General AML FAQs
Money Laundering is the processing of criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy financial profits without jeopardising their source. These sources might be illegal arms sales, smuggling, and the activities of organised crime such as drug trafficking and prostitution rings, which are each capable of generating huge amounts of money. The desire to benefit from these huge amounts of money is the real incentive to “legitimise” the ill-gotten gains through Money Laundering.
When a criminal activity generates profits, the individual or group involved must find a way to control the funds without drawing attention to how the activities that generate the money or the persons involved occur. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention – in short, Money Laundering!
Businesses that are regulated by the Money Laundering regulations are called ‘regulated businesses’. These include: estate agents, casinos, insolvency practitioners, tax advisers, accountants and auditors, certain legal professionals (dealing with finances or property), and high value dealers. It also includes banks, credit institutions, money lenders, foreign exchange bureaus and corporate finance advisers.
In Kenya, Safaricom is covered by the Proceeds of Crime and Anti-Money Laundering Act 2009 which applies to “financial institutions” whose definition in the Act includes “any entity which conducts as a business…… issuing and managing means of payment (such as….electronic money)”
For example, FATF, citing the International Monetary Fund (IMF), states that in 1996 the total value of Money Laundering in the world could have been somewhere between two and five percent of the world’s gross domestic product (gdp).
Using 1996 statistics, these percentages would indicate that money laundering ranged between US$590 billion and US$1.5 trillion. To put this into perspective, the smaller figure is roughly equivalent to the value of the total output of an economy the size of Turkey.
In Safaricom if we don’t prohibit the use of M-PESA for money laundering, it may lead to penalties for both the company and individual staff members; this in turn can lead to loss of jobs due to the financial implications that the cash penalties will have not to mention the bad publicity the company would have to deal with.