The scale of Kenya’s illicit financial losses has brought a fresh spotlight on the professionals who help businesses and individuals set up companies, manage transactions and acquire property, with a new report warning that their expertise can also be used to hide illegal wealth.
Kenya is estimated to have lost Sh6 trillion ($47.5 billion) through illicit financial flows over a 10-year period, placing the country fifth among sub-Saharan African states for such losses between 2013 and 2022, according to a study by Global Financial Integrity.
The report, The Enablers Gap: Assessment of the Shadowy Craftsmen of Illicit Wealth — The Case of Kenya, Uganda and Ghana, focuses on people and firms that may provide the services needed to move illicit funds or disguise where wealth comes from.
Lawyers, accountants, real estate agents, bankers and trust and company service providers are identified as some of the key professionals who can either knowingly or unknowingly help create arrangements that make illegal money difficult to trace.
“Behind nearly every significant movement of illicit capital stands a professional enabler,” the report says.
The study describes these professionals as operating in a “grey zone” between legitimate business activity and financial crime.
Their services may involve setting up companies, transferring money, buying property, organising financial transactions or creating structures that make it difficult to establish who ultimately owns an asset.
The report says criminals exploit professional services to “purchase high-value assets like real estate, establish opaque corporate structures that conceal true beneficial ownership, and abuse professional confidentiality to shield transactions from regulatory scrutiny.”
The findings come against the backdrop of Kenya’s efforts to strengthen its system for detecting and preventing money laundering.
The country has established a wide range of laws and institutions aimed at tackling financial crime but remains under enhanced monitoring by the Financial Action Task Force.
Kenya was placed on the FATF grey list in February 2024, increasing attention on the country’s ability to enforce measures designed to prevent illicit money from entering and moving through its financial system.
The GFI report says Kenya’s continued presence on the list points to a gap between having regulations in place and ensuring that those rules are properly enforced.
In response, Kenya has amended the Proceeds of Crime and Anti-Money Laundering Act, the Companies Act and the Limited Liability Partnership Act.
The changes have included efforts to strengthen beneficial ownership requirements and subject professional sectors that have traditionally operated under confidentiality rules to greater anti-money laundering oversight.
The Law Society of Kenya has also been given the role of a self-regulatory body for anti-money laundering and counter-terrorism financing purposes.
The legal sector has received particular attention because of attorney-client privilege, which protects confidential discussions between lawyers and their clients.
According to the GFI report, Kenya’s 2021 National Risk Assessment identified lawyers as an enabling profession because the confidentiality attached to the lawyer-client relationship could be misused.
Lawyers are now required, where the law allows, to carry out customer due diligence, maintain proper records relating to clients and submit reports on suspicious transactions.
Accountants are similarly regarded as important players in efforts to prevent financial crime.
Their involvement in auditing accounts, offering tax advice and handling money on behalf of clients gives them a close view of financial activity and places them among the professionals expected to help detect suspicious dealings.
The report, however, points to weaknesses within the bodies responsible for overseeing these requirements.
Limited resources and inadequate technical capacity among regulatory agencies are identified as major barriers to effective enforcement.
The report therefore shifts attention beyond the people who generate or move illicit funds to the wider network of professional services that can help such wealth enter the formal economy.
For Kenya, the challenge is not only to maintain and expand its legal framework, but also to make sure regulators have the capacity to enforce the rules and prevent professional expertise from being used to disguise the ownership and movement of illicit wealth.