Alert over crypto use in money laundering
Sunday September 10 2023
An attendant assist a customer scan his phone's QR code using the biometric device used to register members to the new Worldcoin cryptocurrency at KICC in Nairobi, Kenya on August 1, 2023. PHOTO | WILFRED NYANGARESI | NMG
Kenyan authorities have raised the alarm over the growing use of digital currencies, warning of possible money laundering and terrorism financing risks from trading in cryptocurrencies.
Central Bank of Kenya (CBK) Governor Kamau Thugge said since the cryptocurrency space is rapidly changing, there is a need for cross-border regulations to protect citizens against risks.
Appearing before an ad hoc committee of the National Assembly inquiring into operations of Worldcoin in Kenya on Tuesday, Dr Thugge pointed to a lack of laws barring the trade in crypto as an avenue for the space to be used as a conduit for money laundering and terrorism financing.
Urging caution, the CBK boss said that due to the transnational reach of crypto assets, there is a need for supervisory cooperation to regulate the space.
He said unregulated crypto space could affect monetary policy and control, compromise cybersecurity of critical national infrastructure and enhance cybercrime fraud and scams.
Read: Crypto theft volumes reach all-time high
“In Kenya for example, we have not licensed any cryptocurrency. However, trading in the currency has not been made illegal because there is no regulation or legal framework in place,” said Dr Thugge.
Currently, he said, risk assessment on virtual assets and virtual assets service providers is ongoing spearheaded by the financial reporting centre.
The Worldcoin project, founded by OpenAI CEO Sam Altman, launched its operations in the country from as early as April 2022.
One of the key features of Worldcoin’s entry into Kenya is the launch of a peer-to-peer (P2P) exchange that allows individuals to quickly and easily access digital currencies and US dollars directly with one another, without the need for a centralised third party to facilitate the transactions.
Read: Kenya suspends Worldcoin data collection project
The cryptocurrency industry in Kenya has been steadily growing in recent years with an estimated four million active users in the country.
Nonetheless, Dr Thugge said no survey has been done to establish the extent of cryptocurrency use in Kenya.