Nairobi’s glamorous real estate sector has turned out to be a haven for money launderers across the continent, an investigative report by The Sentry indicates.
The Sentry is an investigative team comprising investigative journalists and anti-corruption civil society groups following trails of ill-gotten financial flows across the continent.
According to the report titled “Looted Funds Used to Buy African Real Estate”, most of the developers in this sector are African war criminals and war profiteers as well.
In its reports, The Sentry indicates that “African kleptocrats, especially those in war-torn countries, have increasingly favored real estate in African cities as a means for laundering the proceeds of corruption, despite the greater headlines that result from “kleptocracy tours” in the United Kingdom and Europe.”
Among the soft investment spots in the real estate sector is Nairobi as well as other African cities registering tremendous growth.
The preference to launder money through Kenya’s real estate sector added the report, is due to existing loopholes in the regulations governing the sector thereby creating an opportunity to the launderers.
“Banks, governments, and regional and international organizations have not prioritized these activities in cities like Nairobi, Kampala, Windhoek, Cape Town, and Johannesburg, creating an opportunity for corrupt actors to exploit the sector. Kleptocrats may choose these destinations because of their comparative political, economic, or monetary stability,” part of the reports reads.
An evaluation of Kenya’s real estate sector by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) held that failure by real estate agents to report suspicious transactions as prescribed by an enforcement law passed in 2011 has abetted these corrupt deals.
“However, authorities have done little to address this significant risk in the country. Kenya, Namibia, and South Africa have seen similarly uneven responses. Persistent loopholes and gaps in anti-money laundering standards involving real estate provide illicit actors with various options for laundering money through real estate,” the report adds.
A call to action was made to respective governments, law enforcement, regulators and financial institutions to address “systemic issues that contribute to illicit financial flows through real estate.”
Following the report, Financial Reporting Centre (FRC) Director-General Saitoti Maika in an interview with the Star said that it is true the real estate sector is a hotbed of money laundering.
Saika noted that the lack of a regulator in this sector has seen huge chunks of money transacted in funding various projects in this sector.
“What we have is a licensing board and not a regulator. The sector is not well regulated,” he noted.
