The story at a glance

-The regulation to curb money laundering is as old as late 70s in most developed countries.
-Bank experts will on Thursday meet at Nairobi’s Norfolk hotel to share experiences on anti-money laundering technologies

-The International Monetary Fund puts the aggregate size of money laundering in the world between $725 billion (Sh56.5 trillion) and $1.8 trillion (Sh140.4 trillion).

-The fraud is effected by passing the proceedings secretly through legitimate business channels by means of bank deposits, investments, or transfers from one place (or person) to another.

Kenya now has a new law on anti-money laundering

-Under the new law, those found guilty of the offense of money laundering will serve a jail term not exceeding seven years, or a fine not exceeding Sh2.5 million, or both.

BY JAMES RATEMO IN NAIROBI

Kenyan banks have been urged to employ latest technology to fight money laundering.

Speaking ahead of an Anti-money laundering conference scheduled for Thursday in Nairobi, Infrasoft Technologies Limited Managing Director, Hanuman Tripathi said human labour alone cannot detect the many often-veiled suspicious transactions in banks.

According to a local daily newspaper in Kenya, The Standard, over 70 bank officials in Kenya will participate at the conference to discuss the latest anti-money laundering technologies to employ in curbing the vice as well as share experiences and expertise.

Money laundering is a process in which the origin of funds generated by illegal means such as drug trafficking, gun smuggling, terrorism and corruption is concealed.

“Adoption of global processes, rules, regulations and technology towards Prevention of Money Laundering will integrate Kenya with the global trade faster, will improve Kenya’s rating as a low risk country and will foster more attractive trade and investment opportunities for the country,” he said.

The conference is especially key as already Kenya has in place an elaborate law on Anti-Money Laundering.

In telephonic interview from India, Tripathi whose company has organized today’s conference in conjunction with AITEC Africa said anti-money laundering poses a big risk to banks and automation as opposed to manual monitoring is paramount.

“Manual work of this nature is bound to throw wrong results, which is a big risk to the banks as well as the country. Technology can now detect suspicious transaction and alert bank authorities who would take relevant action as per the law,” he said.

He said money laundering prevention requires analyzing large quantum of transaction data of financial institutions, as ongoing traffic, with varying patterns.

“Sometimes criminals deposit or withdraw small amounts of money at a time to avoid suspicion…with automation, suspicion alarm can be raised if such transactions are multiple or add up to enormous amount, which in normal circumstances can evade a human’s eye,” he argued.

“This requires process automation and our software solution uses complex algorithms and rules based intelligence to analyze the data and provide results of possible money laundering scenarios,” he explained.

“The Kenyan economy is fast integrating with the external world on global trade…most banks would now look for mechanism to implement money laundering prevention policy, procedure and technology for use as well as compliance,” said Tripathi.

He said InfrasoftTech has experience of providing Anti Money Laundering technology in 15 countries and the software has been tested for 27 global jurisdictions across Asia, Middle East, Africa, Europe and America.

“The purpose of this event is to educate the Kenyan Banks as to how technology will help banks on reducing their risk and help in regulatory reporting,” he said.

Tax evasion

“Money laundering proceeds are mostly used in white collar crimes like tax evasion but the bigger concern for nations is when money laundering is used for financing terrorism, drug trafficking or smuggling,” he said.

However following the infamous September 11, 2001 World Trade Centre terrorist attack in USA, PATRIOT Act was passed in October 2001, of which the provisions covered actions for money laundering preventions within the country as well as countries with which USA is doing business.

The Financial Action Task Force (FATF), a world body has been very active since then to form and update rules and regulations for prevention of money laundering in international trade including blacklisting nations who do not have sufficient Anti-Money Laundering regulations.

Kenya’s Anti-Money Laundering Act 2009 took effect on Monday, June 28, 2010 and is likely to completely shift how banks monitor their clients’ transactions.