Wednesday, October 5, 2022

Major jackpots flagged by Kenyan authorities as possible money-laundering avenue

Lucrative jackpots paid to gamers in Kenya have been flagged as a possible means for laundering proceeds of theft, drug deals and terror-related activity. The observation comes as Kenya heightens its scrutiny of the gambling industry. 

A risk review report launched by Interior Cabinet Secretary Fred Matiang’i noted that mega jackpots by betting companies posed a money-laundering risk, with betting firm owners easily able to launder billions of shillings through their companies. 

Matiang’i feels the risk is high, too, as his inspection of potential money-laundering perils may increase the clamour for greater disclosures on cash sources used for jackpot payouts. 

Current jackpots in Kenya have hit an average high of SH250m ($2.1m) amid a recent betting craze, a move in apparent defiance of recent government measures to clamp down on excessive betting through increased taxes for both bettors and operators. 

Currently, Kenyan law does not require sportsbooks to report suspicious transactions to the state’s Financial Reporting Centre (FRC), a body that tracks potentially illicit cash.  

Following the Matiang’i report, it’s expected the Central Bank of Kenya (CBK) will increase vigilance on players dealing in large transactions, and those placing regular and suspicious bets. 

The Matiang’i report states: “The risks for money laundering were assessed to be high for the owners of betting firms. 

“The money-laundering risk was noted where proceeds from sports betting could be co-mingled with funds from predictable crimes and passed off as genuine winnings; with a possible collusion on who takes the winnings, which are later either reverted into the syndicate or transferred outside the country.” 

Kenya’s battle with betting sites has been raging since 2019, when concerns about the multi-billion shilling industry first came to light.  

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