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DE RUEHNR #0875/01 0541004
ZNR UUUUU ZZH
P 231004Z FEB 07
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 7708
INFO RUEHXR/RWANDA COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC

UNCLAS NAIROBI 000875 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR AF/E, AF/RSA, 
DEPT FOR EB/ESC/TFS KATHERINE LEAHY AND LEANNE CANNON S/CT for Patty 
Hill, and S/CT Finance Galer and Novis 
JUSTICE FOR AFMLS, OIA, AND OPDAT 
TREASURY FOR FINCEN 
TREASURY FOR VIRGINIA BRANDON 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EFIN ETTC KTFN PREL PTER KCRM KE
SUBJECT: Kenya Terrorist Finance: Illicit Cash Couriers 
 
REF: State 016120 
 
SENSITIVE BUT UNCLASSIFIED  FOR USG USE ONLY. 
 
¶1. (SBU) Summary: Kenyan officials share USG concern over cash 
couriers and money laundering, partly because of cash smuggling over 
the Somali border.  Kenya's draft anti-money laundering (AML) bill 
contains provisions requiring declaration of monetary instruments 
over USD 5,000, criminalizes willful failure to declare, and 
authorizes officers to seize suspicious money temporarily.  Until 
the bill is passed and regulations implemented, Kenya Revenue 
Authority (KRA) Customs will be more diligent in requesting 
declarations and reporting more detailed information to the Central 
Bank of Kenya (CBK).  End summary. 
 
Current Cash Declaration Regime is Weak... 
------------------------------------------ 
¶2. (SBU) EconOffs transmitted the reftel demarche and background 
documents to the Government of Kenya's (GOK) inter-agency AML Task 
Force and then met on February 22 to discuss the issue with them. 
The Task Force shares USG concerns over cash couriers and money 
laundering, partly because of cash smuggling over the Somali border, 
but also because it is regarded as an important aspect of AML.  KRA 
officials confirmed the legal basis for the requirement to declare 
monetary instruments and cash over USD 5,000 in value is Legal 
Notice 118 of September 1998.  Based on the Central Bank of Kenya 
Act, the CBK previously instructed KRA Customs only to provide a 
monthly record of the volume of declared cash flows. The summaries 
of cross border cash declarations are sent to CBK to collate data 
for statistical purposes. .Cash declaration is not part of the exit 
or entry forms in Kenya, and oral requests by Customs officers about 
cash from travelers are inconsistent or rare, according a KRA 
representative on the Task Force who investigated current practices. 
 If a Customs officer discovers undeclared cash over $5,000, the 
officer simply requires the traveler to declare the cash.  There are 
no penalties and no follow up beyond recording the amount declared. 
 
...But Can Be Strengthened 
-------------------------- 
¶3. (SBU) KRA officials said they would take immediate steps to 
improve their procedures at Kenyan airports, followed later at 
border crossing points.  Customs Officers will ask travelers for 
declarations, and signs will be posted stating the declaration 
requirement.  Two books will be kept to record incoming and outgoing 
cash declarations separately.  The names of declaring travelers and 
whether they declared voluntarily will be noted for CBK and KRA's 
tax collection offices to follow up on.  However, addition of the 
cash declaration to the exit forms will have to wait, perhaps until 
after the AML bill is passed and implementing regulations completed. 
 
 
AML Bill Covers Cash Couriers 
----------------------------- 
¶4. (U) The draft AML bill, called the Proceeds of Crime and 
Anti-Money Laundering Bill of 2006, includes provisions to control 
carrying money across borders (see para 8 for the relevant text). 
Task Force officials stated that the implementing regulations will 
specify the procedures for declaration and seizing suspicious money 
from travelers.  Two of the three senior KRA officials on the Task 
Force stated they plan to attend an East and Southern Africa 
Anti-Money Laundering Group (ESAAMLAG) conference on cash couriers 
in Zambia the week of February 26.  They also requested U.S. Customs 
support for training KRA Customs Officers on implementing the 
provisions in the AML bill. 
 
