FATF Public Statement

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions*.

Iran

Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies** The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Bolivia
Cuba**
Ethiopia
Kenya
Myanmar
Sri Lanka
Syria
Turkey


* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.
**Cuba has not engaged with the FATF in the process.


Iran

The FATF remains concerned by Iran’s failure to meaningfully address the on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. The FATF remains particularly concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2011.

Cuba

Cuba has not committed to the AML/CFT international standards, nor has it constructively engaged with the FATF. The FATF has identified Cuba as having strategic AML/CFT deficiencies that pose a risk to the international financial system. The FATF urges Cuba to develop an AML/CFT regime in line with international standards, and is ready to work with the Cuban authorities to this end.

Bolivia

Despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Ethiopia

Despite Ethiopia’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Ethiopia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ethiopia should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework and procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Ethiopia to address its remaining deficiencies and continue the process of implementing its action plan.

Kenya

Despite Kenya’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Kenya should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Kenya to address its remaining deficiencies and continue the process of implementing its action plan, including by implementing the AML legislation and operationalising the new AML Advisory Board.

Myanmar

Myanmar has taken steps towards improving its AML/CFT regime, including by clarifying the scope of the ML offence. Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken steps towards improving its AML/CFT regime, including by improving the ML and TF offences. Despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by working on CFT legislation. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

Kenyan MPs pass money laundering law

The law on Proceeds of Crime and Anti-Money Laundering now awaits presidential assent after Parliament passed it with amendments on Thursday.

The Bill seeks to prevent earnings of crimes from entering into the Kenyan market. It also criminalizes all forms of money laundering, a process in which the origin of funds generated by illegal means such as drug trafficking, gun smuggling terrorism and corruption are concealed.

The chairman of the Parliamentary Committee on Administration of Justice and Legal Affairs Abdikadir Mohammed proposed changes to the Bill that include requiring police officers and other law enforcement agencies from carring out any searches without warrants or to falsify information.

Mr Abdikadir argued this measure would prevent police officers from harassing innocent people through the Financial Reporting Centre which is mandated with identification of proceeds of crimes and money laundering.

The Police Commissioner replaced the Law Society of Kenya on the Board which is established under the Bill.

Meanwhile, Parliament adjourned on Thursday for the Christmas recess but is expected to be recalled in early February to begin debate on the harmonised draft constitution.

Speaking earlier, Mr Abdikadir assured Kenyans that the parliamentary break would not delay the realisation of the new constitution within 12-month time frame.

“Assuming everything went like clockwork, the earliest we will require parliament is February 25 and Parliament will be there if that need comes… even earlier.”

He added: “I have heard that people feel Parliament is not interested in this process… they are even thinking of going on recess. Last time, we recalled Parliament in January although traditionally Parliament resumes in March so the PSC will work whether or not Parliament is in recess or not. The Parliamentary Committees don’t go on recess.”

The referendum on the new constitution will be held four months after the Abdikadir-led Parliamentary Select Committee on the Constitution tables the draft law for approval by Members of Parliament.

The timetable shows that the country may go into a referendum by June 2010.

Under the new roadmap, the negotiators envisaged that the review process would be completed within 12 months after the constitutional referendum law is initiated in Parliament.

Source: Capital News

KENYA: AML Bill Passes, But Does Govt Mean Business?

Kenya's Parliament finally passed the Proceeds of Crime and Anti-Money Laundering Bill in December. But while the passing of the bill is viewed as a highlight of the Tenth Parliament, many fear it may just be a gimmick by the government to appease international partners.

George Kegoro, the executive director of International Commission of Jurists - Kenya Chapter, says while the legislation is good, he doubts there is political will to completely stamp out money laundering in Kenya.

"The existence of the legislation is not sufficient to deter the vice neither are the stiff penalties that are recommended in the bill," he says. "There is need for genuine support from the government to enact this law. We need a good set of people to be put in place to interpret the legislation."

