Over 19 government agencies in Kenya have proposed to curb illegal transactions while promoting transparency in the shipping industry through a bill set to be presented in front of the parliament before the end of 2020. The new bill will compel importers and exporters to identify the individuals or companies sending or receiving packages from all over the world. This does not exempt banks and other financial institutions from identifying senders and receivers of funds as well as assess the risk that the transaction might be used for illegal purposes. Being the financial hub of the East African region, Kenya remains vulnerable to money laundering. This occurs in the formal and informal sectors, deriving from domestic and foreign criminal operations. Such criminal activities include smuggling, illicit trade in drugs, counterfeit goods and weapons, trade in illegal timber and charcoal, and trafficking of wildlife parts.
While there is a lack of verifiable data on illicit trade or its associated costs, there is a general agreement that it results in major financial and social costs globally and brings about risks to economic growth and sustainable development. For instance, the trafficking of animal parts such as ivory, tiger skins, and rhino horns is estimated to be a $19 billion trade per year. Pricewaterhouse Coopers (PwC) 2018 survey reveals that 75 percent of the respondents in Kenya bore the brunt of economic crime that continues to trouble the country. Illegal trade and the wide availability of illicit liquidity also prevent fair and open markets from attaining their full economic potential and threaten state sovereignty, experts say.
Kenya’s Central Bank Governor Patrick Njoroge said the Central Bank will be endorsing the proposed legislation because Kenya’s economy has been endangered by illegal freight trade. He added that Know Your Customer scheme is expected to be aligned with the East Africa Protocol on the Preventive and Combating Corruption and Illegal Trade and Kenya banks will be adopting Know Your Customer scheme before any transaction is completed.
