Money Laundering in Africa: What

You Need To Know

June 7, 2018 by Jens Ischebeck
The fintech market of money transfers is rapidely growing, but what’s about the
issue of money laundering? Especially money laundering dangers in the African
countries?

This article shall illustrate the money laundering setting in Africa.

Basic overview: Just click and jump to your chapter!

Money Transfers
Money Laundering
Organisations To Combat Money Laundering In Africa
Sending Money Online
Money Transfer Regulations And Limits
Nigeria
Ethiopia
Ghana
Ivory Coast (Côte D'Ivoire)
Kenya
What You Need To Know

Money Transfers
Money transfers can occur in several ways and for many different reasons. Below
is a list of the most common ways of transferring money.
1) An Electronic Funds Transfer (EFT) is the most common type of money
transfer. It involves a transfer from one bank to another, with the use of a
payment card and a payment system, such as shopping in a store and paying
with a debit card. While a convenient form of money transfer, it requires both
parties to be in the same location or to use the same website for online
shopping, and it does not allow transfers to individuals that do not have a
payment system.

2) A Wire Transfer is the standard system used by banks. It is usually an

international payment made from one bank to another. Most companies use wire
transfers for payments to other foreign companies. It is an easy way to make a
payment, but the banks usually charge large fees and do not always provide the
best exchange rates for different currencies.

3) Money Orders have in the past been a very common way for people to send
cash to each other. The payment is usually in the form of a check or money gram,
both of which are cashed in at a designated location. The fees are reasonable, but
they require both parties to visit a branch of the same company, which is not
always possible in some areas.

4) Remittances are transfers of money by foreign workers to people in their

home country. These types of payments are becoming a huge economic force in
many countries that have people working in other areas of the world. Increased
globalization will only see a further increase in this type of transfer. Some
governments and banks have even adopted new systems to make sure these
payments can be processed with minimal hassle for both parties.

5) Online Money Transfers are the newest form of money transfers, and also the
largest area for growth. The convenience of money transfer apps makes sending
money from one country to another, not only easy but also cost-effective. The
apps allow funds to be transferred between bank accounts, through debit or
credit cards, or even through mobile wallets, making it possible to send money
both quickly and easily with added data protection.
There are a couple of online money transfer providers available, such as (but not
limited to) WorldRemit, Azimo, Xoom, TransferWise, CurrencyFair or Payoneer.

In today's global age, sending money to other countries is a regular occurrence.

Only a few decades ago, it was impossible to send or receive money without
going to a financial institution or money wiring service.

Not only is it inconvenient for most people, it can be dangerous in countries with
high crime rates. A criminal can easily know where people will pick up cash, and
how they can steal it from them.

In today's age of internet and technology, sending money to other parts of the
world only requires an internet connection and a smartphone or computer. It is
not only safer, it is also more secure and convenient for both parties involved.

There are many reasons that people need to send money around the world.
Whether it is a worker sending money home to family, or someone sending
money for a holiday, or a person sending money to a company for work they
performed. There are numerous reasons.

Because money transfers are so common, they can also be used by criminals to
launder money, which is why there are so many regulations on who can send
money where, and how much can be sent.

Money Laundering Is The Act Of Trying To Hide The True, And

Criminal, Origins Of The Money, Usually Cash!
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Money Laundering
Money Laundering is the act of trying to hide the true, and criminal, origins of
the money, usually cash. This could be from drug dealing, illegal weapons
dealing, insider trading, computer fraud, human trafficking, poaching, or any
other illicit forms of trade that are illegal. Criminals will try to use legitimate
business to hide the original origin of the money. Hence the term 'laundering' as
they are trying to 'clean' the real source of the money. This type of money is also
commonly used to fund terrorism.
Money laundering takes place in multiple steps. The first step, usually called
'placement', is when the criminals deposit their illegal funds into the financial
system. This can be in the form of cash deposits or purchasing of monetary items,
such as cheques or money orders.

Once the money is in the system, the criminals will then try to hide the true
origins of the funds, through the process called 'layering'. This is often done
through money transfers sometimes disguised as payments for services or other
such 'typical' transfers. After the money is 'cleaned' the criminals can then
withdraw the money as if it was legally obtained from the beginning, this final
step is called 'integration'. The money is then a part of the legitimate financial
system.

