfers. One should also know the minimum transaction amount and the different pay points so that the recipient can collect the money as quickly as possible.

To make it convenient for customers to send and receive cash, money transfer firms have penetrated remote places by signing in agents to their networks.

Western Union has local agents like Post Bank, Kenya Commercial Bank, Diamond Trust Bank among others, and has 300,000 agents worldwide.

Safaricom has signed up hundreds of agents for the M-Pesa service. The mobile firm has also partnered with financial institutions like Equity Bank, Post Bank and Housing Finance.

Moneygram services are accessible from Cooperative Bank, Stanbic, Prime Bank, I&M Bank and Imperial Bank branches.

PostaPay, available both for people sending money within Kenya as well as internationally, operates a network of 500 pay points.

Source: The Standard

Kenya: Fix loopholes in AML bill

They are a common feature in almost every society on earth; those overnight millionaires without known employment or businesses.

And they lead profligate lives. One would think planting cash was their profession. But, nay, most of them indulge in criminal activities such as drug pushing, pyramid investment schemes, corruption, computer fraud, child trafficking and gun running.

It is money got from such unlawful ways that they clean (launder) by concealing sources, then transfer to local and foreign banks or legitimate businesses.

Kenya’s economy is still reeling from the devastating effects of last year when several pyramid schemes collapsed with depositors’ billions of shillings.

It was not an isolated event the world had seen in recent years. In the Philippines, for example, close to two million people invested in pyramid schemes, having been promised weekly returns as high as 60 per cent. The hapless investors poured in their pensions, cash from abroad, and even sold homes to increase personal stakes.

The schemes collapsed with about US$ 1.4 billion of investors’ money, with their effects rippling over the entire country. Forced to repay the loans, police officers resorted to extortion while on patrol, while destitute investors turned to criminal activities.

In Albania, pyramid schemes collapsed between 1996 and 1997 when the investments accounted to a half of the country’s Gross Domestic Product. Big players of the schemes transferred out of the country more than 93 per cent (US$500 million) of its deposits.

The collapse of the schemes caused a civil war in which 2,000 people were killed and 3.5 million others displaced.

In Kenya, experts have argued that some of the economic scandals that have taken place such as Goldenberg and Anglo Leasing were examples of high-level money laundering.

It is for this reason that a number of organisations have been rooting for legislation to fight money laundering. They include the Centre for Governance and Development, the International Commission of Jurists and some members of the Parliamentary Initiatives Network.

The government first introduced the Proceeds of Crime and Anti Money Laundering Bill in 2006 but it lapsed after the First Reading (formal introduction). It was re-tabled last year but it was frozen with the end of the life of the Ninth Parliament last November.

I sighed with relief when MPs concluded debate on the Bill last Thursday upon its re-introduction, then referred it to two departmental committees for fine-tuning. The Bill awaits scrutiny by members of Finance and Trade committee on one hand, and those of Administration of Justice and Legal Affairs on the other.

It is instructive that some MPs already raised the red flag over the Bill, saying it was the work of the USA and foreign multilateral donors. I leave that to the Finance minister Amos Kimunya to explain, but my take is that Kenya urgently needs a law to fight money laundering.

But first, the highlights of the Proceeds of Crime and Anti-Money Laundering Bill, 2008.

It has a number of clauses defining acts that will be deemed as money laundering, associated offences and property that will be seen as having been acquired through criminal activities. They shall include assisting criminals hide properties acquired unlawfully as well as aiding others to benefit from proceeds of crime.

If enacted, the Bill provides that it shall be a crime to acquire or possess proceeds of crime. Anyone who fails to report any suspicion regarding the proceeds of crime will have committed an offence. To knowingly transport, transmit, transfer or receive a monetary instrument or anything with the intention of committing an offence will be illegal.

Giving tips to suspects of money laundering or providing false information to officials or bodies regulating the Act shall be an offence. Transmitting more money or monetary instruments (travellers’ cheques, personal cheques, bank cheques, money orders, investment securities, etc) into or out of Kenya shall be declared in a prescribed form at the point of entry or exit.

There are to be set up entities to implement the Bill if passed into law: The Financial Reporting Centre, the Anti-Money Laundering Advisory Committee, the Assets Recovery Agency, and the Criminal Assets Recovery Fund. The he Financial Reporting Centre is to identify proceeds of crime and fight money laundering, while Anti-Money Laundering Advisory Committee or of Financial Reporting Centre.

The Assets Recovery Agency shall be a semi-autonomous outfit under the Attorney General, charged with the duty of recovering any proceeds of money laundering. It shall also administer the monies of Criminal Assets Recovery Fund.

However, the Bill has so many weaknesses that the departmental House and MPs should fix before passing it. Last year, the Centre for Governance and Development hinted at most of the loopholes in its July edition of Bills Digest.

For example, the Bill has no links with other offences that may generate proceeds or assets that may become the subjects of offences under the proposed law. The UN Convention against corruption refers to such vices as predicate offences and they include organised crime, terrorism, human, drug, and arms trafficking, extortion, forgery, fraud, insider trading, and kidnapping.

