The Panama Papers, Kenya and Money Laundering

Recently millions of documents belonging to the law firm Mossack Fonseca were leaked to a German Newspaper. You may not know Mossack Fonseca, but Vladmir Putin knows Mossack Fonseca- or at least his close friends do.

via Reaganpluscats.com

The leaked documents explain why Putin is widely seen as one of the wealthiest men in the world yet apparently has no assets to his name. As one saying goes: ‘to be rich in friends is to be poor in nothing’. And Putin apparently treats his billionaire friends as a slush fund. In the words of a quote attributed to Emily Dickinson: ‘My friends are my estate’.

Apparently the money was moved from Russia to Swiss Lawyers to Panamaian Lawyers to British Virgin Island Bankers to Cypriot Bankers to Putin’s friends.

And the flow of cash started around the time rumours of Putin’s corruption started seeping out while he was deputy mayor of Leningrad (now St. Petersburg).

We will no doubt hear a lot of disclosures about Mossack Fonseca’s clients in upcoming weeks and months in the fine tradition of Wikileaks and Snowdenleaks. The law firm itself put out a jumbled response that is so defensively drafted it actually raises more questions than answers (such as how all the regulators it lists and the reputable firms it did business with missed the signs of dodgy dealings). So far the only African connection mentioned in the document dump is some Zimbabwean personage on a sanctions list. But this has lessons for Kenyan investigators of money laundering: the launderer’s start-up kit is a close confidant, a pliant law firm and an unscrupulous banker.

The NYS looters apparently tried this method– using family and friends’ names to register assets, a mid-level law firm to do the legwork of buying and registering land and vehicles, and managers at a fast-rising bank to move the cash through accounts without triggering all the red flags that large, complex or oddly-structured transactions would normally raise.

They got caught because they did it crudely, failed to move the money offshore and didn’t have an experienced partner like Mossack Fonseca around to assist.

via CRIEnglish.com

The role of lawyers as money launderers has been well known- at least as far back as the BCCI scandal (where well connected American firms lobbied and misled regulators) and the Chiluba scandal (where even Nelson Mandela’s personal lawyers was implicated for failing to ask simple questions about suspicious transactions). Yet in Kenya, lawyers remain the only high-risk profession that is not fully covered by the stringent reporting requirements of the Proceeds of Crime and Anti-Money Laundering Act. This is despite the FATF’s influential 40+9 recommendations insisting that lawyers as designated non-financial professionals maintain the same level of customer due diligence and reporting as financial professionals when providing services like land/company registration, managing shares, bank accounts, and creating or operating corporate bodies for clients.

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