Buried treasure – pirates drop anchor in Kenya

Turmoil and anarchy in Somalia have affected countries all over the world but its immediate neighbours have been hit hardest by the lawlessness across their borders with Kenya, East Africa’s commercial hub, especially exposed to money laundering. One major concern is the earnings of Somalia’s rapacious pirates. Millions of dollars are collected in ransoms and from the sale of seized cargoes but these criminal enterprises are not known for their contribution to social and economic development – so where does the money go? Mohammed Yusuf looked for answers in Nairobi.

Forward to basics – starting with an FIU

The chief executive of the Law Society of Kenya (LSK) says that laundered money from Somali pirates is seeping into his country’s financial system and he warned that it could be spent on political patronage and campaign financing. Apollo Mboya explained to MLB: “We are not seeing an economy that can absorb the millions of dollars of pirate ransoms being paid in Somalia; where does the money go? The money is being laundered somewhere. People say it is being invested in real estate and some business centres, especially in Eastleigh, Nairobi [an area close to the capital’s central commercial district, populated mainly by Somalis].” It is rather dispiriting, therefore, that Kenya has made only slow progress in setting up an anti-money laundering framework. In its assessment of the country, released in June 2011, the Financial Action Task Force (FATF) said, “Although Kenya’s government had a ‘high-level political commitment to work with the FATF and [regional AML body] ESAAMLG to address its strategic AML/CFT [anti-money laundering/combating the financing of terrorism] deficiencies’, strategic AML/CFT deficiencies remain. Kenya needed to work to address these, including by ‘ensuring a fully operational and effectively functioning Financial Intelligence Unit’. The report added that Kenya needed to do better in “adequately criminalising terrorist financing;… establishing and implementing an adequate legal framework for identifying and freezing terrorist assets; raising awareness of AML/CFT issues within the law enforcement community; and implementing effective, proportionate and dissuasive sanctions” for both citizens and companies. Legislation needed to be properly implemented and a new AML Advisory Board brought into full operation.