The East African Community is urging Burundi and Rwanda to become full members of an international anti-money laundering group to protect the financial systems of the partner states from being used to clean money made from criminal activities like drug trafficking, terrorism, poaching and human trafficking.

With the EAC working to implement the Monetary Union Protocol, it is expected that the financial systems of the five states will become more integrated and thus the need to induct all of them into the Eastern and Central African Anti-Money Laundering Group (ESAAMLG) — an institution that supports countries to implement legal and operational measures to combat money laundering.

Currently Uganda, Tanzania and Kenya are the only EAC members in the group. They are also the only EAC countries that have agreed on direct interaction between their financial systems through the launch of the East African Cross-border Payment System (EAPS). 

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The EAPS, which went live on November 25, 2013, reduces transaction costs as businesses are able to make on-the-spot payments that link real time gross settlement systems (RTGS) in the central banks of Kenya, Uganda and Tanzania.

The system, which works the same way as the RTGS of each central bank but supports all three currencies, reduces the cash lost by senders during cross-border money transfers. 

By joining the anti-money laundering group, Burundi and Rwanda would implement measures that were established after the Organisation for Economic Co-operation and Development set up a financial action taskforce (FATF) to combat money laundering and curb the financing of terrorism.

These measures, commonly known as the FATF 40 recommendations, require countries to make money laundering  a crime and have laws that allow authorities to confiscate property and proceeds linked to money laundering.

“The Council of Ministers decided that all EAC partner states should become members of the anti-money laundering group because implementation of the Common Market and Monetary Union exposes our financial systems,” said Leonand Onyonyi, a peace and security expert with the EAC.

Rwanda was granted an ESAAMLG observer status in August last year and now the EAC is determined that Burundi follows suit this year. However, this can only happen after internal issues such as lack of financing to subscribe to ESAAMLG, are resolved.

Mr Onyonyi explained that the EAC is already exposed to money laundering since South American drug cartels have been trying to use the East African coast as a transit point for drugs destined for the European market.

The Danish Navy impounded a boat full of cocaine at the coast of Tanzania less than a month ago. The Canadian and Australian Navy also impounded illicit drugs worth about $100 million dollars in Zanzibar early last year.

Experts fear that if cartels find weak financial systems that are unable to arrest, prosecute and impound ill-gotten wealth from trafficking, the region will be used to clean this dirty money.  

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“In some partner states you can change $2,000 without leaving a paper trail, after which this money can be invested in different sectors in the region,” said Mr Onyonyi.