Betting an avenue for money laundering?
08 September 2016, 16:14
The government was recently concerned with the rise in betting companies, not because it is turning into an uncontrollable addiction, but because of the large amounts of money that is being generated. From a financially criminal aspect, money laundering is the threat.
Interpol defines money laundering as any act or attempted act to conceal or disguise the identity o illegally obtained proceeds so that they appear to have originated from legitimate source. As the term implies, money laundering is akin to washing money from a dirty source and trying to make it legitimate.
Betting systems allow people to place bets through various financial streams and as many times as possible. Verification of the sources of these funds is highly engaging. For one to be able to launder money, there are three main steps identified in the legal dictionary; placement, layering and integration.
Placement is inserting the illegally earned funds legal legally recognized institution or transforming it into a form that can be used for financial negotiation.
Once the money is in a financial institution, it is moved around into different accounts, at times across countries in effort to disguise its origin.
Once sufficient layers have been formed, the funds are then integrated into normal financial procedures. The entire process may be slow or fast depending on the counter measures set by respective governments.
In the US, a law under the Federal Bank Secrecy Act of 1970(BSA) was enacted in order to cub this vice. It required that any deposit exceeding $10,000 was to be reported to relevant authorities. In Kenya, the issue of money laundering is addressed in the Proceeds of Crime and Anti-Money Laundering Act chapter 59B.
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The Kenyan act spells out the procedures of tracing, freezing and repossessing funds and assets suspected to have been gained through criminal activity. The Act also identifies the bodies responsible for enforcing this legislature. The establishment of the law is one thing, its enforcement another.
As the betting companies continue to comply with the relevant laws, betting still remains one among the most plausible vehicles criminal entities may employ to launder money. Betting in Kenya is regulated under the Betting, Lotteries and Gaming Act Chapter 131. The act was revised in 2012, the same time period when the money laundering act was reviewed.
Regulators have the high and engaging duty to ensure that betting remains free from money laundering activities. Many Kenyans are increasingly putting their hard earned money into winning probabilities, and the unpredictable windfalls should not be tainted with the possibility that dirty money is being cleaned through this avenue.
Laws of Kenya Cap 131
Laws of Kenya Cap 59B
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