Kegoro, whose organisation undertakes advocacy and policy work aimed at strengthening the role of lawyers and judges in protecting human rights and the rule of law, argues that while the bill was government-sponsored, Kenya’s track-record on corruption is poor and he doubts the genuineness of the political class.

It is the fourth attempt since 2004 to pass a bill to prevent the concealment of large profits from drug trafficking and other organised crime, and even this time around it faced resistance from members of parliament who believed the bill was a sly back-door re-introduction of an Anti-Terrorism Bill which had been quashed.

When the bill was tabled in November, an assistant minister in defiance of his own government, strongly opposed the tenets of the Bill. The assistant minister for public service, Aden Sugow, opposed the Bill saying it was an attack on the Muslim community. He argued implementing the Bill would be bowing to the interests of external interests and said that Kenya currently has adequate laws in place to deter money laundering.

While supporting the bill, defence minister Yusuf Hajji warned of a general feeling among the Muslim community that the legislation was targeting them. The Bill went forward after assurances from Prime Minister Raila Odinga that the government had no such intentions.

Once signed by the president, the law will establish a Financial Reporting Centre to assist in the identification of the proceeds of crime. An Asset Recovery Agency will be charged with tracing and recovering ill-gotten assets.

According to Job Ogonda executive director of international corruption watchdogs Transparency International, this would mean millions of dollars stashed in off-shore accounts swindled from Kenya could be recovered.

But Ogonda doubts the passage of new legislation will improve Kenya’s standing as a corrupt state internationally.

"At the moment it is embarrassing to be a Kenyan. Nigeria is improving with regards to corruption because they have shown tangible commitment of doing something about graft. However, the same cannot be said for Kenya," he says.

"We have previously had good pieces of legislation which would have helped fight graft, however, nothing has been done. How many ministers or former ministers have ever gone to prison because of corruption?" Ogonda wonders.

Ogonda is referring to anti-corruption legislation such as the Public Procurement and the Public Officers Ethics Act which require all public office holders to declare their wealth and origin of the same: this older legislation has had no noticeable effect.

Kenya’s record internationally as a corrupt state has for many years been bad and in the bribery and corruption index released by Transparency International, the country has kept the company of states such as Nigeria, Russia and Zimbabwe. Currently, Kenya is position 147 out of 180 on the global index of corruption.

Indeed the passing of the anti-money laundering bill comes in the wake of the release of a U.S. State Department report saying 93 million dollars of earnings from drug trafficking are laundered in the country’s financial system annually.

Another equally damning report by a UK firm, Kroll Associates, hired by the Kenyan government to track wealth acquired corruptly, revealed an estimated $1.7 billion is currently stashed in off-shore accounts. While the results of this 2004 report have remained confidential, the document was leaked: no action has been taken against any of the prominent figures named in its 110 pages.

But all the right noises were made when the bill was moved in Parliament by deputy Prime Minister Uhuru Kenyatta, who said that in view of the magnitude of the problem to the economy, the debate should focus on the quality of the legislation to ensure it was stringent enough.

Seconding the bill, Raila said, "The country risks becoming a pariah state unless the legislation is passed. We have suffered from the effects of money laundering especially in the property sector whose value has been skyrocketing due to the money being brought from the acts of piracy off the coast of Somalia".

A boom in property prices in Nairobi is preventing a majority of Kenyans from buying real estate, and in some cases even pricing locals out of the rental market. Media reports are linking the boom with profits from Somali pirates who seized numerous vessels during 2009, extracting handsome fees from their owners before releasing ships and crew members. In certain Nairobi neighbourhoods, Somalis are willing and able to pay rent up front for periods of even up to two years.

Ogonda states that for many years, Kenya has been a hub of money laundering with illegally acquired cash from Europe, South Africa, South America, Democratic Republic of Congo, Sudan, Rwanda, Burundi, Uganda and Tanzania finding its way into local financial markets.

