Posted  Tuesday, April 17  2012 at  16:24

http://www.nation.co.ke/business/news/Money+laundering+fraud+centre+to+be+formed/-/1006/1388250/-/ii14ig/-/

Photo/FILE Money-laundering is the process by which illegally obtained money – for instance from drugs, terrorism, corruption or other crimes – is given the veneer of having originated from a legitimate source. 

The enactment of the Proceeds of Crime and Anti-Money Laundering Act 2009 on Tuesday received a fresh boost following the approval of the creation of a Financial Reporting Centre by the Anti-Money Laundering Advisory board.

The centre will investigate suspicious money laundering transactions as well as develop policies in consultation with the advisory board.

Further, it will provide a mechanism through which money laundering activities can be investigated and prosecuted.

“The Financial Reporting Centre has been established pursuant to section 21 of the Proceeds of Crime and Anti-Money Laundering Act 2009. It will assist in identification of the proceeds of crime and combating money laundering,” read a statement from Central Bank of Kenya (CBK).

The centre comes in place amid cases of money laundering thriving for lack of a clear legal framework.

With its establishment, the centre defines clear structures for investigating money laundering activities.

Previously, CBK had assumed the role though it is not legally mandated to carry out investigations of money laundering transactions.

“Without the Financial Reporting Centre, reporting entities (banks) did not have somewhere to report their suspicions. The centre will therefore provide a mechanism for identifying and quantifying money laundering activities,” said Habil Olaka, CEO of the Kenya Bankers Association.

There are no official statistics to show to what extent the economy has suffered as a result of money laundering deals as there has been no structured reporting centre for such transactions even as cases such as the CharterHouse Bank scandal have been linked to the same.

According to Ashif Kassam, managing director RSM Ashvir Consulting Limited, while implementation of an anti-money laundering law seems to be gaining progress, it will call for long-term evaluation of the will of those responsible for its execution to fight the vice.

“Setting up a reporting centre is good for the economy. However, the gains will be determined by the will behind it,” said Mr Kassam.

In addition to the Financial Reporting Centre, the Anti-Money Laundering advisory board will also need to establish an Asset Recovery Agency that will be responsible for confisticating assets accumulated through money laundering and setting up of a Criminal Assets Recovery Fund before the fight against money laundering is fully operationalised.

Money laundering activities pose a challenge to economic growth by preventing achievement of the full potential of a country’s tax system thus denying the government money for development purposes.