- Senior management of banks are to implement board-approved money laundering/terror financing policies.
- Bank staff are to prepare periodic reports on money laundering and terrorism finance for their senior management and boards of the bank and also communicate these to the CBK.
- Financial institutions will be required to appoint a money laundering reporting officer who will be the point of contact for CBK.
- Banks should assess and rank TF and ML instances and actions in terms of high, moderate, and low risk.
- They should identify countries and regions that are high risk for business; high-risk includes countries subject to sanctions from the UN and other credible organizations, countries that don’t have appropriate banking safeguards and countries known to sponsor terrorism.
- Banks are to assess their customers for money laundering and terror financing risks; suspicious customer activities include frequent and unexplained movements of money to other accounts, or other institutions, and to far locations. They should also look at politically exposed persons who bank with them including prominent public figures, senior politicians, judicial officers, corporate CEO’s who dealing with them, or their families, may bring a reputational risk to the bank.
- Banks are to assess their service delivery channels for money laundering risks. They are to pay attention to cash-intensive businesses, including supermarkets, convenience stores, restaurants, retail stores, liquor stores, wholesale distributors, car dealers.
Last week, Kenya’s opposition movement, the National Super Alliance (NASA), who boycotted the repeat presidential election held on October 26, announced an “economic liberation programme” and called on their followers to boycott the products of three companies Bidco, Brookside, and Safaricom.
— NASA Coalition (@CoalitionNASAKe) November 3, 2017
What’s the link?
Brookside Dairies is associated with the family of President Uhuru Kenyatta. The company was started in 1993 and Brookside has grown to control about 44% of the processed milk market in the country, ahead of New KCC and Githunguri Dairies.
Brookside has acquired several dairy companies and still sells milk under their original brands including Tuzo, Molo Milk, Ilara and Delamere. While the NASA statement mentions that when Jubilee took over milk farmers were getting Kshs 35 per litre while consumers paid Kshs 72 per litre, and that today farmers still get Kshs 35 while consumers pay 120 per litre, the economics of milk prices is a complex one, not attributed to the processor alone. Brookside collects milk from over 160,000 farmers every day.
Safari com: MP’s from the NASA side have accused Safaricom, arguably Kenya’s most successful company, and some of its employees who they publicly named, of enabling incorrect election results to be transmitted during the August 8 elections, something which the company has denied and also expressed concern that their employees had been needlessly endangered as they did their jobs and the company merely fulfilled a contract to support the 2017 Kenya general election.
NASA MP’s have gone ahead to public switch from using Safaricom to rival Airtel, even as Safaricom dealers warned of dire effects for their employees and communities.
— NASA Coalition (@CoalitionNASAKe) November 6, 2017
Safaricom has 6 of its 45 shops in the Western/ Nyanza Region which is the bedrock of NASA support. Whether this is a turning point for Airtel in Kenya as a company which has branded as Kencel, Celtel, and Zain and which has steadily lost ground and value to Safaricom over the years, remains to be seen.
— Robert Nagila (@Rnagila) November 7, 2017
But members of parliament from ODM (the main party in NASA) have in the past voiced critical comments about some of their issues with Safaricom from even before the 2017 election – especially during debate on the gambling and sport betting bills in the last parliament, earlier this year.
Gumbo: Safaricom supports social media which is a forest of mediocrity #BungeLiveKE
— Mzalendo (@MzalendoWatch) February 9, 2017
Here are some comments by Nicholas Gumbo, the then-Member of Parliament for Rarieda and Chairman of the Public Accounts Committee in the National Assembly.
Gumbo: Safaricom makes billions doing what? It destroys tangible economic activity #BungeLiveKE
— Mzalendo (@MzalendoWatch) February 9, 2017
Then-Member of Parliament for Gem and Deputy Minority Leader, Jakoyo Midiwo threatened on more than one occasion to introduce legislation to break Safaricom.
