Kenya, US partner to curb money laundering
30 August 2015, 06:58
Nairobi - Kenya and the United States governments have entered into a partnership that will help the two countries crack down on money laundering agents and their activities.
In this joint venture, the US Government will provide Kenya with software to track illicit money which has negatively impacted on the Kenyan economy.
A communiqué issued by the US Government says the Obama administration is committed to support the fight against corruption, bad governance and improving institutions. It strongly mentions the importance of fighting money laundering.
“The US also pledges to procure software for Kenya’s Financial Reporting Centre (FRC) to improve the analysis of suspicious transactions and better communication with other countries’ FRCs once the requisite platform is in place,” the communique on the White House Website says.
Kenya is expected to give US open access to the software to enhance collaboration between the two countries. This move is set to favour the interest of the US Government in fighting terrorism and other international money crimes.
The US Government comes on board to help fight money laundering at a time when Kenya’s Financial Reporting Centre (FRC) has been struggling to win ‘a war in a game that is controlled through modern technology where most players collude with financial institutions to achieve their illicit money transactions greed’.
Following a visit by the US President Barrack Obama in July 2015, it became evident that the US Government was keen to partner with the Kenya Government in many socio-economic development matters.
Beneficiaries to money laundering may include terrorist groupings among other security threats. It is for this reason that the two Governments will take the fight to a conclusive end. During his address in July while in Nairobi, President Obama promised, “the US will support Kenya shoulder to shoulder in the fight against terrorism”.For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page!
This collaboration is expected to boost Kenya’s standing globally in fighting international economic crimes. President Obama pledged that his Government will also extend best practices and advice to Kenya’s FRC by conducting an Analyst Exchange Workshop in Nairobi within four months.
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Kenya is committed to speed up work and strengthen the capacity of FRCs and the Central Bank to track illicit financial flows. It will include fitting the FRC with the requisite platform to run anti-money laundering software.
Kenya is also rolling out an enhanced coordinated port operations programme under the Border Control and Operation Coordination Committee to coordinate efforts for increased efficiency and transparency in customs and clearance procedures.
According to economic money laundering expert, Brent Bartlett of International Economics Group, Dewey Ballantine, the negative economic effects of money laundering on economic development are difficult to quantify.
Brent explains: “It is clear that such activity damages the financial-sector institutions that are critical to economic growth and reduces productivity in the economy’s real sector by diverting resources which encourage crime.”
Other effects of money laundering according the expert are, corruption which he says, slows economic growth and distorts the economy’s external sector. The other effect is international trade and capital flows to the detriment of long-term economic development.
Impairment of financial institutions development is also considered another contributing factor to money laundering. Brent also notes that Money laundering reduces productivity in the economy’s real sector by diverting resources.
Criminal organisations can transform productive enterprises into sterile investments by operating them for the purposes of laundering illicit proceeds rather than as profit-maximizing enterprises responsive to consumer demands and worthy of legitimate investment capital.
Unabated money laundering can also impair a developing country’s economy through the country’s trade and international capital flows.
Nonetheless, it is clear from available evidence that allowing money laundering activity to proceed unchallenged is not an optimal economic-development. Money laundering damages the financial institutions that are critical to economic growth and reduces productivity in the economy’s real sector.
The resources accrued from money laundering encourage crime and corruption. The accrued funds distort the economy’s international trade and capital flows to the detriment of long-term economic development.