Money laundering takes place throughout the world but as José Pedro de Morais
the Governor of the Banco Nacional de Angola says in his article The Fight
Against Money Laundering – An African Perspective, 'Illegal transactions or
financial discrepancies can take place anywhere in the world. There is, however, a
lower risk of detection in African countries because our compliance programmes
are often not as robust as they should be and in some cases simply ineffective.'
Informal economies in Africa, along with the abundance of valuable resources,
such as precious stones and oil add to the criminals' ability to hide the illegal
origins of their money.
Viewing the steps involved in money laundering, it is easy to see that regulations
must be put in place to make sure money transfers are legal and of legitimate
means. There are several different organisations that help combat money
laundering throughout the world including the global organisation called the
Financial Action Task Force.

Recommended Article To Read: Best Money Transfer App for Africa!

Organisations to combat money laundering in
Africa
There are three regional bodies within Africa that are working to combat money
laundering. They are the Eastern and Southern Africa Anti-Money Laundering
Group (ESAAMLG), the Middle East and North Africa Financial Action Task Force
(MENAFATF), and the Inter Governmental Action Group against Money
Laundering in West Africa (GIABA). All of which work to adopt and enforce the
guidelines set out by the FATF.

 Eastern and Southern Africa Anti-Money Laundering Group

 Middle East and North Africa Financial Action Task Force
 Inter Governmental Action Group against Money Laundering in West Africa

In 1989 the Financial Action Task Force (FATF) was formed at the G-7 summit
in Paris. According to their website, the 'objectives of the FATF are to set
standards and promote effective implementation of legal, regulatory and
operational measures for combating money laundering, terrorist financing and
other related threats to the integrity of the international financial system.' The
Financial Action Task Force is a 'policy-making body', which means they are in
charge of making recommendations on how best to fight criminal financial
transactions.

The Financial Action Task Force currently has 37 different countries as members
from around the globe. They are the leading AML/CFT organisation in the world
and have been developing ways and means of combatting criminal finances since
their formation.

The FATF Guidance on Anti-Money Laundering and Terrorist Financing Measures

and Financial Inclusion set forth the groups recommendations. As stated on their
website, the 'Guidance paper focuses on ensuring that AML/CFT [Anti-Money
Laundering/Counter-Financing of Terrorism] controls do not inhibit access to well
regulated financial services for financially excluded and underserved groups,
including low income, rural sector and undocumented groups.' The FATF sees the
importance of balancing fighting crime, with allowing law-abiding citizens to
conduct financial transactions with minimal difficulty.
The FATF recommendations were created to help countries combat money
laundering within a framework that can be altered to suit the individual country.
There are six main steps that are identified by the recommendations as essential
to combating money laundering. The first is to identify risks and in turn to create
policies and domestic cooperation. Second, to pursue money laundering,
financing of terrorism, and financial fraud. The third is to then apply preventive
measures for the safety of the economy and financial infrastructure. The fourth is
to establish authorities that can investigate, enforce and supervise the safety
measures. The fifth is to ensure transparency and availability of information. The
sixth and final step is to 'facilitate international cooperation'.

The main FATF recommendation that affects individuals trying to send or receive
money is called 'customer due diligence and record-keeping' (CDD) which is
implemented by the financial institutions of countries in which crime is present in
order to limit money laundering possibilities. It prohibits anonymous or fictitious
names for accounts along with requiring detailed record-keeping for all
transactions. Banks are recommended to use CDD for several situations when a
business relationship is first established when a transfer is over USD/EUR 15,000
with added specifics for wire transfers, when there is suspicion of money
laundering, or when previous information is brought into question.

The CDD recommendation means that banks must keep detailed records, along
with requiring identification from their customers to verify their identity and the
source of their funds. The specifics for wire transfers are in place to make sure all
transactions can be traced. The threshold for transfers under the
recommendation is USD/EUR 1,000. The person sending money must supply their
name, account number along with a verified address. The person receiving the
money must provide their name and account number.
These guidelines are in place to stop money laundering and the criminal activity
which produces the proceeds of crime. Controlling money laundering is essential
to controlling crime and terrorism, and in turn, helping to make the world a safer
place, and for maintaining the stability of the financial system. Because money
laundering is an issue, regulations have been set up to prevent criminals and
terrorists from hiding their money and as a result, normal business must be
conducted within these guidelines.

While these guidelines will not stop someone from sending money where they
need, it can add complications and delays, so it is best to be aware of them
before running into issues that can be avoided. Often it is the case that it is easy
to send money to Africa while being more complicated to send it out from Africa.
The ease is due to the country of origin rather than the destination country.