Secondly, due to the complex nature of money laundering, the Bill should block avenues used by money launderers to dodge justice on legal technicalities. It should also lengthen the minimum period within which legal proceedings may be initiated. That is the case in best international practices.

It should also compel reporting institutions to develop a policy on training staff on money laundering and also criminalize anonymous accounts and those that are obviously in fictitious names.

The Bill should make specific provisions for those vulnerable to money laundering such as the Head of State, ministers, politicians, top private company bosses, senior public servants, judicial, military and other uniformed officers.

And records containing information on active customer accounts should not be destroyed after seven years as proposed by the Bill.

And, pray, why should most members of the proposed 17-member Anti-Money Laundering Advisory Committee be busy, senior public servants? This gives the government undue power and influence over the committee.

There is no reason why the Assets Recovery Agency should be under the Attorney General who shall also appoint its director. The agency should be delinked from the AG for independence, while its director ought to enjoy security of tenure.

This is is a timely piece of legislation.

http://www.nationmedia.com/dailynation/nmgcontententry.asp?category_id=1&newsid=123057

Terror funds from across border

International Islamic terror is funded by a huge financial system. It has penetrated deep into the Indian system as well. The parallel economy has a lot to contribute to it.

There is nexus between smuggling, drug rackets, arms peddlers and hawala. Some part is played by black money also. The Financial Action Task Force (FATF), an inter-Governmental organization, to study terror finance has found that the terror masters use all financial and banking routes to support their activities. In other words, they use the international or national banking and financial systems. The FATF has been trying to cut the terror funding. So far, India is not a member of this organization.

Significantly, the terror financial mechanism extends to almost all activities. The terror outfits also raise funds from the public. Even black money is supposed to have a role in its sustenance. Besides, the role of charity and human rights organizations need to be under the scanner. It has been found that terrorists spend more on preparations so that the cost of the actual operations could be reduced, according to the FATF 2008 report.

The terror outfits have been investing in the Mumbai stock exchange and are stated to be active players in real estate. Their linkage with various building and construction companies needs to be probed. Does the real estate boom have a terror link?

International money laundering too has close links with terror and crime. It is estimated that 50 per cent of the US $950 billion money laundered is done by terror-related organizations. According to the UN Monitoring Committee estimates, smuggling funds 29 per cent, drugs 26 per cent, organized crime 24 per cent and financial frauds 21 per cent.

Importantly, the economics of terror extends to many activities in India . Sadly, however the Indian investigative agencies have done little either to study or penetrate these outfits. After 9/11 the US broke the funding links. The UK also has done it. But this is nowhere on the radar of our anti-terror mechanism.

Especially against the background that the Indian agencies are aware of the different modules that fund terror. The Mumbai police investigations found that the founder of the Indian Mujahideen Riyaz Bhatkal, had set-up a recruiting agency for the Gulf countries. He had recruited over 500 youth. This had earned him a huge sum both from the recruits and their employers. The agencies have not investigated whether the employers have links with terror outfits.

Not only that. The Madhya Pradesh Police found that SIMI's chief coordinator Safdar Nagori had held a youth camp at Indore in 2007. He had set a target of raising Rs one crore through donations and charity by mobilizing the youth.

In addition, major funding comes through fake currencies purportedly printed in neighbouring countries and circulated through them. In April last, one Naushad Alam Khan was held in Dhaka with Rs 50 lakh fake Indian currency notes. Khan, it was found, was a close aide of the Harket-ul-Jihadi's (HUJI) Bangladesh Chief Abdul Hanan. Many such fake currencies have been found in Nepal as well.

An ex-Punjab terrorist Kashmir Singh too was arrested in April with 50 kg heroin worth several crores in the international market. He is believed to be working for terror organizations. In the recent Mumbai attack, the terrorists used credit cards apart from other sources of funding.

The Taliban and Al Qaeda have always been raising funds through drug and arms peddling. It is said that it controls the drug triangle and the Myanmar-India-Afghanistan-Europe route.

Their operations reportedly have close links with different insurgent groups in Jammu & Kashmir, Manipur, ULFA and other insurgent groups in Assam and Tripura. They operate with close cooperation from their shadow organizations in Nepal and Bangladesh .

Additionally, the Naxalites get arms from myriad sources including China , Pakistan and Afghanistan . Not much study has been done of the finances of the Naxalites. Mere extortions and the poor-exploited people do not fund the billions of rupees spent by the Naxalites in their operations.

The US Commission for Studying the Funding Pattern of Terrorists has come out with a 155-page report. According to the US Federal Bureau of Investigation terrorists in the US have used almost all the available financial services at one time or the other. The US could confiscate properties worth US $850,000 having links to the Al Qaeda and related terror organizations.

The Commission revealed another pattern: terror outfits are acquiring properties and possibly are even active players in the real estate business. The US Administration is looking into the sub-prime crisis from this angle as well. It is also trying to find out how the penetration of these organizations had affected its economy.

