In my short introductory remarks, I’m going to try to quickly answer six important questions:
1. WHY DOES SOUTH SUDAN MATTER TO KENYA?
- The government and rebel leaders in South Sudan who are destroying their country through atrocity crimes such as village burning, mass rape, child soldier recruitment, and obstruction of humanitarian aid are the same people who have looted the world’s newest country of billions of dollars of natural resource wealth. The Kenyan real estate and banking sectors are critically important getaway cars for this South Sudanese looting machine.
- Kenyan commercial interests have facilitated the exodus of the spoils of corruption, and laundered the stolen assets of South Sudanese leaders, their family members, and their business partners. Kenya represents a key entry point into the international financial system for these elites and, along with Uganda, remains a preferred destination for them to stash their assets.
- Kenya has also been connected to South Sudan through the thousands of South Sudanese refugees it has hosted, as well as being a leader in the peace processes involving South Sudan for decades, both before and after its independence.
2. WHAT RISKS DOES SOUTH SUDAN POSE TO KENYA?
- The integrity of the Kenyan banking system continues to be under threat from its ongoing exploitation by those who facilitate illicit financial flows from South Sudan. This exploitation will increasingly imperil Kenya’s economic growth and access to the international financial system, as corrupt South Sudanese leaders look across the border to stash ill-gotten assets in bank accounts and real estate, including right here in Nairobi.
- If Kenya is seen by the international financial community as the regional destination for the proceeds of corruption from South Sudan, it risks serious damage to its image as a safe place for multinational banks and other companies to do business. As shown by the U.S. Treasury’s Advisory yesterday warning banks about the connection between corrupt senior foreign political figures and their enabling of human rights abuses, regulators are increasingly concerned about the use of the U.S. and international financial systems to move or hide illicit proceeds or evade U.S. and multilateral sanctions. We should do everything possible to ensure that Kenya is well-positioned to protect the health of its financial industry and demonstrate to multinational banks and businesses that Kenya won’t tolerate money laundering by South Sudanese elites. Combating this perception through taking action is critical to safeguarding Kenya’s reputation as a safe and well-regulated financial system for companies around the world who are right now deciding whether or not they invest or transact in new markets like Kenya.
- A recent study by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), the top anti-money laundering watchdog in the region, showed that the negative trend has already started. In the study, Kenya falls near the top of the list in every category of “de-risking,” where global banks decide that some business relationships are just too risky to maintain.
- This is not a problem just faced by Kenya, and the impact of de-risking can be seen elsewhere in the world. De-risking, combined with reputational damage to a country’s industry, has severe consequences for the economic growth and financial prosperity of countries that are seen to be lax in complying with international standards for anti-money laundering and financial transparency.
- Furthermore, the IGAD regional mediators trying to resolve the South Sudan conflict currently lack the leverage necessary to stop violent kleptocrats from using their forces to burn, imprison, silence, torture, starve, impoverish, kill, and rape to maintain or gain power. South Sudanese peace talks are stuck in part because President Kiir and his allies do not want to let go of their exclusive grip on the crudely-constructed looting machine masquerading as a government. The primary point of leverage is going after the stolen assets of South Sudanese leaders and their collaborators, finally creating a long-threatened consequence for being peace spoilers and state looters.
3. WHAT IS THE CHOICE FACING KENYA?
- Kenya has a fundamental choice to make. Does it want to realize the economic goals for prosperity outlined in its Vision 2030 plan, the long-term development blueprint for the country and one which will make Nairobi the banking capital of East Africa? Or do the government and banks here want to put the positive trajectory of the economy at risk by tolerating the illicit financial flows of South Sudan’s corrupt elite that will ultimately drive away investors and international banks?
- Now is the time to fix it and to act to change the trend. Kenya can’t afford for the international business community to wonder whether it has become the next illicit financial hub, exploited by people like President Kiir and his commercial enablers.
4. WHAT ACTIONS CAN KENYA TAKE?
- It’s vital that Kenyan banks and their regulators lead the way in implementing strict standards for anti-money laundering, anti-corruption, and sanctions enforcement to protect the country’s financial system from abuse by the violent kleptocrats and corrupt elite in South Sudan who pump their ill-gotten gains into Kenyan bank accounts and real estate holdings.
- The U.S. is ramping up its use of the policy tools of financial pressure, including the particularly effective combination of network sanctions, which target not just an individual but their support systems of frontmen, enablers, and businesses, and anti-money laundering measures, such as those that warn the financial community of the risks posed by certain kinds of transactions or that require U.S. correspondent banks to terminate their relationships with foreign financial institutions of concern.
5. WHY WOULD A KENYA-U.S. PARTNERSHIP BE TIMELY?
- Kenya needs to protect its financial sector from being penetrated by illicit financial flows, and the international community should support its efforts to do so. Today we’re talking about a war criminal’s money, but tomorrow it could be terrorists. The U.S. and Kenya can work closely together on this shared agenda to ensure that South Sudan’s war criminals, state looters, and sanctioned officials must look elsewhere in order to hide their ill-gotten gains.
6. WHY IS TODAY’S VISIT IMPORTANT?
- While many of the violent kleptocrats and their commercial enablers may have thought that they’ve won and successfully clung onto power while still doing business in U.S. dollars, I have someone that I want them to meet who thinks otherwise.
- Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker, the top U.S. official in charge of financial sanctions, anti-money laundering, counter-terrorist financing, and protecting the U.S. financial system from a whole range of financial crimes, is making the first ever visit to Africa by someone in her position, and I’m so glad that she is here.
- She’s a tough former prosecutor who led the U.S. Department of Justice’s teams in going after those responsible for committing human rights abuses, cyber crime, money laundering, and promoting U.S. national security and law enforcement priorities, and a strong advocate for using all of the legal authorities and financial tools at her disposal to impact the ability of President Kiir and his networks of commercial enablers to steal from their people.
- Under Secretary Mandelker’s trip to Uganda, Kenya, and the Democratic Republic of the Congo this week raises the stakes for the violent kleptocrats and their corrupt elites who don’t believe that the United States will follow through on its threats of pressure, and for that I would personally like to say, “thank you.”
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For media inquiries or interview requests, please contact: Greg Hittelman, +1 310-717-0606, [email protected]
About THE SENTRY
The Sentry is composed of financial forensic investigators, policy analysts, and regional experts who follow the dirty money and build investigative cases focusing on the corrupt transnational networks most responsible for Africa’s deadliest conflicts. By creating a significant financial cost to these kleptocrats through network sanctions, anti-money laundering measures, prosecutions, and other tools, The Sentry aims to disrupt the profit incentives for mass atrocities and oppression, and creates new leverage in support of peace efforts and African frontline human rights defenders. The Sentry’s partner, the Enough Project, undertakes high-level advocacy with policy-makers around the world as well as wide-reaching education campaigns by mobilizing students, faith-based groups, celebrities, and others. Co-founded by George Clooney and John Prendergast, The Sentry is an initiative of Not On Our Watch (NOOW) and the Enough Project. The Sentry currently focuses its work in South Sudan, Sudan, the Democratic Republic of Congo, Somalia, and the Central African Republic.
In less than two years, The Sentry has created hard-hitting reports and converted extensive research into a large volume of dossiers on individuals and entities connected to grand corruption, violence, or serious human rights abuses. The investigative team has turned those dossiers over to government regulatory and law enforcement agencies in the U.S. and around the world, as well as to compliance officers at the world’s largest banks.
Learn more at www.TheSentry.org.
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