Kenya’s Killer Punch against Financial crimes
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| Dr. Njoroge: Governor Central Bank: He wrongfooted the "mattress bankers" |
The banknote is the highest store of value in Kenya and
very popular with those involved in financial crimes including fakers. The
current one will cease to be a legal tender in four months’ time, on October 1.
This is a killer punch because it tightens the noose for
“mattress bankers.” Many are, of course, involved in financial crimes. That is
why the money cannot be banked for fear it will be traced to them. The rules of
retiring the old note are stringent, geared to expose the owners of the money. This leaves the mattress bankers with only two
options: bring it out and answer questions, and perhaps, face the law or go
bust.
The option of facing
the law is not attractive given the stiff penalties already imposed on proven
graft cases. Read http://eaers.blogspot.com/2018/05/graft-under-siege-in-kenya.html. Many could opt to let the wealth go to waste,
after all, they never worked for it. Their money could soon be museum pieces!
The rules allow those who hold less than one million
shillings in one thousand shilling notes, to walk to the nearest bank and get
it replaced provided they provide proof
of ownership. Those holding between one
million and five Million shillings will
have to go to their banks where they hold accounts and are known and provide
the usual proof.
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Those holding between
one Million and five Million in one thousand shillings notes and do not have bank accounts will have to take it to
the Central bank for replacement.
That is a catch22 situation: The corrupt cannot just walk to
a bank and deposit large volumes without answering some nasty questions. The
thought of visiting the Central bank is definitely a nightmare. And the commercial banks, smarting from hefty
fines imposed on them by the Central Bank for handling money stolen from the
National Youth service, NYS, will be watching their backs.
The Kenya Bankers’ Association has warned that there will be
no escape for financial criminals who hold large volumes of illicit money in
their homes. And these are the targets of the new order in Kenya’s money world.
The association has warned that not even buying assets such as buildings, and
vehicles will clean the money. They are right!
Kenya has advanced in electronic
funds transfer system. Even supermarkets and other traders accept electronic
transfer using Mobile money transfers. Large financial transactions are
effected through electronic Cash transfers which are secure and reliable. This
means that hefty cash purchases of high-value assets will be red flagged
suspicious!
And given that some are suspected
to hold tens, if not hundreds of millions of illicit cash, that cannot be spend
overnight, the order must be a nightmare for them.
So what to do? Tough Choices! The financial criminals cannot
even use their relatives and friends to clean the money as they will have to
explain how they made the money to the banks. This leaves only one other
choice: using perennial litigants to try and stall the implementation of the
demonetization.
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Two of these litigants have already
filed suits seeking to stall the move. However, it remains to be seen whether
any Judge will be foolhardy to stall it. Already the judiciary is being viewed
as protectors of the corrupt and other criminals by issuing orders that amount
to an abuse of office. It has to be
extremely careful how they tackle this matter lest it turns out to be the
proverbial “last straw that broke Carmel’s back.”
The move to demonetize the 1000 bank note, is
apparently the final part of the strategy to make financial crime expensive in
Kenya. It comes hot on the heels of the move to nationalize physical assets of
graft suspects if they cannot account for it. Already, the anti-graft body has
recovered an estimated US$ 300 million of such assets. The Assets Recovery
authority, another institution whose mandate is to recover assets suspected to be
acquired with proceeds from crime has also recovered some assets and is in the
process of recovering others.
In effect, financial criminals will soon be
reduced to paupers: if they have not found a way of disposing of the money
stashed in their mattresses, it would soon turn into worthless paper. Also, Read
http://eaers.blogspot.com/2018/05/graft-in-kenya-are-40-days-of-thief-over.html
The other parts of the strategy to
make financial crime expensive includes creating a multi-agency investigating team,
which ensures that all skills are put together to investigate any suspected crime.
The entry of National Intelligence
Service into active investigations must worry a number of people and scare
others for these can out ghost anyone.
And the sleuths are playing a major role in the war against crime,
including financial crimes.
All security agencies in Kenya,
including the Police, the Directorate of Public Prosecutions, and the Ethics
and anti-Corruption authority are now managed by people who cut their teeth in
either military or civilian intelligence. The National Intelligence Service
itself is headed by a former Chief of military intelligence. The message is
clear here: There is no place to hide for criminals, not even for corrupt
judges!
A similar multi-agency structure,
created to fight the Somalia based terror group Al- Shabaab, has proven lethal
to the terrorists. The forces on the ground are under one command which has
eliminated bureaucracy in sharing intelligence and operations.
All it takes is a distress call
for other units to swing into action in support of Kenyan forces in Somalia.
Although it has not eliminated Al-Shabaab, the strategy has degraded the
militants and also reduced terror attacks on Kenyan soil.
The corrupt and other financial criminals face
a similar fate because, the multi-agency team, in this case, involves the Central
Bank.
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