MONEY LAUNDERING IN KENYA: FDIC TRAINING A SUCCESS

UNCLAS NAIROBI 004422

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR S/CT NOVIS, INL/C/CP RINDLER, ISN/ECC HARTSHORN,
AF/E, AND AF/EPS HASTINGS
DEPT PASS TO FDIC

E.O. 12958: N/A
TAGS: EFIN PTER ECON KE
SUBJECT: MONEY LAUNDERING IN KENYA: FDIC TRAINING A SUCCESS
SENSITIVE BUT UNCLASSIFIED



1. (SBU) Summary: Kenyan participants in the FDIC's September bank
supervision regulatory training class praised the course highly and
said they would apply elements to Kenya's own draft anti-money
laundering (AML) bill. They suggested increased case studies,
practical visits to agencies, tips for trainers, and opportunities
for interaction among the students. EconOff advised them the next
INCSR/AML report would reflect the revelations of widespread,
massive money laundering from the Charterhouse scandal (septel),and
urged them to encourage their agencies to push the AML bill's
passage and renew their investigation of Charterhouse and Paramount
Banks. End Summary.


2. (SBU) After being nominated by the Embassy Nairobi Economic
section, five Kenya government officials participated on FDIC
Regulatory training on anti-money laundering training for trainers'
course held September 18-22, 2006 in Rosslyn, VA. The Kenyan
participants drawn from the interagency Anti-Money Laundering Task
Force (AMLTF) were: James Manyonge, Assistant Director, Legal
Services, Banking Supervision, Central Bank of Kenya (CBK); Samuel
Rono, Assistant Manager, Banking Supervision, CBK; Francis Okonya,
Assistant Commissioner of Police and Director, Banking Fraud
Investigations Unit, CBK; Samuel Keter, Parliamentary Counsel,
Attorney General's Office; and James Buyela, Assistant Commissioner,
investigations, Kenya Revenue Authority (KRA). FDIC funded all the
participants' costs.


3. (SBU) On October 3, Acting Econ Counselor and Econ Specialist met
with the participants to get their feedback on the course. The
participants were very positive about the course, and enjoyed the
experience. The course was well-taught, and they enjoyed meeting
students from other countries. They confirmed the course work was
relevant to their work and provided valuable inputs for revising
Kenya's draft anti-money laundering bill, which they expect will be
tabled in Parliament before the end of 2006. They noted that, in
the absence of AML legislation, KRA is the agency handling
AML-related cases as it evident that perpetrators of AML do not pay
taxes. They hope that FDIC will enable more of their colleagues to
attend the course to expand the knowledge base at their agencies.

Comments on the course by the participants:
--------------

4. (SBU) The participants made the following specific suggestions
for future iterations of the course:

- The course schedule was intense. It would be useful to have an
informal social event with the other participants get to know one
another, and a joint dinner during the course of the training.

- Spend more time on case studies, and use more references and case
studies from developing countries, especially on setting up
financial intelligence units.

- Include some American students in the class to provide their
perspectives and experience.

- To obtain more regional perspectives on AML/CTF, hold a roundtable
discussion or divide the class into subgroups with reps from each
region to discuss specific issues and then report to the entire
class.

- Provide practical experiences like a visit to the FIU, the stock
exchange, insurance or real estate professional associations, or
other avenues for money laundering. While this would require
extending the class length, it would greatly enhance the course
experience.

- Include information on asset recovery and actual operations of
FIUs.

- Include a session on tips for trainers to prepare them to train
their colleagues.

Use Your Knowledge
--------------

5. (SBU) Acting Econ Counselor thanked the participants for their
insights, but then expressed the concerns of the USG, other donor
countries, and the IFIs about the large-scale money-laundering
exposed by the Charterhouse and Paramount Bank scandals (septel).
He warned that the 2007 INCSR money laundering report would correct
the 2006 report's conclusion that Kenya's financial sector was not
being used for money laundering, and urged them to push their
agencies to address Charterhouse, Paramount and the other banks as
soon as possible. He noted that UNODC and the World Bank were ready

to provide technical assistance, and the USG could help set up an
FIU. The Kenyan officials were fairly confident the GOK would send
the AML bill to Parliament soon, and that Parliament would pass it
before the end of 2006. They believed focusing on the anti-crime,
anti-corruption aspects of the bill would make it difficult for
opponents to block it with allegations it targeted the Muslim
community, or was the result of USG pressure.

Comment
--------------

6. (SBU) Keter's statement that he had almost finished amending the
AML bill to harmonize it with existing laws, and would send it to
the Ministry of Finance soon for publishing matches statements from
senior KOK officials. He also confirmed the implementing
regulations are done. Once the bill is published, Post will work
with or through UNODC, the World Bank and other donors to support
passage.

Hoover