Sending Money Online

While there are guidelines from FATF and the regional bodies, not all counties
economies are the same and therefore, do not have the same sort of restrictions.
Counties with well-established banks and regulated economies are easier to send
money out of because there is less likelihood that the money being sent is illegal.
Smaller, less developed countries may have stricter regulations because it is
harder to determine where the money originated from.
For example, a foreign worker living in the EU sending money to Africa has a
variety of choices of sending money, like sending money on mobile phones. The
wages they are sending were probably processed through a local bank, so the
origin is not in question. But a worker in Africa may have a limited number of
choices when it comes to sending money, especially if they are paid in cash. The
person sending money out of Africa will need to consider the regulations in the
country that they are sending money out of.
Money Transfer Regulations And Limits
Money Transfer Regulations in Nigeria
Nigeria is one country that has very strict regulations on money transfers. They
only allow bank to bank transfers into the country, but the funds are available
right away. They also allow mobile airtime top-ups.
When it comes to sending money out of Nigeria, it is only possible to do so
through a bank or through either Money Gram International or Western Union.
The country has strict regulations due to criminal activity and the Central Bank of
Nigeria has only authorised the two major companies to offer transfer services
outside of the banking system.

WorldRemit Xoom Azimo C

Bank Transfer Bank Transfer Bank Transfer n

Cash Pickup Cash Pickup

Airtime Top Up Airtime Top Up

Money Transfer Regulations in South Africa

South Africa also has strict regulations. When sending money into the country,
instant cash is available, but only through banks. For larger amounts, bank
transfers are available, but they can take up to three days to process and may
require the recipient to complete a Reporting Mandate form before receiving
funds.
South Africa is the only African country that is a member of the FATF, which
means they adhere to strict regulations to prevent money laundering and other
criminal activity such as tax evasion. While this may make transferring money a
bit more time consuming, it should not stop legitimate transfers from happing.

WorldRemit Xoom Azimo C

Bank Transfer Bank Transfer Bank Transfer B

Cash Pickup Cash Pickup

 WorldRemit Xoom Azimo C

Airtime Top Up Airtime Top Up

Money Transfer Regulations in Ethiopia

Ethiopia also has limited money transfer options. It is nearly impossible to get
money out of the country. Funds going into the country must go through a bank,
whether they are bank transfers or cash and can take up to two days.
They do have a system for remittance payments into the country that is meant to
ease the flow of money into the country from expatriates and foreign workers,
but they are regulated by the banks.

WorldRemit Xoom Azimo C

Bank Transfer Bank Transfer SWIFT Transfer

Cash Pickup Cash Pickup

Airtime Top Up

Mobile Money

Money Transfer Regulations in Ghana

Ghana only allows money to be sent from banks within the country. When
sending money to Ghana, there are a few options. There is the usual instant cash
pick up which is handled by banks, and bank transfers that can take one to two
days. They also have mobile money available for MTN Ghana and Airtel Ghana
users.
There are no fees for transferring money through the mobile wallets, but there
are limits of about USD 400 per day and USD 1000 over thirty days. There are
fees associated with withdrawals from the mobile wallet that customers should
also consider.

WorldRemit Xoom Azimo Cu

Bank Transfer Bank Transfer Ba

Cash Pickup Cash Pickup Cash Pickup

Airtime Top Up Airtime Top Up

Mobile Money Mobile Money

Money Transfer Regulations in Ivory Coast (Côte d'Ivoire)

Ivory Coast also has mobile money available for incoming transfers through
MTN. They do set an account balance limit that cannot be exceeded. This means
a transfer will be rejected if it would put the account above the USD 2,500 limit.
They also have cash transfers available as most other countries do. Bank transfers
usually take a day and are available at all banks in the country.

WorldRemit Xoom Azimo C

Bank Transfer Bank Transfer B

Cash Pickup Cash Pickup Cash Pickup

Airtime Top Up Airtime Top Up

Mobile Money

Money Transfer Regulations in Kenya

Kenya has cash transfers and bank transfers for incoming money. Any outgoing
transfers must be handled by banks. They also have mobile money available
through M-Pesa. The limits are USD 5,000 for any thirty days and USD 700 per
transaction with only 20 transactions per month allowed.
Again there is an account balance limit for the mobile wallet. For Kenya the limit
is USD 1,000, they also have a similar limit on how much a person can send in a
single day.

WorldRemit Xoom Azimo C

Bank Transfer Bank Transfer SWIFT Transfer

Cash Pickup Cash Pickup Cash Pickup

Airtime Top Up Airtime Top Up

Mobile Money Mobile Money

You can easily learn more about each money transfer provider on my extensive
descriptions:

 WorldRemit
 Xoom
 Azimo
 CurrencyFair
 TransferWise

What You Need To Know

So how do online money transfers work? Similar to EFT, there is a transfer of
funds between two parties. Online money transfers are the modern day
equivalent to the old fashion money wiring. Unlike its predecessor, transferring
money online is almost instant and much more secure than before. There is no
chance of any physical mix up as all the information is electronic. This also means
that the information for both parties is secure.
The process starts with both parties registering their banking information into
their chosen money transferring app or website. This information is not provided
to those sending you money or to those receiving it, it is used by the system to
verify your identity. The only information that is exchanged once the transfer has
been made is the encrypted date required to make the transfer. So if the data
was lost, no information would be lost or compromised in the process.

