Kenya: New report finds there is a high risk of money laundering in the betting industry
A new report has found that there is a high risk of money laundering and terrorist financing activity in the betting industry because owners of these firms are predominantly foreign-based, with locals playing a minority role.
The Star Kenya reported that the Money Laundering and Terrorism Financing National Risk Assessment Report (NRA) had assessed the risk to the sports betting sector as medium to high.
The report also said The regulator also assessed real estate, money remittance providers, Saccos, legal professionals and second-hand motor vehicle dealers’ sectors as posing a high risk to the country’s national Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing vulnerability.
Findings from the report showed that the banking industry was assessed as the sector with the highest impact on the national money laundering vulnerability, largely due to the important role played by commercial banks in the economy.
The report also found the legal sector was highly vulnerable to money laundering abuse mainly due to the role played by lawyers concerning their client’s transactions.
Another interesting insight from the report pointed out that the motor vehicle dealers’ industry, especially the second-hand dealership, is highly vulnerable to ML/TF abuse in the country.
However, the NRA report recommended that Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) requirements should be applied to lawyers and motor vehicle dealers.
“This is attributed not only to the threats facing these sectors in general but also to the fact that these sectors have relatively weaker frameworks on ML/TF/PF (Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing) oversight,” the report stated.
According to the report, NRA assessed the most common methods of laundering money in Kenya to entail opening ‘suspicious’ bank accounts and making periodic cash deposits which do not correspond to the suspect’s known sources of income.
The report gathered that in a number of related incidences, there are no withdrawals from the bank accounts despite receiving huge sums of money, which obviates a presumption of innocence.
The report concluded that fraud and forgery, corruption, drug trafficking, environmental crimes and tax evasion are the country’s predominant predicate money laundering offences.
It added that money launders avoid detection by depositing funds below the reporting threshold to evade the attention of the authorities and guidelines placed by regulators, which require that an account holder declares the source of such money.
Using the standardised World Bank tool and methodology, the National Risk Assessment on Money Laundering and Terrorism Financing (ML/TF) exercise (NRA) was conducted between 2020 -2021.
The latest report will assist the country in identifying the gaps and deficiencies in Kenya’s legal, regulatory and institutional framework for Anti-Money Laundering, Combating the Financing of Terrorism and Combating Proliferation Financing (AML/CFT/CPF).
