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The East African : February 17th 2014
46 STATES MUST JOIN ANTI-MONEY LAUNDERING GROUP Money laundering a key threat to EA financial systems The ≥egion’s financial systems set to become mo≥e integ≥ated with the implementation of the Moneta≥y Union P≥otocol By DICTA ASIIMWE Special Correspondent T he East African Community is urging Burundi and Rwanda to become full members of an international anti-money laundering group to protect the financial systems of the partner states from being used to clean money made from criminal activities like drug trafficking, terrorism, poaching and human trafficking. With the EAC working to imple- ment the Monetary Union Protocol, it is expected that the financial systems of the five states will become more integrated and thus the need to induct all of them into the Eastern and Central African Anti-Money Laundering Group (ESAAMLG) — an institution that supports countries to implement legal and operational measures to combat money laundering. Currently Uganda, Tanzania and Kenya are the only EAC members in the group. They are also the only EAC countries that have agreed on direct interaction between their financial systems through the launch of the East African Cross-border Payment System (EAPS). The EAPS, which went live on November 25, 2013, reduces transaction costs as businesses are able to make on-the-spot payments that link real time gross settlement systems (RTGS) in the central banks of Kenya, Uganda and Tanzania. The system, which works the same way as the RTGS of each central bank but supports all three currencies, reduces the cash lost by senders during cross-border money transfers. By joining the anti-money laun- dering group, Burundi and Rwanda would implement measures that were established after the Organisation for Economic Co-operation and Development set up a financial action taskforce (FATF) to combat money laundering and curb the financing of terrorism. These measures, commonly known as the FATF 40 recommendations, require countries to make money laundering a crime and have laws that allow authorities to confiscate property and proceeds linked to money laundering. “The Council of Ministers de- cided that all EAC partner states should become members of the anti-money laundering group because implementation of the Common Market and Monetary Union exposes our financial systems,” said Leonand Onyonyi, a peace and security expert with the EAC. Rwanda was granted an ES- AAMLG observer status in August last year and now the EAC is determined that Burundi follows suit this year. However, this can only happen after internal issues such as lack of financing to subscribe to ESAAMLG, are resolved. Mr Onyonyi explained that the EAC is already exposed to money laundering since South American drug cartels have been trying to use the East African coast as a tran- The EastAfrican BUSINESS FEBRUARY 15-21,2014 Region’s innovato≥s win g≥ants By SCOLA KAMAU Special Correspondent TWO EAST AFRICAN businesses have won grants under the Impact Economy Innovations Fund that seeks to reward innovative entrepreneurs in Africa. The fund is sponsored by the Rockefeller Foundation and the Tony Elumelu Foundation. Kenya’s M:Lab and Tanzania’s Policy and Economic Research Council are among the seven African winners. Other winners were Senegal’s Investisseurs and Partenaires, Ethiopia’s Renew LLC, Nigeria’s Doreo Partners and Ghana’s GIMPA Centre for Impact Investing and SliceBiz. This year’s award attracted applicants from the finance; agriculture; policy and research; and information technology sectors. The Impact Economy Innova- Kenyan anti-narcotic officers inspect confiscated rolls of cannabis sativa (bhang). The region is susceptible to drug trafficking — a weakness cartels could take advantage of to launder drug money. Picture: FILE INCIDENTS Experts fear that if cartels find weak financial systems that are unable to arrest, prosecute and impound ill-gotten wealth from trafficking, the region will be used to clean this dirty money. The EAC is already exposed to money laundering since South American drug cartels have been trying to use the East African coast sit point for drugs destined for the European market. The Danish Navy impounded a boat full of cocaine at the coast of Tanzania less than a month ago. The Canadian and Australian Navy also impounded illicit drugs worth about $100 million dollars in Zanzibar early last year. Experts fear that if cartels find weak financial systems that are as a transit point for drugs destined for the European market. The Danish Navy impounded a boat full of cocaine at the coast of Tanzania less than a month ago. The Canadian and Australian Navy also impounded illicit drugs worth about $100 million dollars in Zanzibar early last year unable to arrest, prosecute and impound ill-gotten wealth from trafficking, the region will be used to clean this dirty money. “In some partner states you can change $2,000 without leaving a paper trail, after which this money can be invested in different sectors in the region,” said Mr Onyonyi. Chinese fi≥m to invest $500m to mine coal in Kenya By KENNEDY SENELWA Special Correspondent CHINESE MINING firm Fenxi plans to invest at least $500 million in exploitation and production of coal in Kenya, after obtaining approval from the government. The Chinese firm has formed a joint venture with locally owned Great Lakes Corporation to form Fenxi Mui Mining Corporation and estimates 2016 as the earliest date that mining of coal could start. The concession agreement for coal exploration area C and D in Mui Basin, eastern Kenya was signed on December 23, 2013 with the Ministry of Energy, Ministry of Mining, National Treasury and Kitui county government among others. “Whatever was agreed on does not impair on the integrity and commercial bankability of the concession,” said Fenxi Mui Mining Corporation’s director George Karithii. In 2010, substantial exploration of Block C found commercially viable coal deposits estimated at 400 million metric tonnes. The government slapped Fenxi with concession fees of $3 million and $500,000 for Blocks C and D respectively in order to get the award. The Ministry of Energy estimates that the two areas in Kitui county, about 180 kilometres away from Nairobi, have potential for 400 million metric tonnes of coal for power generation among other uses. Fenxi Mui has contracted Nairobi-based Nortken International Ltd to carry out a strategic environmental assessment (SEA) for areas In 2010, substantial exploration of Block C found commercially viable coal deposits estimated at 400 million metric tonnes C and D for approval by the National Environment Management Authority (NEMA). Dr Karithii said the SEA encompassing all components of the proposed project is expected to be prepared for approval by NEMA within six months prior to applying for an exploration licence from the Ministry of Mining. “Further exploration work will be done to quantify the amount of coal. Mining activities will start after obtaining the requisite government approvals preceded by other studies to determine money to be invested,” he said. Dr Karithii said the company, together with the government, is set to carry out a feasibility study of infrastructure facilities required to support mining operations, while land will be acquired from people residing in coal-rich areas. “The study for water pipelines, roads, power lines and rail connectivity is vital to facilitate the actual construction of work,” he said. tions Fund was launched in April 2013 and provides capital for entrepreneurs with projects that create employment in underserved sectors. “The winners were selected for their work in bridging the gap between African businesses and financing options,” said Wiebe Boer chief executive officer of the Tony Elumelu Foundation. SCT ≥ollout date pushed to June By A SPECIAL CORRESPONDENT KENYA, UGANDA and Rwanda have postponed the Single Customs Territory (SCT) roll-out, giving Burundi and Tanzania more time to prepare for the shift. East Africa Community Secre- tariat Customs officer Ally Alexander told a committee on communication, trade and investment that met in Mombasa, Kenya that the implementation of the model would begin in June. The SCT was initially planned to begin in January with the three countries moving their revenue staff to common entry and exit points to begin goods clearance. However, Tanzania and Burundi protested their exclusion from the arrangement, prompting the three partner states to go slow on their plans. Mr Alexander said a single re- gional bond for cargo would be issued to cater for goods from the port of Mombasa to different destinations. An electronic cargo tracking system would also be used to avoid diversion of goods into the transit market.
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