Online transfers are available to anyone that has a bank account. Mobile money
transfers are available to anyone that has both a bank account and a mobile
phone. Of course, an internet connection is also needed. The most convenient
aspect of these types of transfers is the ability to complete them whenever and
wherever you need, instead of having to visit a local bank or wiring service.

As with any kind of financial transaction, it is important to be aware of any fees or

exchange rate information that may apply to the transaction. Using a website
like apps-for-money-transfer.com can help you choose the right app for your online
money transfer.
It can also help you learn about what fees you may need to pay and the security
measures that are put in place to keep your information secure. The convenience
of online money transfers is sure to see the continued growth of the industry and
in turn growth of apps and websites that are available for use by consumers.

For further information, check our detailed descriptions of the money transfer
service providers:

WorldRemit, Azimo, Xoom, CurrencyFair, TransferWise or Payoneer

There appears to be an elaborate plan to launder money in countries

like Kenya and Uganda, but US officials have gotten a whiff of these
scams and have issued ultimatums to these nations’ leading financial
bodies to either clean up their act or face dire consequences
CHARLES WACHIRA
Kenya Commercial Bank (KCB), East Africa’s biggest lender by asset base and most
profitable has been linked to money laundering on behalf of corrupt government
officials in South Sudan, including senior military leaders sanctioned by the United
Nations in the wake of the civil war which erupted in December 2013.

Also thought to be culpable includes the local Stanbic Bank which is member of the
Standard Bank Group, based in Johannesburg, South Africa.

Predictably the two lenders have to date denied involvement in the fishy business.

On its part KCB ‘s Group CEO, Joshua Oigara said the lender being a regulated entity
deployed global standards and had no proclivity to engage in money laundering in all
the countries of its operations including Burundi, Kenya, Rwanda Tanzania , Uganda
and South Sudan.

“KCB South Sudan continues to work closely with the Government of South Sudan and
the Bank of South Sudan with regards to resolutions on UN Security Council Sanction
List 2206,”Oigara said in a press release.

According to data from the Central Bank of Kenya (CBK), the monetary authority of
Kenya, East Africa’s biggest economy, nine local banks had subsidiaries within the East
Africa Community (EAC), which draws in six countries including, Burundi, Kenya,
Rwanda, South Sudan, the United Republic of Tanzania, and the Republic of Uganda,
with its headquarters in Arusha, Tanzania.

According to the US-based Sentry organization, a two-year investigation into the

corruption in South Sudan, money movement and assets locations, found KCB has taken
part in abetting money laundering on behalf of the elite in South Sudan.
 Among the senior army generals in
South Sudan who the report named as culpable was General Gabriel Jok Riak, who was
called out for transferring hundreds of thousands of US dollars to his personal bank
account in the Kenyan bank yet his monthly salary was less than $3,000 dollars, or only
about $35,000 a year.

General Riak, commander of Sector One, which includes Divisions 3, 4, and 5, of the
South Sudan’s army, the Sudan People’s Liberation Army (SPLA), has been under the
United Nations sanctions for his brutality during the civil war. His known assets have
been frozen and he is banned from travelling to foreign countries.

“Specifically, Gen. Jok Riak had command authority over a full-scale 2015 offensive
across three states in violation of multiple ceasefires and resulting in the displacement
of over 100,000 people and the commission of grave war crimes,” said The Sentry
report, titled ‘War Crimes Shouldn’t Pay.’

“Bank records reviewed by The Sentry indicate that Gen. Jok Riak received large
financial transfers totaling at least $367,000 to his personal bank account at Kenya
Commercial Bank (KCB) from February to December 2014 alone—sums that dwarf his
official annual salary of about $35,000,” The Sentry report revealed.

Also indicted include General Reuben Riak Rengu, who the report revealed was directly
involved in procuring weapons and planning military offensives but also is involved in a
wide range of commercial ventures and had received substantial payments from
multinational firms from at least three countries that operate in South Sudan through
KCB.
“Although Gen. Reuben Riak’s official annual salary is about $32,000, information
obtained by The Sentry suggests that he is living well beyond what such a salary would
support and appears to have received hundreds of thousands of dollars in payments
from numerous multinational companies active in South Sudan,” the report revealed.