Various estimates suggest that terror outfits spent about US $750,000 on eight operations. The US security agencies estimated, as per a Washington Times report on Nov 18 2001, that the 9/11 World Trade Centre attacks cost the terror outfits US $500,000. The UK home office said that the 7/7/2005 London transport system attacks cost the terrorists British pound 8,000. In 2004, the UN Monitoring Team estimated that the Madrid train blast cost US $10,000; the Istanbul truck blasts US $40,000; Jakarta Marriott Hotel blast US $30,000; Bali explosions US $50,000; and the attacks on the US embassies in Kenya and Tanzania US $50,000.

Clearly, India needs to do a study on the terror financial resources and swoop down on it. It needs a detailed and specific study to pinpoint the lacunae in the legal and financial system so that such funding could be throttled.

Shivaji Sarkar, -INFA

Source: Central Cronicle

Kenya: MPs Clash Over Bill On Money Laundering

Members of Parliament expressed concerns over a proposed money laundering Bill before the House.

They said the Proceeds of Crime and Anti-money Laundering Bill contained offensive clauses that cloaked the controversial Anti-terrorism Bill, which was rejected by the House.


The MPs made no secret of their intentions to maul the Bill at the committee stage to expunge offensive provisions that would interfere with the right to private property.

They argued it was not home grown and claimed it was being railroaded by donors.

Nonetheless, it sailed through the second reading and was referred to the Finance and Trade committee for amendments.

In anticipation of the hostile reception, Finance minister Amos Kimunya assured members that the Finance committee would comb the Bill and address their concerns.

Kimunya, aware that the Bill had made two false starts previously, pleaded with members: "Please let us not throw away the baby together with the bath water."

MPs concluded debate on the Bill on Thursday, and referred it to the departmental committee on Finance and Trade. The MPs agreed with the minister that the Bill was long overdue, but frowned upon its contents.

Earlier during debate, the Government Bill received opposition even from its own. Three assistant ministers, Margaret Wanjiru (Housing), Ramadhan Kajembe (Environment) and Aden Duale (Livestock) agreed with three MPs that the proposal had serious shortcomings that could infringe on the rights of Kenyans.

MPs Chris Okemo (Nambale, ODM), Mohammed Abdikadir (Mandera Central, Safina) and Eugene Wamalwa supported it, but called for amendments to expunge offending provisions.

Special Programmes minister Naomi Shabaan, who seconded the Bill, and Johnstone Muthama (Kangundo, ODM-Kenya) threw their weight behind the proposed legislation, telling the members it was well-intentioned.

Okemo said while the Bill sought to rein in a crime that was the preserve of the 'big boys', Parliament must tighten controls to ensure that it does not open new avenues for corruption.

He said the Bill should be tailor-made to suit Kenya's situation and not passed merely to please donors.

Kimunya, however, defended it, saying the Government had not been arm-twisted by donors. "The bill is in the best interest of the country," he said.

http://allafrica.com/stories/200805081064.html

Terror attack victims file $40 billion suit against Sudan, Iran

By Morton Saulo

Victims of terrorist attacks on American embassies in Africa have filed a $40 billion lawsuit against the Republic of Sudan and the Islamic Republic of Iran for their complicity in the attack.

Mr Gavriel Mairone, counsel for the victims, announced that a lawsuit was filed on Tuesday in Federal District Court in Washington DC, on behalf of over 270 employees of the US government (and their family members) that were killed or seriously injured in the Al Qaeda suicide bombings against American embassies in Nairobi, Kenya and Dar Es Salaam, Tanzania.

On August 7, 1998, Al Qaeda perpetrated simultaneous suicide truck bombings on both embassies, killing 247 people and injuring more than 5,000.

Act amended

In January 2008, the US Federal Sovereign Immunity Act was amended to strip states supporting terrorism of immunity and grant employees and contractors of the United States government (in addition to US citizens) the right to sue in US federal court such states for damages resulting from terrorist attacks perpetrated anywhere in the world.

For the first time, survivors and family members of US government employees killed and maimed in the US Embassy bombings in Africa became eligible to seek compensation from the Republic of Sudan and the Islamic Republic of Iran in US federal court.

In December 2004, Mann & Mairone, together with other attorneys, filed an historic, multi-billion dollar lawsuit in US Federal court in New York against Arab Bank on behalf of over 2,000 victims of terrorist attacks perpetrated by Hamas, Palestinian Islamic Jihad, Al Aqsa Martyr Brigades and the Popular Democratic Front for the Liberation of Palestine.

Subsequent to the filing of this lawsuit, the US government fined Arab Bank more than $20 million in connection with money laundering and terrorist financing.

Source: The Standard

Kenya: Muslims Question Proposed Money Laundering Law

Muslims have expressed strong opposition to a proposed law to curb money laundering, saying it would sanction human rights violations by the state.

The Proceeds of Crime and Anti-Money Laundering Bill (2007) is pending before parliament.

The Muslim Human Rights Forum said that after listening to expert reviews of the constitutionalism of the bill, it had come to the "unshakable conclusion" that if enacted the law will have grave consequences on the civil liberties of Kenyans and the sovereignty of the nation.

"The bill as it stands is a cunning attempt at reintroducing clauses from the Suppression of Terrorism Bill (20030 which was rejected by Kenyans for its human rights derogations. It has serious flaws that not only assault fundamental legal principles but also attempt to amend other laws in a crafty, albeit reckless, manner," MHRF explained.

