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State entities, churches flagged  for enabling illicit financial flows 

State entities, churches flagged  for enabling illicit financial flows 
A person counts dollars. PHOTO/Print

Government agencies and churches are on the spot over their key roles in facilitating illicit financial flows (IFFs) by lending their expertise and credibility to criminals.

Financial crime risk management experts say Kenya will have to up its game in the efforts to combat IFFs if it is to realise economic prosperity for citizens. 

Currently, critical government ministries under the national government’s nose, although not directly, have been seen to be key enablers of IFFs thwarting economic prosperity, according to experts at Flywheel Advisory, a specialised consultancy firm offering expert services in Financial Crime Compliance. 

It describes IFFs as the act of moving unaccounted money through different channels to a single person or a group’s account across the board and may include activities such as money laundering, smuggling and tax evasion, among others. 

Government ministries such as the National Treasury, the Ministry of Agriculture, Mining and independent organisations such as churches, have been identified as some of the notable key enablers of the illegal movement of money or capital across borders. 

According to Grace Mburu, a Forensics and Anti-Financial Crimes Specialist at Flywheel Advisory, a proper regulatory framework that would otherwise help streamline operations to curb the vice is not being adequately enforced.  

“That is why in as much as stakeholders try to push for the same, the general public tends to miss out on the actual benefits,” she said during a recent IFF engagement with financial reporters. 

The engagement had been organised by Transparency International (TI), a non-profit organisation, in collaboration with Global Financial Integrity (GFI) and the European Union.

For instance, the National Treasury, according to the Institute of Public Finance (IPF) and observation by Business Hub, fails to timely update the realities of the country’s total liabilities and if it does, the documents are in poor formats and qualities that are not machine readable, hence requiring extra efforts and expertise that an ordinary Kenyan does not have. 

Development partners 

This makes it hard for the general public and development partners to get access to the critical information as the data, again a times, varies from that of the Central Bank of Kenya (CBK). 

As of June 5, public debt stood at Ksh11.364 trillion according to the CBK weekly bulletin, but according to the National Treasury Principal Secretary, Chris Kiptoo, who had appeared before the National Assembly Budget Committee towards the end of May, the debt as of April 30, 2025, stood at Ksh1.5 trillion. 

This discrepancy tends to raise eyebrows in regards to the true state of the public debt.

In line with this, economists and financial institutions in the country have been calling for the creation of the sinking fund, but the idea has always been shoved under the carpet in every financial cycle.

“This is a scheme used by the government to pay for debts that are non-existent. The sink fund would enhance accountability and transparency, but the government doesn’t want that,” Samuel Nyandemo, Senior lecturer, Department of Economics and Development Studies at the University of Nairobi, told the People Daily

His sentiments concurred with those of Mburu, who said, “The other day we saw a committee being put up to audit public debt. Why do we need a committee if the money was borrowed and channelled to specific projects? So it’s rogue…it’s a systemic rogue.”  

This has also been publicly seen where some previous finance ministers have been unable to explain how specific instruments such as the Eurobonds were spent during their tenure, a factor which again brings the issue of accountability and transparency.

Additionally, more investors, mostly in government, are now tapping the agricultural sector to back up their financial flows and status.  

Key speculation is that the participants have other opaque dealings where their finances flow from, but use the farming business to do the clean-up exercise, as depositing a significant amount of money would raise the alarm. The mining industry also serves as a big enabler for the IFFs due to the opaque nature of the actual owners and true beneficiaries of the land mines. 

For instance, stakeholders over X (formerly Twitter) are currently enquiring about the actual owner of a company that has bought a parcel of land in Lamu that is allegedly in a conservatory.

The company that, according to the stakeholders, is seeking to mine base titanium is allegedly linked to a top politician in the sector. 

Additionally, the communities where the mines are located, according to journalists from the region, still face slow infrastructure growth, workers at the mines lacking proper gear and insurance, yet the extracts are traded at high values at the export markets.

This could be one of the IFFs as the issue of trade mis-invoicing- misreporting the actual value, in a bid to receive or issue higher payments than the actual amount of the minerals. 

Financial institutions 

Religious places are also gaining momentum in the scheme, as it is easy to back up the huge deposits in financial institutions such as banks.

In Kenya, churches, for instance, have been receiving generous donations from top political figures for certain quoted projects despite other critical sectors of the economy, such as education and health in marginalised areas facing severe financial challenges. 

“For religious places such as churches, it’s an easy target, because when questioned by the banks, they will always cite the sources of the huge deposits to be fundraising, and the banks won’t have to come and confirm because they mostly deal with documents,” Mburu explained. 

Other enablers include car yards and car washes in residential areas, real estate investments and businesses in high-end setups but lacking customer flow.

These opaque processes cut across different fields across the country, hence the current greylisting by the Financial Action Task Force (FATF), a global organisation that sets international standards for combating money laundering and terrorist financing.  

“We account to be deficient, we don’t have proper controls in our money laundering and terrorist financing frameworks, and so we were put on the grey list, but more importantly, that is why we landed there. We don’t have a proper understanding of the risks…” Mburu explained. 

Mburi, however, noted that the country is currently implementing the Proceeds of Crime and Anti-Money Laundering Act to help tame the situation while trying to get delisted from the grey list. 

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