Financial Crime World

Financial Crime Wave Hits Kenya: A Look at Fraud, Money Laundering, Tax Evasion, and Cybercrime

Introduction

Financial crimes, also known as white-collar crimes, are acts committed with the primary intent of obtaining a financial or professional gain through deceit, fraud, or manipulation. In Kenya, financial crimes persistently pose a major threat to the economy. _ Below are some insights into the current financial crime landscape in Kenya, focusing on fraud, money laundering, tax evasion, and cybercrime. _

Threat Landscape

The primary financial crime threats in Kenya are:

  • Fraud and related economic crimes
  • Corruption
  • Drug crimes
  • Tax crimes
  • Product piracy
  • Cybercrime
  • Wildlife crime
  • Money laundering

Despite efforts to combat these crimes, fraud remains the most prevalent financial crime in Kenya.

Fraud

Tax Fraud

  • Tax fraud, which involves evading tax payments illegally to reap financial benefits, is a significant issue.
  • The Kenyan Revenue Authority (KRA) plans to mine data from digital devices to combat tax and financial fraud.

Other Forms of Fraud

  • Other forms of fraud, such as credit card fraud, wire fraud, securities fraud, and bankruptcy fraud, are also common.

Money Laundering

  • The Kenyan government’s efforts to combat corruption are reflected in the revised Country’s Proceeds of Crime and Anti-money Laundering (AML) Act 2009, now called ‘Bill’ 2021.
  • A court in Kenya recently froze over $40 million in accounts belonging to a Fintech firm under the country’s AML laws.

Cybercrime

  • The rise of cybercrime is a critical concern for authorities in Kenya.
  • The Kenyan government has collaborated with the FBI to counter cybercrime.
  • The losses due to cybercrime exceed $1 billion annually.
  • The Kenyan government has implemented the Cybersecurity Laws and Regulations Kenya to combat cybercrime.

Drug Crimes

  • Drug trafficking is a serious drug crime prevalent in Kenya, particularly in coastal regions such as Nairobi.
  • Suspected traffickers often launder the proceeds from their illegal activities, making it crucial to address money laundering in conjunction with drug control efforts.

Conclusion

  • While cybercrime, drug crimes, and product piracy are on the rise, the actions against other financial crimes suggest a neutral or reducing trend.
  • The banking sector poses the biggest potential money laundering vulnerability due to its significance.
  • Money remittance providers, money network operators, real estate, legal, and motor vehicle dealers are also notable potential AML and CFT vulnerabilities.
  • The Kenyan authorities and law enforcement agencies’ relentless pursuit of financial crime perpetrators continues, with the public encouraged to remain vigilant and report any suspicious activities.