The organisation asked the government to shelve the bill until the necessary amendments are made before it is re-introduced in parliament.

Among the grounds for rejection listed by MHRF is that the bill contravenes established legal principles, such as presumption of innocence, advocate-client relationships, self incrimination, guilt beyond reasonable doubt and creation of suspicion amongst neighbours.

The bill assumes that there are perfect institutions in Kenya and gives police excessive powers. It is also drafted from the standpoint of western society, and needs to be adapted to the local reality.

The Muslims noted that the bill has interest in other trans-national crimes, including terrorism, and is likely to be used in the absence of an anti-terror law.

Foreign jurisdictions are allowed access to Kenyan suspects, without any mutuality. In addition, Muslims are of the view that the proposed law has more stringent measures to deal with money laundering suspects than is the case with those of murder.

The bill legitimises human rights abuses by the state. Money destined to organisations critical of the government could be withheld on allegations of being proceeds of crime.

Moreover, curbing money laundering is not a priority for Kenya when there are more pressing issues such as implementation of the reports on post-election violence and the electoral commission, completion of the constitutional review, institutional reforms, resettlement of displaced persons and dealing with the food crisis.

Muslims read foreign manipulation in the drafting of the bill and urged the government to "hold the interests of its citizens higher than those of any other foreign state or agency."

Source: AllAfrica

Kenya: Groups poke holes into money laundering Bill

Story by JEFF OTIENO
Publication Date: 2008/07/01

Human rights lobbyists have poked holes into the new Anti-Money Laundering Bill, insisting that far-reaching amendments need to be done before it is passed by Parliament.

The lobbyists, among them members of the civil society, lawyers and the media are now seeking to meet MPs to push for the amendment of the Bill.

And one of the proposals which they oppose vehemently is the placing of the proposed anti-money laundering agency under the Attorney General’s office.

Although the lobbyists support the idea that the Bill will, for the first time, introduce a nationwide scheme for recovering the proceeds of crime through civil proceedings rather than criminal courts, they insist that the agency must be independent.

Enormous powers

“The director of the investigation agency is too important an office to be appointed at the sole discretion of one individual, the Attorney General,” says lawyer Christopher Gitari of the International Commission of Jurists.

The Bill gives the AG enormous powers in the appointment of the head of the investigation agency.

The lobbyists say that the agency should have operational autonomy akin to that enjoyed by the Kenya Revenue Authority.

The Assets Recovery Agency, will be established to pursue the confiscation of assets both in Kenya and abroad. The resulting receipts will be channelled into a fund (Criminal Assets Recovery Fund) for fighting the vice.

It means that the agency will have the power to seize wealth acquired through criminal activity, including money in bank accounts, cars and houses.

Second reading

The Proceeds of Crime and Anti-Money Laundering Bill (2008) has already been tabled in Parliament and is in its second reading. It is currently being studied by parliamentary committees dealing with legal and financial matters.

The Bill aims at disrupting organised criminals, who often rely on cash transactions to fuel their businesses, by allowing officers to search persons and premises for criminal cash.

The document defines money laundering as a transaction with knowledge or having reason to have known that it involves proceeds of crime and has the effect to disguise or conceal such proceeds or ownership of it, assist a launderer to avoid prosecution and removing or diminishing such property.

It also makes it an offence to assist someone benefiting from proceeds of crime or failure to report, to the relevant authorities, those involved in the vice.

Other than let the AG have the leeway in appointing the director of the investigating agency, Mr Gitari argues that the recruitment be in two stages; the application and vetting stages.

The vetting, the lawyer adds, should be done by the relevant committee of Parliament “in this case the Committee on Legal Affairs and Administration of Justice”.

They say the record of the AG’s office in fighting crime has been wanting, adding that the agency needed to be given full autonomy.

“Similar agencies like the Law Reform Commission have been neutered in their independence and sundered in performance of their jobs by bureaucratic placement under the Attorney General,” adds Mr Gitari.

The Law Reform Commission was cited as one of the worst performers in the recently released audit on performance of ministries and government departments.

The Ministry of Gender and Sports scooped the top position in the ministries category while Kenyatta University was voted the best managed parastatal.

While releasing the results, Prime Minister Raila Odinga said the Law Reform Commission has been a major let-down to Kenyans, despite its critical role in the country.

Mr Gitari also says there is no reason why the director of the recovery agency must be a lawyer, as proposed by the Bill, adding that the office holder could be a person with other qualifications.

“The relevant skills are knowledge of money laundering issues, integrity and management experience to run such a sensitive agency. Legal knowledge should not be the only requirement,” he added.

To tighten the noose on suspected money launderers, the Bill proposes that a person conveying monetary instruments above $5,000 must report it to the relevant authorities.

Monetary instruments, as cited by the document, refers to notes, coins, travellers cheques, banker’s cheques, personal cheques, investment securities and money orders, among others.

Punishment for those found guilty, range from Sh1 million to Sh5 million in fines and between one year and 14 years imprisonment. The maximum penalty for an offender is 14 years imprisonment or a fine of Sh5 million or both.