Midiwo: The sports betting companies are controlled by Safaricom, which we must next break into three companies #BungeLiveKE
— Mzalendo (@MzalendoWatch) February 16, 2017
Bidco: The edible oils company is probably the most vulnerable of the three brands, and was likely targeted because its group chairman Vimal Shah, is the chairman of MKenya Daima an offshoot of the Kenya Private Sector Alliance (KEPSA), of which he’s a past Chairman, and which has throughout the election season been championing for respect of the election outcomes, grievances to be addressed in the constitutional ways (through the courts), for politicians to be careful about their public utterances and for normal business life to resume. KEPSA recently released a statement that read:
This is why we have consistently called Kenyans’ attention to the disastrous economic consequences of the present uncertainty which affects all Kenyans. The Private Sector having reviewed the loss and has estimated it to be about 10 per cent of the GDP equivalent to Kshs 700 Billion
Earlier this year, Bidco announced plans to become a billion dollar turnover (Kshs 103 billion) company by 2021 (their current turnover is Kshs 25 billion) by diversifying into the production of fruit juice, soft drinks, and cereal products.
EDIT May 1 2018
We had earlier said to boycott Bidco, Brookside, Safaricom, Haco and others. We now withdraw that directive. We forgive them and our people can now do business with them – @RailaOdinga Labour Day speech https://t.co/umZJg7ryLL
— Bankelele (@bankelele) May 1, 2018
Yesterday Saudi Arabia, the United Arab Emirates, and Egypt led a handful of other countries including Bahrain, Yemen in severing diplomatic relations with Qatar – and these have now extended to some Qatar Bank sanctions.
- The three Gulf states gave Qatari visitors and residents two weeks to leave their countries.
- Saudi also closed the border and halted air and sea traffic with Qatar, urging “all brotherly countries and companies to do the same”
- Bahrain’s withdrew its diplomatic mission from the Qatari capital, Doha, within 48 hours
- The UAE ordered Qatari citizens to leave the country within 14 days and banned its citizens from traveling to Qatar.
- Egypt also announced the closure of its airspace and seaports for all Qatari transportation “to protect its national security”.
- UAE-based carriers Emirates, Etihad Airways, and FlyDubai said they would suspend flights to and from Qatar beginning Tuesday morning.
During my recent trip to the Middle East I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar – look!
— Donald J. Trump (@realDonaldTrump) June 6, 2017
Qatar Airways which flies to over 150 destinations was barred from flying over UAE and Saudi Arabia. They have complied, which now leads to some interesting flight radar maps.
IMAGE: Qatar Airways today pic.twitter.com/BXFndeFyZW
— The Spectator Index (@spectatorindex) June 6, 2017
Continuing the onslaught which was apparently green-lit by US President Trump, financial sanctions were now announced today targeting Qatar banks and finance including:
- Banks in Saudi Arabia, UAE & Bahrain HAVE suspended transactions to banks in Qatar, citing instructions by central banks.
- Saudi Central Bank told banks not to trade in #Qatari Riyals in addition to foreign exchanges
- U.A.E. banks not providing leverage on Qatar bonds
- Qatari riyal under pressure as Saudi, UAE banks delayed Qatar deals.
- UAE and Bahraini central banks had asked banks they supervise to report their exposure to Qatari banks
- Some Sri Lankan banks stopped buying Qatari riyals, saying counterpart banks in Singapore had advised them not to accept the currency.
- Commercial banks say that they stopped accepting Qatar Riyal as they have no way of repatriating and clearing them
Older pre-sanction report
- Qatari banks have been borrowing abroad to fund their activities. Their foreign liabilities ballooned to 451 billion riyals ($124 billion) in March from 310 billion riyals at the end of 2015, central bank data shows.
- So any extended disruption to their ties with foreign banks could be awkward, though the government of the world’s biggest exporter has massive financial reserves which it could use to support them. Banks from the United Arab Emirates, Europe and elsewhere have been lending to Qatari institutions.
- Because of its financial reserves and as long as it can continue exporting liquefied natural gas, Qatar looks likely to avoid any crippling economic crisis. But credit rating agency Moody’s Investors Service said on Monday that if trade and capital flows were disrupted, the diplomatic dispute could eventually hurt the outlook for Qatar’s debt.
Yesterday, the Sentry Group, whose mission is dismantling the financing of Africa’s deadliest conflicts, released a report on corruption in South Sudan. As the fighting in South Sudan has gotten worse, with the leaders unable or unwilling to pursue peace, it’s been an open secret that they have economic links, some of which are in Nairobi, especially in real estate and banking.