General Reuben has illegally transferred to his personal bank account at the Kenya
Commercial Bank millions of US dollars, despite having a salary of less than $3,000
dollars a month.

“Documents reviewed by The Sentry show $3.03 million moving through Gen. Reuben
Riak’s personal bank account—a US-dollar denominated account at Kenya Commercial
Bank (KCB)—between January 2012 and early 2016,” the report further revealed.

The transactions recorded, it said, include more than $700,000 in cash deposits and
large payments from several international construction companies operating in South
Sudan.

Additionally, the report showed that over this four-year period, $1.16 million US dollars
in cash was withdrawn from his KCB account.

The report further revealed documented proofs that General Reuben and many of his
children have. According to the report, international banks are looking to mitigate the
risk stemming from South Sudan’s banking sector in order to avoid regulatory fines and
reputational harm.

“Larger banks operating in East Africa have a network of correspondent relationships

and help connect smaller South Sudanese banks with the global financial system.
Because of these ties to the regional correspondent banking network, South Sudanese
banks hold nested accounts in Kenya and Uganda.” says Sentry. shares in companies
operating in South Sudan.

Late this June, Ms. Sigal Mandelker, the US Treasury’s under-secretary for terrorism
and financial intelligence while on a tour of East Africa publicly stated that some South
Sudanese who are under UN sanctions had continued to invest illicit money in Kenya’s
real estate market.

“I want to be very clear, those who profit from human rights violations and corruption,
preying on the poor and innocent and mothers and children, must heed our warning,”
Mandelker said at a press conference here in Nairobi.

“We will impose consequences, we will cut off your access to the US financial system and
we will work with our partners in this region and elsewhere to do the same,” she added,
repeating a warning she had delivered earlier in the week in neighbouring Uganda.

The political and military elite in South Sudan have been accused of corruption in hard-
hitting reports by the US foundation The Sentry, co-founded by actor George Clooney.
Also thought to be involved in money laundering using Kenyan lenders include
President Salva Kiir and his vice president Riek Machar. Both are said to have
profiteered from the civil war, acquiring waste of the art homes in Kenya and
neighbouring Uganda.

Mandelker said she met with top officials in Kenya’s government and the banking sector
to urge them to watch out for money laundering from South Sudan.

She asked them to ban South Sudanese who have been on a US black list since 2015 and
to freeze their bank accounts and seize their properties.

“Corrupt money is not wanted here,” she said.

“Those who profit on of the backs of individuals who are devastated by human rights
abuses will no longer have access to the international financial system because we will
block that access, kick them out and we will work together to eliminate such despicable
profiteering.”

The Treasury under-secretary urged officials in Nairobi and Kampala to close loopholes
that allow transfer of illicit funds from South Sudan.

“We hope Under Secretary Mandelker’s engagement with Kenyan authorities and banks
will spark official inquiries into real estate purchased by South Sudanese officials
potentially to hide unexplained wealth obtained in the context of war,” John
Prendergast, co-founder of The Sentry, said after the visit of the US Government
mandarin.

“Investigating, and if appropriate, seizing these homes would provide tremendous

leverage for the peace process, and would be a critical step toward accountability for the
systematic looting and mass atrocities committed since the country’s independence in
2011,” he said.

Kenya and Uganda do have the legal tools needed to investigate the suspect real-estate
transactions and, if warranted, to seize those properties, The Sentry said.

The group notes that information it had provided led Australian authorities to initiate
the seizure earlier this year of a Melbourne home owned by former South Sudanese Gen
James Hoth Mai.

The Sentry has urged the Kenyan government to “follow Australia’s model to investigate
unexplained wealth.”

“With support from NGOs, domestic banks and U.S law enforcement, Kenya — East
Africa’s banking capital and home to a large South Sudanese Diaspora — is well-placed
to take the lead in pursuing potentially corrupt assets,” The Sentry adds.
Early this Oct Mr. John- Alan Namu, CEO and Editorial Director of Africa Uncensored,
an independent media house based in Kenya that specializes in unraveling nefarious
acts that happen within the East Africa region had an expose on the money laundering
business banned from running on one of Kenya’s top TV stations underlining the
influence and perceived power local lenders and the elite South Sudanese have within
the East Africa region.

“It is possible that money launderers have identified Kenya as a ‘safe haven’ to store ill-
gotten wealth as the country boasts a robust economy with political stability. Hence,
country dynamics (macro-economic and business environment) play an important role.
Further, given Kenyan banks operate in the region, efficient movement of funds both to
and from the domestic market is achieved,” said Patrick Mumu, an analyst at Genghis
Capital, a local investment bank.