Rights to secrecy will be overlooked on offences stipulated under the Bill, if it becomes law. It means that secrecy will not be a defence, if one is required to disclose all the information he or she knows about the crime.

However, despite the proposed harsh punishment for offenders, the lobbyists insist that investigators of the agency must remain independent, free from interference from any quarters if the fight against money laundering is to be won.

They argue that risks and enticements will be high for investigators, as their work will involve tracing and recovering cash and goods derived from crime.

According to the Bill, other powers will also include that of holding property at the start of a criminal investigation to avoid it being hidden or dissipated.

The anti-corruption lobbyists are also taking issue with the proposal on the recruitment of investigators, saying that it will weaken the agency.

According to the document, the director of the agency may, with the approval of the AG, get staff from other departments, on terms determined by the latter.

If allowed to pass, the human rights lobbyists argue that the agency runs the risk of being filled with individuals who will be easily manipulated by senior government officials.

“Those seconded to the agency might act based on the whims of individuals who aided them get jobs there,” says another lobbyists.

Nerve centre

Apart from the establishment of an Asset Recovery Agency, the Bill proposes the establishment of a Financial Reporting Centre and an Advisory Committee to advise the Government on how to combat money-laundering.

The Financial Reporting Centre will be an information gathering bureau and will act as the nerve centre for the investigation agency. This is because cases of any suspicious transactions and suspected underhand deals involving dirty money will be reported. It will rely heavily on banks and other financial institutions.

However, the document gives the Finance minister the power to appoint the director and deputy director of the Financial Reporting Centre on the advice of the Anti-Money Laundering Advisory Committee, which the lobbyists are also against.

“There is a risk that those appointed might not be the best persons for the job, but friends or close associates of the person occupying the Finance docket,” says Dr Charles Otieno, a governance consultant. He says cases where ministers have misused their powers by appointing incompetent persons to offices of authority are numerous.

“We must not let that happen in this case as we are dealing with a very sensitive issue,” Dr Otieno adds.

It is not only amendments targeting the Government that the lobbyists are pushing for. According to Mr Gitari, for the Financial Reporting Centre to be effective in its gathering of critical information for investigation, financial institutions ought to be barred from maintaining anonymous accounts. The lawyer argues that identifying customers is the cornerstone of anti-money laundering procedures.

In fact the Bill will require banks and other financial institutions to provide information on suspicious dealings and questionable accounts.

“Monitoring orders to banks or other financial institutions to provide transaction information on a suspected account will help financial investigators trace the proceeds of crime and investigate money laundering,” says Dr Otieno

The lobbyists urged the Government to establish a framework on how banks will provide information to the Financial Reporting Centre, adding that the information was crucial for investigators.

“The way to guarantee good data is to link the centre to other databases and to give it right to search them,” adds Mr Gitari.

Dr Otieno, also takes issue with the composition of the advisory committee, saying it is dominated by Government officials. “If the Bill is passed, 14 out of the 17 members in the advisory committee will be government officials. This compromises the independence of the advisory services that the committee will provide,” Dr Otieno says.

Among those proposed as members are permanent secretaries in the ministries of Finance, Foreign Affairs and Justice and Constitutional Affairs. Others are the Police Commissioner, Kenya Revenue Authority representatives and officials from the National Security Intelligence Service (NSIS).

Anti-corruption lobby group, Transparency International and Association of Media Women in Kenya (AMWIK), also fear a possibility of conflict of roles between the Kenya Anti-Corruption Commission and the proposed Assets Recovery Agency.

Under the Anti-Corruption and Economic Crimes Act (2003), KACC is mandated to recover assets acquired through corrupt activities, a role that will also be done by the Assets Recovery Agency.

Be superior

However, Dr Otieno explains that the proposed agency should be superior to KACC given the fact that it will deal with all types of money acquired illegally and not only that originating from corruption.

Other sources of money laundering that the agency will deal with are drug trafficking, prostitution, child trafficking and dealing in counterfeit and contraband goods.

The lobbyists are asking Parliament to make the necessary amendments to the Bill before passing it.

Dr Otieno says Parliament must ensure the Assets Recovery Agency has powers to tackle tax fraud. “It should also have powers to deal with persons whose income or gains were derived from crime,” he adds.


Source: Daily Nation

Gulf banks laundering pirate booty -paper

Gulf banks are being used by organised pirate syndicates to launder millions of dollars taken as ransom from vessels hijacked off in the Gulf of Aden, the UK’s Independent newspaper reported on Tuesday.

Investigators hired by the shipping industry told the newspaper around $80 million was paid out by shippers last year, much of which finds its way to piracy “godfathers” based in the Gulf and African countries such as Kenya.

Investigators said these “godfathers” include businessmen from Somali and the Gulf region, as well as nationalities from the Indian subcontinent.

"There is evidence that syndicates based in the Gulf play a significant role in the piracy which is taking place off the African coast," Christopher Leger, a former Royal Marine officer and director of Idarat Maritime, was quoted as saying.

Idarat specializes in maritime protection and is working with underwriters Lloyd's to come up with safeguards for shippers.

