The Impact of Money Laundering and Illicit Financial Flows on Investment in Kenya

Financial crime, in particular money laundering and illicit financial flows are a thriving economy whose value is in the billions of dollars, with robust markets and demand across the world. This paper seeks to identify and assess the impact that money laundering and illicit financial flows have had on Kenya’s investment landscape. The paper was premised on findings from desk research of literature written concerning money laundering as an emerging from of transnational and financial crime, as well as from findings of studies conducted by government agencies and other institutions on the risk, prevalence and challenges around anti-money laundering in Kenya. The paper also examines Kenya’s legal framework on money laundering and its overall anti-money laundering strategies, and further draws on the researcher’s experience as a practitioner in the criminal justice system and expert on transnational organised crime and its occurrence in East Africa. The research sets out a contextual background which illustrates the measures taken to combat money laundering from the international level, to the national level through the different international instruments ratified and domestic laws enacted by Kenya. The paper additionally discusses at length the country’s current standing internationally with regard to efforts made to combat money laundering, the different ways in which money laundering and illicit financial flows manifest in Kenya’s economy, and the various factors that have served as enablers for money laundering and illicit financial flows, both within and outside of the legal framework. Key findings in this regard include the presence of a strong cash-based economy, the proliferation of mobile money transactions in Kenya, corruption and low political goodwill, advances in technology which are not matched by tandem advances in the legal framework, overall weaknesses in the investigative and prosecutorial roles that are unable to adequately address the occurrence of money laundering as well as poor coordination of efforts by regulatory agencies to combat money laundering. The study discusses the implications and impacts of money laundering on Kenya’s investment landscape in detail, and proposes various measures which if implemented, would go a long way in reducing the prevalence of money laundering and illicit financial flows and by extension, the far reaching impacts on investment, governance and the rule of law

Business · Financial system · Money Laundering · Political science · Private Equity and Venture Capital · Finance