"Due to our porous borders and poor implementation of legislation, people have simply walked in with huge amounts of cash, hired a lawyer to front for them who in turn invest the cash, especially in property," Ogonda says.

He says despite moves to assure the independence of the new watchdog agencies' leadership, and fresh monitoring requirements for the banking system, the version of the bill which is now awaiting presidential assent does not demand greater accountability from lawyers whose lawyer-client privileges remain intact.

Kegoro notes that the prescribed penalties are fairly high - jail terms of two to five years, with fines of up to $65,000 for individuals, and corporate penalties set as high as $330,000 or the value of the property. But, he argues, it is not the severity of the penalty that will make people fear it. It is the certainty of being caught, hence the need for genuine political will to implement the law.

Ogonda is in agreement. "Application of the bill is what will be the determining factor. The structure of governance has to support the law and if it remains the same the legislation can exist and nothing will change."

By Susan Anyangu-Amu

Source: IPS

Concerns over inactive money laundering law

BY SIMON NDONG'A

Corruption watchdog Transparency International -Kenya (TI) now wants the Proceeds of Crime and Anti-money Laundering Act fully operationalised.

Executive Director Samuel Kimeu said on Friday that the law which was assented to in December 2009 was yet to come into effect, which has hampered efforts to fight money laundering.

Mr Kimeu stated that the government needs to establish the institutions and processes necessary to fight money laundering and related crimes.

"It is worrying that the government is dragging its feet in putting into effect a law that will boost the war against corruption, piracy, drug and human trafficking and other similar crimes," he said.

"The legislation provides for a financial reporting centre to assist Kenya in the identification of the proceeds of crime as well as asset recovery agency."

He further urged the Ministry of Finance to devise a coordinated action plan to facilitate the implementation of the law in a bid to protect the economy and recover stolen assets.

"We are aware that the Central Bank of Kenya (CBK) has tasked one of its departments to pursue some provisions of this legislation. However for Kenya to fully combat money laundering activities, the institutions and processes provided for under the Act must be established," he stated.

"The continued delay in the implementation of the law allows corrupt individuals, drug traffickers and other individuals to benefit from this illicit activity."

The Proceeds of Crime and Anti-Money Laundering Act 2009 seeks to create a comprehensive legislative framework to combat the offence of money laundering in Kenya and to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime among other things.

Before the enactment of the Act, money laundering legislation in Kenya was weak and fragmented.

The Act, which repeals the anti-money laundering provision in the Narcotics Act, applies to all persons whether individual or corporate, and to the proceeds from any criminal activity.

The Central Bank of Kenya Guideline however remains in force and banking and financial institutions will therefore be required to comply with both the Act and the CBK Guideline.

Money laundering under the Act is wide and includes entering into a transaction involving property which one knows or ought to reasonably have known is or forms part of the proceeds of crime regardless of whether such transaction is legally enforceable or not, and which has the effect of concealing or disguising the nature or ownership of the property.

It also involves assisting a person who has committed an offence to avoid prosecution or concealing any proceeds of crime.

The definition also covers acquisition, use or possession of property which at the time of acquisition, use or possession, one knows or ought to reasonably have known that it is or forms part of the proceeds of a crime committed by another person.

Other related offences include assisting someone to benefit from proceeds of crime, malicious reporting, making false or fraudulent statement or entry, and failing to report suspicion of proceeds of crime.

Offences under the Act attract penalties of up to a 14-year jail term and/or a maximum fine of Sh5 million in the case of an individual and Sh25 million for a body corporate or the value of the property involved in the offence, whichever is higher.

Other penalties include criminal forfeiture of the proceeds of crime, civil forfeiture of property including civil proceedings for recovery of property.

Source: Capital

Kenya losing war on corruption-report

Kenya is still losing the war on corruption.

This is according to a report released Thursday by the Africa Policy Institute.