Findings & Recommendations
- Even President Kiir and Vice President Machar themselves have acknowledged that corruption is at the core of the country’s current crisis. “An estimated $4 billion are unaccounted for or, simply put, stolen by former and current officials, as well as corrupt individuals with close ties to government officials,” President Kiir wrote in a June 2012 letter to government officials that was leaked to the press.
- Most of the funds that these kleptocrats have amassed appear to come from the oil, mining, foreign exchange, and banking sectors as well as food procurement and defense supply contracts from the government.
- South Sudanese leaders have paid lip service to the need for oversight, but public institutions have been transformed from entities that are supposed to safeguard the rule of law and provide social services into predatory entities that do quite the opposite.
- Top South Sudanese officials and their immediate family members hold stakes in numerous commercial ventures are not actually available to the public…Immediate family members of South Sudanese politically exposed persons – (a.k.a. PEPs) should be required to declare their assets.
- U.S. authorities, as well as their counterparts overseas—in places like Australia, the European Union, Kenya, and Uganda— should open investigations that could lead to the forfeiture of criminally derived assets and to the prosecution of those involved in profiting from corruption in South Sudan.
- Governments should thoroughly examine whether or not banks involved in these transactions fulfilled their due diligence, reporting, and compliance requirements.
- The facilitators and enablers of corruption and mass atrocities should be priority targets for sanctions designations. .. been facilitated—knowingly or not—by a wide range of lawyers, brokers, banks, and foreign companies.
- The U.S. government and U.N. Security Council have already sanctioned a series of mid-level commanders from both sides of the conflict in South Sudan. The failure to follow on these actions with any meaningful scrutiny of higher level targets muted any message these actions may have had, resulting in a perception in South Sudan that the international community is not serious about imposing consequences.
- Kenya and Uganda, in particular, have relatively solid anti-money laundering legal frameworks on paper that can provide a basis for action against corruption, as well as demonstrate that local laws are being violated by banks that process suspicious transactions on behalf of South Sudanese PEPs. These banks should already be conducting enhanced due diligence on South Sudanese PEPs, according to the FATF Recommendations, and taking other measures required to prevent suspicious transactions.
- Kenya Commercial Bank processed large payments from multinational companies operating in South Sudan into the accounts of two senior South Sudanese politically exposed persons over a period of several years.
- “Some of these ministers have bought apartments, have bought very beautiful houses, villas,” President Kiir continued. “They are hiding it in Kenya and they refuse to reveal it.” … A source within South Sudan’s government confirmed to The Sentry that the Kiir and Machar homes in Nairobi were close to one another in Lavington
- Violent takeover of KK Security”: One of Machar’s relatives became involved—albeit highly controversially—in KK Security, a Kenya-based company active throughout East and Central Africa.
For KCB, or any other Kenyan banks operating in South Sudan, they are really without blame. The report does not highlight if the transaction with the leaders were in Kenya or in South Sudan where they have 18 branches.
South Sudan is relatively small for Kenya banks, accounting for just 13% of assets outside Kenya (Tanzania is 39%, Uganda is 30%). In the absence of rules from the (regulator) Bank of Southern Sudan, (unlikely) or Kenya’s CBK, or the Kenya government, to freeze doing business with people who probably are in charge of other South Sudan government accounts at the bank, is asking too much.
A guest post by @Wiselar
Getting There: If flying from Nairobi, you have an option of either Kenya Airways (KQ) or Ethiopian Airlines. Kenya Airways operates both a late night (23:55) and a late morning (11:00) flight from Nairobi that costs about $600. For the Ethiopian flight, you will have to connect via Addis Ababa but it’s cheaper at about $450.
I went on the night flight from Nairobi’s JKIA. KQ operates an Embraer 175 on this route (though this changes a lot) and the flight time between Nairobi and Khartoum was about 2.5 hours.
On Arrival: On arrival in Khartoum (same time zone as Nairobi) at about 3 a.m., there was little activity at the airport other than our arriving flight.