"There are huge amounts of money involved and this gives the syndicates access to increasingly sophisticated means of moving money as well as access to modern technology in carrying out the hijackings."

Source: Maktoob Business

Uganda: Funding terror? The flip side of forex boom

By MARTIN LUTHER OKETCH

The huge amounts of money handled by private forex bureaus could be a threat to the country and the region if foreign exchange rules are disregarded, the Bank of Uganda has warned.

In a meeting held in Kampala by forex bureaus and money remittance operators on April 30, the executive director of bank supervision at the Bank of Uganda, Justine Bagyenda, raised the alarm on possible money laundering and financial terrorism.

She said the laid-down guidelines should be adhered to as the country awaits the enactment of the Anti Money Laundering Law.

A survey by the EastAfrican reveals that many operators are not complying with Know Your Customer requirements and procedures drafted by the central bank.

These procedures were issued to all forex bureaus and money remitters in August 2003 to assist in combating the vice in Uganda’s financial sector.

Said Ms Bagyenda: “For instance, some of you are not undertaking due diligence to ensure that customer identification details for large transactions are provided.”

She added: “We have noted that 90 per cent of the operators do not capture the sources of and the purposes of foreign exchange.

“This is very dangerous as it is a possible avenue for money laundering. You should comply with the law on declaring sources and purposes of foreign exchange, and the ‘know your customer’ measures that are crucial to turn down illegally-acquired funds and prevent possible financing terrorism.”

Foreign exchange regulations require dealers to report to the Bank of Uganda the details of any individual selling amounts in excess of $5,000.

Privately run foreign currency exchange bureaus and money remittance outlets handled 30 percent of the net foreign exchange transactions in Uganda in 2008, but the regulators are concerned by increased laxity.

The Bank of Uganda says the forex bureau and money remittance sector has remained largely buoyant, with a total of 122 forex bureaus and 75 money remittance outlets.

But a few were not following operational procedures regarding identification of clients, leaving the country open to money laundering.

Ms Bagyenda said an increase was reported in the inflows and outflows of licensed money remittances in the country that stood at the equivalent of $226.01 million in inflows and $104.20 million in outflows, at the close of December 2008.

This was a tremendous improvement compared with $99.44 million and $40.59 million recorded inflows and outflows during 2007.

Statistics from the bank show that total purchases in the forex bureaus market increased from $1.2 billion at the end of December 2007 to $1.5 billion at the end of December 2008, while total sales increased from $1.3 billion to $1.6 billion over the same period.

It is due to this performance that the Bank of Uganda continues to recognise the crucial role played by forex bureaus and money remitters as partners in deepening the financial sector and fostering macroeconomic stability and growth in the country, Ms Bagyenda said.

She added that increased risk aversion by investors and the effects of the global recession were presenting significant macroeconomic challenges to Uganda’s financial system.

If the global recession is prolonged, Uganda could face reduced export earnings, a decline in foreign direct investments and reduced remittances, which would significantly reduce the banking system liquidity and exert pressure on exchange rates and debt service capacity.

Uganda’s forex bureaus and money remitters operate under the Foreign Exchange Act of 2004 and the Foreign Exchange Remitters Act 2006.

The two Acts provide for exchange of foreign currencies in Uganda and making of international payments and transfer of foreign exchange; and for other related and incidental matters.

Ms Bagyenda promised more rigorous inspections to ensure compliance with laws through off-site and on-site surveillance of forex bureaus and money remittance sector.

In a related development, the bank’s assistant director of non-bank financial institutions, Benedict Ssekabira, said Uganda and Kenya had started harmonising the supervision of forex bureaus.

Two Bank of Uganda officials were to be in Kenya from May 4-8 for an insight into on-site and cash audit operations, he said.

Likewise, CBK officials have been in Uganda for lessons on risk-based supervision of commercial banks and financial institutions. The visits were arranged by a committee of the East African Monetary Community, which is handling the East African Monetary Union.

The East Community Monetary Committee Affairs — under the umbrella of the five governors of central banks of Tanzania, Kenya, Uganda, Rwanda and Burundi — is trying to beat the 2012 target of fast-tracking the East African Monetary Union.

Source: The East African

Terrorists equipped to make Kenyan IDs

Terrorists behind the 2002 attack at the Paradise Hotel in Mombasa had equipment and materials for printing fake Kenya national identity cards, a UN report has revealed.

Fifteen people — 12 of them Kenyans — died during the November 28, 2002 attack on the Israeli-owned hotel in Kikambala.

The ‘Digest of Terrorist Cases’ report by the United Nations Office on Drugs and Crime (UNODC) says the terrorists used the fake documents to rent an apartment where a cache of arms was found.

Automatic guns

Among the weapons found concealed in a sofa set were six automatic guns, magazines, bullets and five anti-tank missiles. Also seized were a saw, hammer and pliers, a hand grenade, training materials and manuals on the use of the weapons.

“A laminating machine and materials suitable for making identity cards were also found,” the report says.

The revelations raise fears that foreigners have found their way into the country with fake identification documents.

In February, the government mounted a countrywide crackdown on illegal immigrants following reports that foreigners acquire Kenyan citizenship through an intricate syndicate involving government officials.

