Money laundering in the banking sector: a critical analysis of the enforcement procedures in Kenya

A Thesis submitted in partial fulfillment of the requirements of the Degree of Master of Laws, at Strathmore University ; Financial crimes in the banking sector have caused the downfall of several banks in Kenya. The success rate of prosecutions and the ability of regulators, as well as law enforcement to curtail financial crime has been under challenge. This is true despite various enacted comprehensive legislation and institutions at their disposal, to curtail financial crimes. This study focuses on money laundering in the banking sector. The objectives of the study are to establish the causes of money laundering in the Kenyan banking sector; the challenges hindering effective enforcement of money laundering laws and regulations in the banking sector; on one hand, and the other to suggest possible measures that would help deter the crime. The study applied qualitative research methods and examination of relevant case laws. The study was able to identify the enforcement measures against money laundering in the banking sector to include a series of correlative measures composed of both preventive and law enforcement procedures. The preventive measures are carried out by the banking institutions to inhibit the infiltration of illicit money into the system. These include; carrying out customer due diligence, reporting any transactions that appear to be suspicious to the FRC and keeping financial transaction records. Law enforcement agents, on the other hand, step in to complement these preventive procedures by using measures such as financial sanctions, investigating predicate offences, confiscating assets acquired through illicit proceeds, and prosecuting banks found to be culpable. The study identified some of the problems facing the enforcement measures against money laundering to include: voluntary and involuntary violations of the AML legislation by banks, corruption, discretionary powers of the different enforcement agents, lack of resources that would help in the investigation and prosecution of the ...