Kenyan Banks have lately been on spot over money laundering allegations and arrest arousing big scandals that are damaging their reputation in current critical economy times.
The United States government even put Kenya on a list of global hotspots for money laundering, citing insufficient controls on the circulation of dirty cash and the lack of laws against terrorism financing.
It is now reported that Central Bank of Kenya (CBK) and international monetary and security agencies are investigating African Banking Corporation (ABC) over money laundering allegations.
The agencies are focusing their spotlight on the owners of the bank, who are said to be neck-deep into the vice of money laundering, which happens through the bank.
According to sources, CBK’s ‘secret’ investigation could throw the bank off balance by exposing the rot therein.
A report published by the United States Department of State Bureau for International Narcotics and Law Enforcement Affairs said money laundering in Kenya occurs in the formal and informal sectors, fuelled by domestic and foreign criminal operations.
“Kenya remains vulnerable to money laundering and financial fraud,” said the report.
It described Kenya’s vibrant financial system as a magnet for money laundering.
“Banks, wire services, and mobile payment and banking systems are increasingly available in Kenya. Nevertheless, unregulated networks of hawaladars and other unlicensed remittance systems facilitate cash-based, unreported transfers that the government cannot track,” it said.
The report says Kenya’s proximity to Somalia makes it an attractive location for laundering piracy-related proceeds.
Under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) and other banking regulations, Kenyan financial Institutions and entities are mandated o report to the Financial Reporting Centre(FRC).