Money laundering a key threat to EA financial systems
Kenyan anti-narcotic officers inspect confiscated rolls of cannabis
sativa (bhang). The region is susceptible to drug trafficking — a
weakness cartels could take advantage of to launder drug money.
Photo/FILE
By DICTA ASIIMWE Special Correspondent
Posted Saturday, February 15 2014 at 12:08
In Summary
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.
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.
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).
ALSO READ: Uganda finally passes anti-money laundering Bill in sync
with partners
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.
ALSO READ: Kenya FRC to fight money laundering
"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.
http://www.theeastafrican.co.ke/business/Money-laundering-a-key-threat-to-EA-financial-systems/-/2560/2207672/-/omvupg/-/index.html
--
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