DHS/CBP Program Can Assist 
-------------------------- 
¶5. (SBU) Nairobi CBP officer explained how CBP's World Customs 
Organization (WCO) Framework of Standards program is comprehensive. 
The training for KRA Customs envisioned over the next 2-4 years may 
not address cash smuggling directly, but the capacity building will 
strengthen KRA Customs' ability to implement the AML laws and 
regulations on cash couriers. 
 
When Will the Bill Become Law? 
----------------------------- 
¶6. (SBU) The Task Force officials were confident the GOK would 
resubmit the AML bill to Parliament when the session begins o/a 
March 20, and that the bill would be one of the GOK's top 
priorities.  They could not guarantee Parliament would pass the 
bill, especially in an election year.  The Task Force Chairman 
believes the Finance Committee supported the bill in general, but 
had concerns about unspecified provisions.  If the bill is approved 
by Parliament, President Kibaki would have to sign it to become law. 
 See septel for further discussion of the bill and advocacy plans. 
 
Comment 
------- 
 
¶7. (SBU) Task Force and KRA officials clearly understand the need 
for, and support actions to tighten, their border cash courier 
control regime.  The demarche appears to have drawn the attention of 
high-level KRA officials to the inadequacy of the current money 
declaration regime at the airports.  We hope Customs and CBK 
implement the offered steps without waiting for the AML bill to 
pass, but implementation will likely be uneven.  KRA knows the 
information gleaned from cash declarations could be useful in 
preventing tax evasion and money laundering and therefore has an 
incentive to follow through.  For its part, CBK needs better 
information on cash flows to manage the money supply and control 
inflation.  However, it will be difficult for them to ensure 
effective declaration enforcement and reporting by line officers. 
 
¶8. (U) Begin operative text on cash declarations from the draft 
Proceeds Of Crime and Anti-Money Laundering Bill of 2006: 
 
Chapter 2, Interpretation 
"monetary instruments" means- 
 
(a) coins and paper currency of Kenya or of a foreign country 
designated as legal tender and which is customarily used and 
accepted as a medium of exchange in the country of issue; 
 
(b) travellers' cheques, personal cheques, bank cheques, money 
orders, investment securities; or 
 
(c) any other negotiable instruments that are in bearer form, or 
other form through which title passes upon delivery; 
 
Chapter 12 
 
(1) A person intending to convey monetary instruments in excess of 
the amount prescribed in the Third Schedule to or from Kenya shall, 
before so doing, report the particulars concerning that conveyance 
to a person authorised by the regulations for that purpose. 
 
(2) A person authorised to receive a report made in subsection (1) 
shall, without delay, send a copy of the report to the Centre. 
 
(3) A person who wilfully fails to report the conveyance of monetary 
instruments into or out of Kenya, or materially misrepresents the 
amount of monetary instruments reported in accordance with the 
requirements of subsection (1) commits an offence. 
 
(4) Any monetary instrument used in a suspected violation of 
subsection (3), or which an authorised officer has reasonable 
grounds to suspect is tainted property, may be temporarily seized by 
an authorised officer for as long as is necessary to obtain a court 
order pursuant to section 65 or 79, but in any event, not later than 
five days. 
 
(5) An authorised officer making a temporary seizure under 
subsection (4) shall give the person from whom the monetary 
instruments are seized- 
 
(a)  a receipt specifying- 
 
(i)  the name, agency, rank of the seizing officer; 
(ii) contact information for that officer and agency; 
(iii) time, date and location of seizure; 
(iv) description (including serial numbers) of the value of and 
types of instruments seized; and 
 
(b) a formal notice of the authorised officer's intent to initiate 
forfeiture proceedings under this Act against the seized monetary 
instruments. 
 
(6) If the authorised officer fails to obtain an order pursuant to 
section 65 or 79 against the temporarily seized monetary instruments 
within five days from the date of seizure pursuant to subsection 
(4), then the monetary instruments shall be returned forthwith to 
the person from whom it was taken. 
 
THIRD SCHEDULE S. 12 
CONVEYANCE OF MONETARY INSTRUMENTS TO OR FROM KENYA 
 
A person who transports monetary instruments of US$ 5,000 or its 
equivalent in Kenya Shillings or any other currency into or out of 
Kenya shall declare, in a prescribed form, at the port of entry or 
exit. 
 
End Text 
 
RANNEBERGER