25 May 2020

Can due diligence on shipping clients deter contraband trafficking in Kenya?

Knowing their customers could help Kenya’s authorities keep tabs on illegal shipments.

Kenyan authorities are struggling to identify the sources and destinations of contraband passing through the country’s ports. ‘It is currently very hard to identify the source of seized consignments of illegal wildlife or forestry products, or to track precisely where they [are] heading,’ Grace Mukangu, a prosecutor in Director of Public Prosecutions office, tells ENACT.

The contraband could be from Kenya, or be trafficked from neighbouring countries and shipped through Kenya. The inability to track these paths is why many investigations stall, she says. Failure to positively identify the tools used and brains behind a crime is a problem in successfully prosecuting and deterring criminality.

The Director of Public Prosecutions and Kenya Revenue Authority aim to improve investigative and law enforcement powers by adapting the Know Your Customer processes used to curb banking fraud and money laundering to the shipping industry. They hope this system will help verify the identity and suitability of clients, and potentially illegal intentions.

The effectiveness of a Know Your Customer policy would depend on its entrenchment in various jurisdictions

Currently, agents facilitating shipping transactions and shipments hardly vet their customers or their consignments. What they collect is rarely comprehensive enough for investigations to be conducted long after transactions. A process is needed to compel agents to collect information adequately and accurately.

Conservation organisation Space for Giants is behind the push to introduce a Know Your Customer regime for import-export agents and shippers. The initiative will ‘compel key stakeholders in the shipping industry to carry out due diligence checks on their customers’, Space for Giants wildlife law director Shamini Jayanathan tells ENACT. It will be accompanied by laws and regulations designed to curb contraband smuggling in Kenya during the importation and exportation of goods.

Such a system has helped identify and prosecute criminals in money laundering. In the shipping sector, it could help identify the beneficial owners of containers seized for illicit cargo.

On its website, Space for Giants cites 14 incidents between 2000 and 2017 in which 24 345kg of tusks, mostly moving through Jomo Kenyatta International Airport or Mombasa Port, were uncovered. ‘Out of a paltry 10 prosecutions of these cases to date, only one led to a conviction that was later overturned on appeal,’ says Jayanathan.

Space for Giants is behind the push to introduce a Know Your Customer regime for import-export agents and shippers

This low prosecution rate is directly linked to a lack of adequate information on the beneficial owners of the seized cargo. It’s inconsistent with the ivory seizures reported in Kenya between 2000 and 2017, considered by the Environmental Investigation Agency as the largest ever in Africa. If successfully implemented, the Know Your Customer approach would enforce compliance due to the threat of revocation of business licences for entities found to engage in illicit activities.

Given the inter-connected nature of ports and shipping lines, the effectiveness of a Know Your Customer policy would depend on its entrenchment in various jurisdictions. State sanctions should apply against non-compliance.

With continuing threats of transnational organised crime and terror, affected countries like Kenya and its neighbours would benefit from Know Your Customer processes in the shipping industry. For this to happen many countries would need to be on board and adopt these processes too.

Deo Gumba, ENACT Regional Organised Crime Observatory Coordinator – East and Horn of Africa, ISS

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