The West pledges help for Kenya after being listed as conduit for dirty cash
National Treasury Cabinet Secretary Njuguna Ndung'u.
What you need to know:
- The International Monetary Fund (IMF), the World Bank, the European Union (EU), the United Kingdom, and the United States have pledged to help Kenya get out of the woods.
- The Treasury Cabinet Secretary Njuguna Ndung’u told the National Assembly’s Debt and Privatisation committee.
Kenya has received support from Bretton Woods Institutions and the West to ensure compliance with international Anti-Money Laundering, Countering the Financing of Terrorism, and proliferation of Weapons of Mass Destruction (AML/CFT/CPF).
The Treasury Cabinet Secretary Njuguna Ndung’u told the National Assembly’s Debt and Privatisation committee that bilateral and multilateral donors have pledged support to Kenya following last week’s decision by the Finance Action Task Force (FATF), the global anti-money laundering watchdog, to place Kenya under high watch for not having strong safeguards against the flow of dirty cash.
The International Monetary Fund (IMF), the World Bank, the European Union (EU), the United Kingdom, and the United States have pledged to help Kenya get out of the woods.
Kenya was last Friday placed among 23 other countries in a list of shame known as the ‘grey list’.
The grey list refers to countries that have deficiencies in dealing with money laundering and terrorist financing.
The placement of the country in the grey list means that it will be subject to enhanced monitoring to ensure compliance with international AML/CFT/CPF.
The downgrade also means Kenya might be subjected to stricter due diligence when it is dealing with the rest of the world.
“This morning, I had a meeting of bilateral and multilateral lenders who have expressed support to ensure our country is taken out of the grey list.
We have done the legal instruments that established four critical institutions that now need capacity building to effectively combat money laundering, terrorism financing and weapons of mass destruction,” Prof Ndung’u said.
“The IMF, the WB, the EU, the UK and the US promised us support to strengthen our institutions including the Financial Reporting Centre (FRC).”
Professor Ndung’u told MPs that the placement of Kenya in the grey list will not worsen its credit ratings.
“We have got a lot of support from multinational lenders. The grey listing will not worsen our credit ratings. The only thing we need to do is to strengthen our institutions after we made amendments to 17 laws to the law,” Prof Ndung’u said.
“In 2009/2010 I fought hard as Kenya was going to be back listed. We have since made 17 amendments that created four institutions that we now need to strengthen to combat AML/CFT/CPF.
The CS told the committee that what is now required is the implementation of the law and the strengthening of the institutions which is the reason why Kenya was put in the grey list by FATF.
Wajir East MP Mohamed Duale had demanded to know how grey listing of Kenya would affect its credit listing, concessional borrowing and foreign direct investments.
Prof Ndung’u dismissed the claims by a section of the media that Kenya was placed on the grey list due to its “wash wash” economy.
“I have read an article that indicates we are a ‘wash wash’ economy. That is irresponsible journalism. Our institutions are checking on this but we only need to strengthen their capacity,” he said.
“We are in a very precarious situation as a country. We have the situation in Somalia, South Sudan, Sudan and the Democratic Republic of Congo. People out there say Kenya is their safe haven for them. The enemy is one step ahead and we need to push the curve ahead and we have the strongest support from our partners.”
Prof Ndung’u said Kenya has not implemented all amendments to the anti-money laundering laws as approved by Parliament
The FATF flagged Kenya, a financial hub in the region, as a regional hub for illicit gold as well as a transit for drug and wildlife traffickers, with law firms, casinos, and real estate agents being highlighted as some of the enablers of money laundering.
With Uganda removed from the list following recommendations of FATF's fifth plenary meeting, Kenya joined Tanzania and South Sudan in the grey list. Other African countries on the list include Nigeria, South Africa, Mali, Mozambique, Burkina Faso, Senegal and Cameroon.
In 2010, FATF placed Kenya on a list of high-risk countries for delays in enacting laws to tackle criminal financial activity as well as a failure to track money laundering. It was removed from the list four years later.
