In February 2022, the United States (US) Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation unearthed money laundering syndicates involved in stealing COVID-19 relief funds from the US and transferring them to Kenya.
Reports indicated that between February 2020 and February 2022, US$250 million was illegally transferred through banks, real estate agencies and other financial institutions located in Kenya. This money was used to purchase beach plots, luxury vehicles and holiday homes, among other things.
The US investigative agencies named 47 suspects in the theft of COVID-19 relief funds from the state of Minnesota. The paper trail indicated that these funds were obtained from federally-funded US child nutrition programmes and then illegally transferred to Turkey, Kenya and Dubai. At the time that these suspects were caught, they still had more than US$114 million stashed in various accounts.
The syndicate that facilitated the theft of the money from the US and its transfer to Kenya involved US citizens working in the humanitarian sector in collusion with US citizens with kinship links to Kenya. The syndicate created fake companies in the US that were used as internal recipients for the child nutrition programme funds, which were then transferred to individual accounts in Kenya. The main suspect, Aimee Bock, used her organisation, Feeding Our Future, to transfer US$32 million to Abdiaziz Shafii Farah, a Somali-American, on the pretext of providing 16 000 meals to vulnerable children in Savage City, Minnesota. Farah used the money to buy houses for himself from Capital View Properties Limited based in Nairobi.
Another man, Liban Yasin Alishire, was also found guilty of fraud in the money laundering syndicate. Through his organisation, Community Enhancement Services, Alishire falsely claimed to have provided over 800 000 meals to children of vulnerable American families during COVID between February and October 2021.
During his prosecution at the Minnesota District Court, it was noted that Alishire fraudulently received more than $2.4 million in federal COVID relief funds. He transferred some US$210 983 to his Kenyan shell company, Jaafar Jelle & Co. This was used to purchase prime beach property in Diani, Kenya. The rest, an estimated US$500 000, was reportedly used to buy a boat, trailer, pick-up truck and an apartment in Nairobi. Others used the same proceeds to purchase an aircraft that was to be delivered to Kenya.
While the conviction of the 47 suspects on money laundering violations in US courts was successful, the trail of illicit fund transfers from US government accounts to shell companies in Kenya, indicates legal and enforcement loopholes on the Kenyan side.
In 2022, Kenya ranked 67th out of 100 countries in the Financial Secrecy Index. A source at Kenya’s Directorate of Criminal Investigations told ENACT that the ease with which US COVID-19 mitigation funds entered and were laundered in Kenya highlights weaknesses in Kenya’s anti-money laundering legislation. The Kenyan Proceeds of Crime and Anti-Money Laundering Act of 2012 has a limited focus on the extraterritoriality of money laundering crimes. That is, there are fewer obstacles to laundering money through investments across territories. As demonstrated in these cases, the inflow of funds through the banks, legal sector and real estate is not always effectively regulated.
Even though the Proceeds of Crime and Anti-Money Laundering Act established the Assets Recovery Agency to aid in the forfeiture of proceeds of crime, no criminal prosecution of suspects involved in the US COVID-19 mitigation funds fraud has been initiated in Kenya. Nor have their properties in Kenya been attached.
While the act has been enforced in implementing sanctions against terrorist financing, cases involving the illicit transfer of funds for ‘investment’ in land, real estate or other forms of property have often been poorly investigated. This has led to limited prosecutions in Kenyan courts, according to the Eastern and Southern Africa Anti-Money Laundering Group.
Section 2 of the act includes ‘proceeds of crime’ and ‘property’ bought through money laundering as part of the offence. But the above case of transfers and investment of proceeds of crime and their use to buy property in Kenya demonstrates weaknesses in the surveillance, investigation and prosecution of money laundering cases in Kenya.
Monitoring of illicit flows of funds, especially in the real estate sector seems to be a key weakness for Kenyan investigative agencies such as the Ethics and Anti-Corruption Commission and the Assets Recovery Agency to prioritise. This could help inhibit the inflow of stolen foreign funds and their investment in Kenya’s real estate sector.
Willis Okumu, Senior Researcher, Eastern Africa, ENACT Project, ISS, and Mohamed Daghar, former Regional Organised Crime Observatory Coordinator, Eastern Africa