The operation, which was spearheaded by regular and Administration Police, was however, called off following an uproar from Kenyan Somalis who said it amounted to ethnic profiling and discrimination.

North Eastern PC James ole Seriani recently cautioned local administrators that they face the sack following reports that some of them were involved in the syndicate.

The report recommends measures that need to be put in place by governments around the world in the fight against terrorism. They include sealing legal loopholes that have seen many terror suspects evade conviction.

Governments around the world have also been asked to use the Suppression of the Financing of Terrorism to bring offenders to justice.

The United Nations Security Council resolutions 1267 and 1373 require all member states to freeze the funds of designated persons and of terrorists generally.

The report adds that countries should use collateral offences committed by terrorists, particularly weapons offences and frauds, to trace terrorist movements and activities.

Governments have also been asked to use Interpol’s Stolen and Lost Travel Documents (SLTD) database to report stolen passports to make it easy to trace them.

As of June 2009 the database contained information on over 18 million documents, over 10 million of which were passports, from approximately 150 countries.

The latest developments come at a time when both local and international security agencies are on high alert after recent discovery of an arms cache in the sea off Malindi and the attack against a village in Wajir by the Somali militia Al-Shabaab, which is linked to the al Qaeda terror group.

Last week, a Malindi fisherman chanced upon a cache of arms, triggering a major security operation in the coastal town.

The weapons packed in sacks, included 436 bullets, four rockets, one rocket launcher, five AK-47 rifles, one Ceska pistol, 10 gun holsters, 18 magazines and four para lights used for illuminating a security operation zone at night.

Malindi deputy police boss Willy Simba said officers were exploring a theory that the find is linked to five suspected pirates arrested in Kenyan waters at the local Marine Park.

Source: Daily Notion

East Africa turns to training to confront money laundering

East African countries have admitted they are vulnerable to global money laundering. They are calling for specialised training and increased information sharing to confront the ogre.

A peace and security conference for the East African Community (EAC) in Kampala, Uganda last week, agreed that the region’s security agencies should be computer literate as technology becomes the more preferred channel for committing certain crimes.

The admission gives hope that the region will strengthen its anti-money laundering laws.

“Countries in the region need to do everything in their power to adopt the international standards pertaining to greater scrutiny of financial transactions,” said a communiqué from the conference.

“Client due diligence, honing and sharpening the technical and technological skills of investigators and enforcers, as well as intensifying information sharing between nations and agencies.”

Kenya is yet to make an anti-money laundering law despite the exposure to criminals like the pirates in the Indian Ocean, who have admitted using Kenya and Dubai as their preferred money laundering destinations.

The proposed law is yet to be debated in parliament.

In Uganda, it is only last month that the draft Anti-Money Laundering (AML) Bill was presented to Uganda’s Parliament, where it will be debated over the next two months.

Rwanda Parliament last year approved anti-money laundering and combating the financing of terrorism law.

With the law in place, a Financial Intelligence Unit (FIU), a national agency charged with receiving, processing, analysing and disseminating information relating to suspect financial transactions is to be formed.

It was not clear if this unit has already been formed but, it is such agencies that are expected to be formed across the region to facilitate exchange of information on suspicious financial transactions.

Source: Africa Business Daily by Steve Mbogo

Online Gambling & Terrorist Financing: America’s New “Poker Threat”

On a darker note, we now learn that the FBI has actually frozen the funds of all US clients, which were still ‘on account’ at NETeller the online e-wallet. It was earlier believed that the digital money would be refunded to US players and now they are calling it evidence and the cash is on ice.

Strangely enough, the authorities are attempting to link NETeller’s online payment processing of gambling money to terrorist funding. Despite the fact that NETeller in the UK has public shareholders, pays dividends and offers 100% audited financial statements, the FBI is pursuing an argument that e-wallet funds are being used to finance terrorist.

Additionally, despite the transparent nature of all these UK payment companies, subpoenas have been issued to the following Wall Street investment banks HSBC, Credit Suisse, Deutsche Bank and Dresdner Kleinwort. All of these fine companies participated in underwriting public offerings for some of the more popular online gambling webs. They all have offices in London and now they all have records being subpoenaed.

This is simply bizarre. Its a great political move because now you have all the other digital currency operators thinking…Am I next?

One notable online gaming expert is quoted as saying:

“(Terrorism is) a smokescreen thrown up by the right-wing Christian lunatics in the government who want to control every facet of human behavior from birth to death. As far as I know, there isn’t a scintilla of evidence there’s any link between online sites and terrorist groups.” *lvbusinesspress.com

Wow, talk about chasing a wild goose! I have not seen anything like this since Roy Cohn and Joe McCarthy crusaded during 1950’s to stop the ‘Red Threat’. Should we start calling this the ‘Poker Threat’ of 2007?

Look closely, the US has gone from Rep. Bob Goodlatte’s (VA) bill, H.R. 4411, which originally got support from the Christian Coalition in an attempt to ban all Internet gambling, up to the present day which is, David Litterick — the U.S. attorney for the Southern District of New York attempting to connect the dots between online poker money and Osama Bin Laden style funding support. I just don’t see it. The original anti gambling bill was about stopping kids’ access to online gaming. How did they arrive at this new prosecutorial frontier?

