HOTTE: Unite against money laundering or suffer apart

Thursday March 22 2018

David Hotte, team leader of the anti-money laundering/combating the financing of terrorism programme. FILE PHOTO | NATION


Team leader of the anti-money laundering/combating the financing of terrorism programme David Hotte spoke to Christabel Ligami.


Why is poaching an important example of organised crime that leads to money laundering?

Poaching is inherently international and not just East Asia where ornaments, trophies and souvenirs of illegal wildlife end up.

Tanzanian authorities worked with Thai and Swiss authorities to help identify accomplices of three men who were arrested at Zurich airport in 2015 with $0.35 million of ivory.

In the end, the investigation unravelled and seized assets worth more than $36 million belonging to a Thai-Vietnamese national.


Poaching and illegal wildlife trade is about profit and making money, and so using financial investigation methods and anti-money laundering controls can be used to reduce money flows on which the trade depends.

Is East Africa doing enough to tackle organised crime and the illegal wildlife trade in particular?

Tanzania has had results after making poaching and illegal wildlife trade a type of organised crime.

Work by its National and Transnational Serious Crimes Investigation Unit, since it was set up four years ago, has led to almost 2,000 arrests of poachers and traffickers and a string of long prison sentences

Kenya in particular has strengthened the punitive nature of its laws to deter and punish would-be poachers in its 2013 Wildlife Act.

Kenya, Tanzania and Uganda have strong laws that criminalise the receipt, transfer, concealment or possession of proceeds gained from crime – this is money laundering and it includes wildlife crime.

Unfortunately, some of these laws are rarely used and financial evidence in prosecutions is almost entirely absent.

Financial investigation units that are at the centre of law enforcement agencies’ efforts to trace criminal money need more resources in east Africa, however.

They need the ability to link up better with other national agencies and across borders for better detection of organised crime money laundering.

How big is the problem of money laundering in East Africa?

Identifying the scale of money laundering in East Africa has proved notoriously difficult, despite the best efforts of experts and law enforcement agencies around the world. It is also hard to measure it by region since money laundering is global in scale.

On the global level, some experts estimate that hundreds of billions of dollars is money laundered annually. Others put it much higher though comprehensive studies are irregularly done.

Which countries in the region are most affected by money laundering and why?

Criminal cases often reveal that it is truly a regional and international problem. The 2016 case of Feisal Mohamed, the ivory smuggler who was arrested in Tanzania and convicted in Kenya shows all of East Africa is affected.

Last year, four individuals – two from the Seychelles and two from South Africa – were arrested in Kenya in connection with money laundering.

Fostering a sense of team spirit across borders is key to tackling large scale financial crime.

Nevertheless, the steady economic growth and stable currency rates witnessed in Kenya, makes the financial hub of Nairobi a particular target for money launderers.

There are high risks associated with sectors or countries where there is a high volume of untraceable cash being transacted 24/7.

In the case of the latter, recent talk of potential sanctions against spoilers in the South Sudan peace process would focus attention on Kenyan and Ugandan banks, where money is believed to have been laundered and seek to freeze assets.

Which sectors are more affected by money laundering in the region?

The consumer and investment banking sectors are often key.

We link up the financial investigation units and Central Banks in East Africa with private local banks to help find ways of working together to help the system for reporting suspicious transactions, increase awareness of what to look out for in financial behaviour and the links to terrorist financing.

We know how, in some countries, entire industries such as construction and hotels, have been financed not because of actual demand but the short-term interests of money launderers.

This might sound ok until, outside the control of government and despite what market forces would encourage, those criminals will suddenly pull their money out and the sector can collapse, taking jobs and associated businesses down with it.

Are East African countries doing enough to curb money laundering?

The countries are tightening their processes. In terms of the trade in ivory and other illegal wildlife products Kenya has been doing a lot.

In late 2011, for example, several large shipments of ivory were seized at the port of Mombasa, including one shipment of 465 ivory tusks that were declared to Customs as soapstone.

Last year, President Uhuru Kenyatta signed the Proceeds of Crime and Anti-Money Laundering (Amendment) Act, clearly intended to close various loopholes.

What can be done to deter money laundering?

Putting measures in place that make the cost of moving, storing and spending criminal money unbearable is key.

For example, the costs can be increased by making it more difficult to prove identity, make transactions across borders more difficult to do, but moreover making the benefits of crime less attractive is vital.

So when high-profile cases make it clear that leaders face a real risk of being caught criminals are deterred. Similarly, when law enforcement agencies seize assets that have been bought after a crime, it means that when a leader gets out of prison he will not benefit.

Building up a better picture of how money laundering occurs and the financial networks behind poaching is key to prevention.

Banks, mobile phone companies, real estate companies – and others – can help by checking the identity of who they are dealing with, report suspicious transactions to authorities and work with the police to deter criminals.

Many East African countries have tightened legislation to tackle money laundering but more is needed.

Closer working between different government agencies, between those agencies and businesses and banking - as well as stronger cross-border information sharing – is critical.