Kenya launches AML probe focusing on betting operations

Authorities have flagged gambling as a potential money laundering risk.

Kenya.- Interior cabinet secretary Fred Matiang’i has highlighted gambling as a potential money laundering risk, increasing the government’s focus on the industry. It comes after 11 companies were cleared to receive gambling licences. The authorities say many operators still do not meet requirements.

Matiang’i’s new report warns that betting firm owners could be using their companies to launder billions of shillings. It’s expected that the Central Bank of Kenya (CBK) may require more disclosures on the cash used to pay jackpots, which have reached as high as Sh250 million (€2m) amid a boom in betting that has resisted government attempts to clampdown through higher taxes and tougher licence conditions.

Business Daily Africa reported that the CBK may also look more closely at players who make large transactions or put significant funds in betting wallets as well as those making smaller but regular bets.

The 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,” adds the report.

The law does not currently require betting firms to report suspicious transactions to the Financial Reporting Centre (FRC), despite lobbying from the Kenya Bankers Association (KBA). However, the state has stepped up its oversight of the industry in the last two years.

In 2020, the FRC launched an inquiry into SportPesa for possible money laundering. And earlier this month, the Betting Control and Licensing Board reported that the majority of betting and gaming firms had not complied with licensing requirements.

The Communications Authority of Kenya ordered mobile network operators to stop issuing ICT platforms and services, including USSDs, shortcodes, and paybill numbers to betting, gaming and lottery operators who had not renewed their Betting Control and Licensing Board (BCLB) licences. The BCLB has since cleared 11 operators to receive licences.