The Kenya Revenue Authority (KRA) has been faulted for failing to institute appropriate measures after former Treasury CS Henry Rotich announced an amnesty for people to repatriate money into the country.
According to the 2020 INCSR–Volume II: Money Laundering and Financial Crimes report presented before the US Congress on March 2, 2020, KRA failed to follow up on repatriated funds leading to the laundering of over Ksh800 billion.
The money is alleged to be untraceable despite the fact that it was repatriated back into the country as the super-wealthy individuals with questionable investments took advantage of the relaxation in the laws.
"The Kenya Revenue Authority (KRA) failed to institute a policy to confirm that supposedly repatriated funds actually were returned to Kenya.
"KRA has been unable to trace approximately $7.9 billion (803 billion KES) of repatriated money or to confirm the KRA-registered funds were not transferred back out of Kenya, raising concerns the amnesty window facilitated the laundering of illicit cash," the report reads.
KRA's woes began when the former Treasury CS Henry Rotich announced an amendment to the Tax Procedures Act in the Finance Act (2016), introducing an amnesty for Kenyans holding money in overseas bank accounts to reinvest in the country.
The amnesty, which was extended to 2018, called for Kenyans who had stashed their wealth abroad to repatriate it back to the country with no questions asked as to the source of wealth provided they returned it during the amnesty period.
Financial experts at the time pointed out that in as much as the state intended to have billions invested in the Kenyan economy, the amnesty was likely to encourage money laundering.
These warnings were confirmed by the US report which lay the blame squarely on the taxman failing to seal the loopholes that saw the colossal amounts allegedly get into the country and disappear without a trace.
The report announced that Kenya still remained vulnerable to money laundering, financial fraud, and terrorism financing due to its strategic position in the East African Community and revolutionary financial policies.
"It is the financial hub of East Africa and is at the forefront of mobile banking. Money laundering occurs in the formal and informal sectors, deriving from domestic and foreign criminal operations," the report reads.
The report further adds that financial institutions are still engaging in transactions connected to international narcotics trafficking, involving significant amounts of U.S. currency derived from illegal sales in the United States and Kenya.