Mr. Litterick is one of the finest legal minds in the US and in the past has prosecuted terrorists involved in the 1993 bombing of the World Trade Center, the bombings of the U.S. embassies in Kenya and Tanzania and now holds a top position at the Department of Homeland Security.

The significance of Mr. Litterick’s appearance here is quite a shift in politics since August of last year when Rep. Goodlatte had to burn the midnight oil to gain support for his anti gambling bill. With this kind of persecution ahead of them, I don’t think the NETeller execs have a snowballs chance in hell of surviving the case.

This should be a big warning for the gold backed digital currency e-dinar. Formerly operated by the e-gold think tank this electronic money is based on the Islamic Dinar. Operated from Malaysia and Dubai Internet City (a great headquarter for any online business), the primary function of the e-dinar system is to render payments, in gold (e-dinar) and silver (e-dirham), from one customer account to another.

If they are trying to paint ‘poker’ money as terrorist financing, I can’t imagine what they will say about e-dinar. Of course e-dinar is not yet processing 7 billion + each year. Although its a fine digital gold currency, I don’t think it is quite that popular!

This is IMHO a very dark time for the US. Now at the dawn of a new age of ‘electronic money’, short sighted US regulators are taking one step forward and three steps back.

http://www.americanchronicle.com/articles/viewArticle.asp?articleID=20378

Ethiopia - 'Canadian Islamists' flee from Somalia

Joseph Brean
National Post

Wednesday, January 03, 2007

Canadian authorities were investigating reports yesterday that an alleged Islamist fighter presented a Canadian passport when he was arrested on Monday while trying to flee war-torn Somalia through a Kenyan border crossing.

The Standard newspaper of Kenya reported that the man, an Ethiopian national, is a military commander of the Ogaden National Liberation Front, an Ethiopian separatist group that has sided with the Somalian Islamic Courts Union in its war with Ethiopia. The unnamed Ethiopian reportedly presented a Canadian passport when he was arrested at Liboi, the main border crossing between Somalia and Kenya.

The Kenyan Daily Nation newspaper reported that 10 suspected fighters were carrying large amounts of foreign currency when they attempted to make the crossing in a four-wheel drive vehicle and that they were "suspected by Kenyan security agencies to double as financiers of the Islamic Courts Union."

Other media reports, quoting local sources, said there were eight men in total -- two claiming to be Canadian, the rest Eritrean. They are being held at Garissa, a city closer to the capital, Nairobi.

"It's one thing having a Canadian passport, and it's another thing making sure that you correspond to the passport," said Rejean Beaulieu, a Foreign Affairs spokesman in Ottawa.

He said there are only two Canadians in Somalia who are registered with Ottawa, despite a travel advisory that urges Canadians not to travel there.

"But it doesn't mean there are not more. Many people around the world don't necessarily register with us," he said.

Kenyan authorities have anticipated an exodus of as many as 3,000 defeated militiamen loyal to the Islamic Courts Union (ICU), an alliance of Muslim fundamentalists that wielded a shaky power over Somalia until last week.

After defeating a U.S.-backed alliance of warlords in June to take the capital, Mogadishu, the ICU rose to power throughout the south of the country, eventually seizing the port of Kismayo, which left the interim government -- supported by Ethiopia and recognized internationally -- confined to Baidoa, an inland commercial centre.

On Nov. 25 last year, a communique issued by Sheikh Sharif Sheikh Ahmad, the ICU's leader, was posted to Internet message boards, calling jihadists from around the world to come fight against Ethiopia, which he said was engaged in the same "crusade war waged against Iraq and Afghanistan, and the previous war in Somalia."

The month before, the National Post reported that the ICU is composed partly of Somali- Canadians from Toronto or Ottawa who have returned to their homeland.

The highest-ranking Canadian is Abdullahi Ali Afrah, second deputy chairman of the Islamic Courts advisory body. In Toronto, he worked at the Canadian branch of Al-Barakaat, a money-transfer outlet implicated in terrorist financing.

The ICU was defeated by Ethiopian troops in a war that began Christmas Eve with the strafing of Mogadishu's airport by Ethiopian jets. Ethiopia's Prime Minister, Meles Zenawi, said his country intervened to "protect the sovereignty of the nation and to blunt repeated attacks by Islamic Courts terrorists and anti-Ethiopian elements they are supporting."

Troops of Somalia's interim government, backed by Ethiopia, retook Mogadishu four days later, prompting an exodus of fighters loyal to the ICU.

The day before, forces of the Ogaden National Liberation Front -- which waged a long and often violent campaign for independence from Ethiopia before allying themselves with the ICU -- intercepted an Ethiopian military convoy of more than 20 vehicles, destroying four of them and forcing the remainder to retreat, according to the Sudan Times.

On Christmas Day, Eritrean radio reported that the ONLF attacked another Ethiopian convoy, killing as many as 500 soldiers. And yesterday, an Ogaden Web site, quoting locals, said the ONLF launched a surprise attack on two Ethiopian military personnel carriers, killing their occupants.

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