Posted Saturday, November 27 2010 at 22:07

http://www.nation.co.ke/News/Envoy%20blames%20scandal%20on%20absence%20of%20anti%20money%20laundering%20law/-/1056/1061628/-/npqfdiz/-/

A report by the US envoy has revealed the dilemma the government faces in dealing with money laundering accusations against Charterhouse Bank.

According to the five-page document, attached to Mr Michael Rannerberger’s letter to anti-corruption agency Kacc, it has been impossible for the government to deal with the accusations since there was no anti-money laundering law in Kenya when the bank was closed in 2006.

The Proceeds of Crime and Anti-Money Laundering Act of 2009 only came into force on June 8 this year.

Yet, its enforcement will not be applied to past accusations on the crime, including those against Charterhouse Bank, according to the report that was part of a secret dossier handed to Kacc boss Prof Patrick Lumumba.

The anti-money laundering law called for the creation of a financial reporting centre to “assist in the identification of the proceeds of crime and the combating of money laundering”.

“However the centre exists only normally and is not yet operational,” said the brief. Additionally, the document said, the anti-money laundering advisory committee and the assets recovery fund that were meant to be set up under the Act, they were yet to be set up.

“Though all these institutions are required for the proper implementation of the Proceeds of Crime and Anti-Money Laundering Act, none have been stood up,” the document said.

Even when the institutions are established, the “legislation will not allow the centre to address past issues retroactively, including Charterhouse Bank”.

The document said the bank will, under the current law, reopen if the Court of Appeal, orders it to. “At present, there is no legislation or legal framework that would prevent this judgement.”

It quotes a former Kacc boss who told the Parliamentary Committee on Finance, Planning and Trade in 2006 that evidence of money laundering could not be acted upon because the vice was not an offence in Kenya.

“Money laundering is not a crime in Kenya and cannot be pursued internationally as it is a requirement that the complaining country should have a law in place,” the former Kacc director is quoted to have said.