SAM KIMEU: Blood money fuels Kenya banks

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SAM KIMEU: Blood money fuels Kenya banks

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SAM KIMEU: Blood money fuels Kenya banks
Blood money
Blood money

The tides may be turning on corruption in our banking system. Last month the Central Bank of Kenya slapped fines on five top banks alleged to have been involved in the National Youth Service corruption scandal.

The move demonstrated how entrenched and systemic corruption and money laundering are in our country, and how tolerated they have become amongst the actively corrupt and quietly acquiescent. The banks fined â€" i ncluding Kenya Commercial Bank and Equity â€" fall mostly in the second category: Fully aware of anti-money laundering regulations, just reluctant and unwilling to implement.

Kenya’s financial system has for long been vulnerable and exposed to racketeers and money launderers. What may be surprising to some is the disastrous consequences, not just at home but in the carnage across the border in South Sudan.

As demonstrated this weekend by an investigative documentary called The Profiteers, many of South Sudan’s elite have been using our banks to enrich themselves. Some of the biggest banks in Kenya and Uganda are handling millions of dollars’ worth of transactions that allow generals and political elite â€" many of them accused of grave human rights violations â€" to siphon huge fortunes out of one of the planet’s poorest countries, as their people struggle just to stay alive in the war the elite created and sustain.

That Kenyan banks have handled transactio ns for purveyors of rape and killing in South Sudan should not come as a surprise. Many warnings have gone unheeded, most recently in June by a senior US official, Sigal Mandelker, who urged Kenya and Uganda to stop corrupt South Sudanese officials from exploiting the countries’ banking systems to enrich themselves.

The vast amounts of blood money stowed in Kenyan banks and the numerous unreported suspicious transactions have enabled and facilitated war and pillage on a massive scale and created Africa’s largest refugee and humanitarian crisis.

Kenya and Uganda have aspirations to attract greater linkages with the international financial system. Uganda is seeking membership in the Egmont Group, a network of government financial intelligence units seeking to prevent money laundering and terrorist financing. Kenya, meanwhile, is preparing for an international evaluation under the Financial Action Task Force framework.

Evidence is mounting that Kenyan banks are complicit in facilitating corruption, crime, war and even terrorism. Unless there is political will to seal the loopholes that allow the corrupt to stow away the illicit proceeds of their crimes, Kenya’s viability as the regional financial hub will be severely threatened. In fact, the Nairobi International Financial Centre will be tainted by blood money even before it takes off.

If we are to realise our economic aspirations, both countries’ governments and banks such as HSBC, Commerzbank and JP Morgan Chase, which handle dollar and sterling transactions for Kenyan and Ugandan banks, need to demand fresh efforts to prevent money laundering by terrorists and war criminals.

The revelations expose the inability of Kenya and Uganda to play the role of neutral arbiter in the conflict. If we are profiting from the looting of South Sudan, what trust can anyone have in our ability or willingness to broker a lasting peace deal that will end the bloodshed?

The CBK’s actions must be lauded for what they are: An effort to tackle corruption by challenging the means through which the corrupt are able to loot public resources. The same level of scrutiny should be extended to transactions relating to foreign nationals and the role each of these banks has played in facilitating war and destruction.

Kenyan authorities have pulled the sovereignty card to justify the lack of action. However, a greater threat to Kenya and South Sudan’s sovereignty will be an endless war just over our border, leading to one of the world’s largest refugee crises, and the degradation of our financial reputation in international markets.

Fighting corruption is a precursor to economic growth at home, and peace across our borders. While the elites prosper, those who suffer are our poorest at home, and the long-suffering people of South Sudan. It is high time the government and financial system recognised this simple fact.

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