Kenyan money launderers: Watch out!

Tuesday July 03 2018

Kenyan currency notes. The Kenya banking industry is on the spot a a conduit of illicitly acquired monies. FILE PHOTO | NMG


The government and rebel leaders in South Sudan who are destroying their country through human rights crimes such as village burning, mass rape, child soldier recruitment, and obstruction of humanitarian aid are the same people who have looted the world’s newest country of billions of dollars of natural resource wealth.

The Kenyan real estate and banking sectors are critically important getaway cars for this South Sudanese looting machine.

As a result, the Kenyan government and private sector have a unique power over the warring parties and should apply pressure on culpable senior officials of the South Sudan government and rebel groups as well as their commercial collaborators by investigating and freezing their illicitly-obtained financial resources, and ultimately blocking them from the Kenyan financial system.

Much has been publicly reported by our organisation, The Sentry, and others about the ways in which Kenyan commercial interests have facilitated the exodus of the spoils of corruption and laundered the stolen assets of South Sudanese leaders, their family members, and their business partners.

This month, The Sentry published an alert on the need for action to be taken against the properties we highlighted in our September 2016 report, War Crimes Shouldn't Pay.

We have repeatedly shown how Kenya represents a key entry point into the international financial system for these elites and, along with Uganda, remains a preferred destination for them to stash their assets.


The integrity of the Kenyan banking system continues to be under threat from its ongoing exploitation by those who facilitate illicit financial flows from South Sudan.

Left unchecked, this exploitation will increasingly imperil Kenya’s economic growth and access to the international financial system, as corrupt South Sudanese leaders look across the border to stash ill-gotten assets in bank accounts and real estate, including in Nairobi, which threatens to become a hub for illicit financial flows into the real estate sector.

If Kenya is seen by the international financial community as the regional destination for the proceeds of corruption from South Sudan, it risks serious damage to its image as a safe place for multinational banks and other companies to do business.

As shown by the June 12 US Treasury Department Advisory warning banks about the connection between corrupt senior foreign political figures and their enabling of human rights abuses globally, regulators are increasingly concerned about the use of the US and international financial systems to move or hide illicit proceeds or evade US and multilateral sanctions.

This follows on the heels of another advisory issued to banks by Treasury last September about the possibility that certain South Sudanese senior political figures may try to use the US financial system to move or hide proceeds of public corruption.

The message to international financial institutions and the government of Kenya is clear, and not just because the US government and civil society groups continue to raise the alarm.

Business is business, and Kenya must do everything possible to ensure that it is well-positioned to protect the health of its financial industry and demonstrate to multinational banks and businesses that the country won’t tolerate money laundering by South Sudanese elites.

Combating this perception by launching investigations, bolstering anti-money laundering compliance efforts, and freezing or seizing assets is critical to safeguarding Kenya’s reputation as a safe and well-regulated financial system for companies around the world who are right now deciding whether or not they invest or transact in new markets like Kenya.

Derisking, when global banks decide to exit relationships and close accounts because of a decision that some business clients are simply too risky to maintain, combined with reputational damage, has severe consequences for the economic growth and financial prosperity of countries that are seen to be lax in complying with international standards for anti-money laundering and financial transparency.

Kenya has a fundamental choice to make. Now is the time to fix it and to act to change the trends, not only in Kenya’s banking sector but in the effort to bring peace to South Sudan.

The US is ramping up its use of the policy tools of financial pressure, including the particularly effective combination of network sanctions, which target not just an individual but their support systems of frontmen, enablers, and businesses, and anti-money laundering measures, such as those that warn the financial community of the risks posed by certain kinds of transactions or that require US correspondent banks to terminate their relationships with foreign financial institutions of concern.

This month, Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker, the top US official in charge of sanctions and anti-money laundering, made the first ever visit to sub-Saharan Africa by someone in her position.

Her meetings with banks, government officials, civil society and the media raise the stakes for the kleptocrats and their commercial collaborators in South Sudan and throughout East and Central Africa who don’t believe that the United States will follow through on its long history of threatened consequences.

By releasing its Advisory targeting corrupt political leaders enabling human rights abuses during Mandelker’s trip to Nairobi and Kampala, the Treasury Department indicated that the legacy of empty threats is about to change in a very meaningful way.

A day of reckoning is coming not just for those responsible for mass atrocities and mass corruption, but also for those outside the war zones who facilitate and profit from these crimes.

John Prendergast is founding director of the Enough Project and Co-Founder of The Sentry; Joshua White is director of policy and analysis at The Sentry.