Immigration forms are readily available and must be filled in duplicate. You must also watch out for the spacing on the form as they are arranged to cater for Arabic which goes from right to left. After filling the forms, processing at the immigration counters is pretty quick. This is followed by a security screening of carry-on luggage before being going to the baggage pickup area where with several baggage carousels around, luggage was ready for pickup on time. Airport officials require you to have your baggage tag and they counter-check against the one on your checked-in baggage, so keep it close.
|Khartoum Airport road|
Sudan requires all visitors of other nationalities to register as aliens on entry to the country and this costs $40. This should ideally be done before you leave the airport but you can also do it the next day if you don’t make it the first time. Most importantly, you will not be cleared to leave Sudan if you don’t register as an alien. This can cause inconvenience you if you didn’t know about it or and didn’t spare enough time especially on the day of departure, when it can be even more difficult or confusing as most officials only speak Arabic.
Getting Around: I had arranged a pickup with the hotel but a taxi from the airport to my hotel (about 14 kilometers away) would have cost about $10. There was no traffic at this time of the day so these charges may vary. I noticed there were more private vehicles than public means around Khartoum. Still, taxis are readily available and they are not too costly, but it’s always better to ask the hotel or a host to arrange the taxi for you and pre-negotiate the rates.
In Sudan, they drive on the right side of the world as does most of the Arab world. Also, it can get very hot, and people drive around with the air-conditioner on.
Rickshaws are also a very popular mode of transport in Sudan, and some owners do some extra ‘pimping’ work on them, such as shiny rims, to make them stand out.
Staying in Touch: If you’re a Safaricom customer like I am, roaming in Khartoum is via Airtel Sudan, Khartoum. Making calls and texting worked fine as expected but it was still expensive, and data charges while roaming are exorbitant so ensure you have your data turned off to avoid accidental connection. If you have to use your phone a lot, consider buying a local SIM. There are several local providers – Sudani, Airtel, MTN – but the biggest is Sudani. I didn’t get to purchase a local SIM but I’m sure this should be easy.
Out & About: Sudanese people are generally friendly. Being a Muslim country, the weekend is on Friday and Saturday with the first day of the work week being on Sunday. The locals are pretty easy going and not too concerned about security. This is unlike Nairobi where you always have to be on the look out. Since it is very hot outside, there are very few people walking the streets.
There’s also little or no police presence around town. This is unlike other African cities such as Abuja where there’s quite a heavy military and police presence
Arabic is the most widely spoken language in Khartoum. Hotel staff and officials from the meeting I went to were able to do basic communication in English. A lot of signage is in both Arabic and English so it is easy to get around. All the newspapers and other publications I came across were in Arabic.
Being an Arabic country, food is eaten communally, from a central serving with smaller side dishes to accompany. Bread and meats are common. Pork is not allowed due to religion, and mutton (goat and sheep) is the most common type of meat.
As with many other African countries, politics takes center stage in conversations and to sum it up, the Sudanese people don’t defend Al Bashir as much as Zimbabweans do Mugabe.
I had to change to the local currency of Sudanese Pounds (SDG) as most places outside hotels will not accept US Dollars. With a daily budget of $20 for meals and $40 for taxis per trip, you can make it around the city.
|Outside Khartoum’s Corinthia Hotel|
Where to Stay: I stayed at one of the better hotels in Khartoum – Corinthia Hotel. A similar classed one would Al Salaam Rotana. A standard room at the Corinthia went for $210 for bed and breakfast before taxes.
Shopping & Sight-Seeing: There aren’t too many shopping spots around Khartoum. I also didn’t get time to go into their famous Afra Mall. You can however get places to buy curios (usually sold by South Sudanese nationals) but with very little variety.
Places for visitors to see include the meeting point of the Blue and White Nile rivers, which is quite a sight. I was lucky to stay at a hotel that overlooked that view. My hosts mentioned there are tourist boat rides on the expansive Nile, and I would have loved to go on one if I had more time.
Odd Points: Due to sanctions, US products have little presence here. My hosts told me they have to purchase computer software via third-parties in places like Dar es Salaam and Dubai. They also prefer to use open source software because of these restrictions which is also the reason credit cards are not accepted in Sudan.
Also, a peculiar habit I noticed was a lady alighting from the lift when a group of men got in and having to wait for the next one.