Financial Crime World

Here is the rewritten article in markdown format:

KENYA FALLS SHORT IN COMBATING MONEY LAUNDERING, SAYS FATF

The Financial Action Task Force (FATF) has released its latest Mutual Evaluation Report, highlighting Kenya’s shortcomings in combating money laundering and terrorist financing.

Partial Compliance with International Anti-Money Laundering Standards

According to the report, Kenya is partially compliant with 21 of the 40 FATF recommendations. This means that Kenya still needs to improve its national cooperation and coordination mechanisms to combat money laundering and terrorist financing.

Areas for Improvement

The report identifies several areas where Kenya needs to improve:

  • National Cooperation and Coordination: Kenya requires stronger laws and regulations to criminalize money laundering and terrorist financing.
  • Preventing Shell Companies: More effective measures are needed to prevent the misuse of shell companies and other legal arrangements.
  • Transparency in Beneficial Ownership: Kenya lacks transparency in beneficial ownership of legal persons and arrangements.
  • Powers of Supervisors and Law Enforcement Agencies: Inadequate powers of supervisors and law enforcement agencies need to be addressed.

Progress Made

While Kenya has made some progress in implementing the FATF recommendations, including:

  • Strengthening Financial Intelligence Unit: The financial intelligence unit has been strengthened.
  • Improving Customer Due Diligence: Customer due diligence requirements for financial institutions have improved.

Vulnerabilities in the Financial System

The report highlights several vulnerabilities in Kenya’s financial system, including:

  • Correspondent Banking Relationships: Kenya’s correspondent banking relationships are vulnerable to abuse.
  • Third-Party Providers: Kenya’s reliance on third-party providers is a risk factor.

Implications of Non-Compliance

Kenya’s failure to fully implement the FATF recommendations has significant implications for its economy and international reputation. Non-compliance can:

  • Undermine trust in financial institutions
  • Increase the risk of money laundering and terrorist financing
  • Damage Kenya’s relationships with other countries

Response from Kenyan Authorities

In response to the report, Kenyan authorities have pledged to take immediate action to address the outstanding issues and bring its anti-money laundering regime into line with international standards.