Speaking during the launch of the corruption report the institute's president Dr. Peter Kagwanja said the Grand Coalition Government was not doing enough to fight graft as it had concentrated its efforts on other issues.

According to the report, the rate of corruption had risen in the period after last year's election compared to the same period after the 2002 general election that brought in the NARC government.

"Kenya has slipped into a democratic recession, unable to create strong legal and political institutions to stamp out corruption and promote a culture of accountability and probity", says Dr Kagwanja.

Research reveals that the anti-corruption system in the country is less vibrant than it was five years ago.

The institute's findings also indicate that the power sharing deal brokered after the 2007 general elections has not made it any easier for the government to fight against corruption.

"For all the euphoria around power sharing, the power arrangement signifies the failure of democratic consolidation, which has given impetus to a new wave of corruption", Dr Kagwanja says.

"In order to win the war against corruption, the country needs to recommit to the vision of a strong democracy and civic citizenship to and undertake far reaching political reforms, including constitutional reforms", he adds.

The report also recommends that the country needs to embark on building strong state institutions and citizen's lobbies.

"There is also need for coordination and strengthening of counter-corruption institutions and recommitment to international instruments on combating corruption including implementing the Africa Peer Review Mechanism Kenya report", the report says.

Source: KBC

Kenya: Banks urged to unite in money laundering fight

Commercial banks and institutions involved in fighting crime should work together to help the country detect and block money laundering activities, a regional security think-tank has said.

The Institute of Security Studies (ISS) said this institutional cooperation should be extended to Eastern Africa region through improvement and harmonisation of anti-money laundering laws.

It has also called on Kenya to domesticate the anti-money laundering provisions contained in the UN Convention on Organised Crime.

Kenya has come under increasing pressure to implement money laundering laws in the face of rising crime posed by the drug traffickers, international terrorists and illicit arms traders operating in the country.

Failure to have an anti-money laundering law in Kenya has been cited as a possible reason behind the country’s failure to attract foreign direct investments despite having a relatively well developed financial system. Laundered money breeds unfair competition as genuine business persons borrow capital on interest hoping to repay such funds using business proceeds, while persons using laundered money pay no interest on the capital.

Source: The Business Daily

Kenya: CBK calls for laws to combat money laundering

Central Bank Governor Prof.Njuguna Ndung'u has rooted for an anti-money laundering legal and regulatory regime if the country's vision of being a regional trade and financial services hub is to be realized.

Prof.Ndung'u noted that Kenya is vulnerable to money laundering practice given its cash based economies and pitched for the enactment of an enabling legal and regulatory framework to combat the vice.

Speaking at the 16th task force meeting of senior officials of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) at a Mombasa hotel, the governor said the proceeds of Crime and Anti-money Laundering Bill 2008 is currently under consideration by parliament.

Prof.Ndung'u deplored the country's porous borders and weak institutions as a set back in the fight against the scam adding that the region has demonstrated through ESAAMLG its commitment to fight money laundering and financing of terrorism.

He noted that in the absence of a comprehensive legislation, Kenyan banking sector should embrace the necessary policies and procedures to deter and detect money launders.

Serwalo Tumelo, PS Ministry of Finance and Development Planning, Botswana and chairman of the ESAAMLG task force of senior officials said the rapidly changing technologies and the introduction of new financial products remains a major challenge, which requires institutions and regulatory bodies to guard against abuse by criminals.

Tumelo said they would continue to initiate dialogue between the region's private and public sector to ensure that both sectors' policy makers work in tandem.

200 foreign delegates including finance ministers, permanent secretaries and senior government officials drawn from ESSAMLG member countries and representatives from the co-operating and supporting nations and organizations converge in Mombasa for the weeklong meeting.

On Friday Kenya's minister for finance will assume the presidency of the ESSAMLG council of ministers while his PS will chair the meetings of the task force of senior officials.

The main objective of ESSAMLG is to combat money laundering and combating the financing of terrorism.

Source: KBC