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“Wash Wash” Illegal Businesses & Money Laundering

September 3, 2021 |
Personal Finance

Even though the IMF projects a positive economic growth, the Kenyan economy is faced with  numerous challenges. There is rampant corruption, a thriving environment for illegal businesses, and money laundering commonly referred to as “wash wash.”

We are a tourist hub, an investment destination, and many other good things. But we are also becoming as notorious as Nigeria in the illegal business and money laundering sphere. Very soon we may join some of the countries blocked by online payment systems such as PayPal.

What is money laundering, or wash-wash? In simple terms, money laundering is the process of making dirty money clean by systematically introducing it into the economy. Note that the government of Kenya, more specifically the Central Bank of Kenya, is aware of all the money that is in supply within the economy. And depositing more than Ksh1 million into your personal bank warrants a mandatory explanation on the source of funds. All these is in a bid to control money laundering.

But the wash wash guys have a way of doing it. There are several techniques of money laundering in Kenya.

You will see a celebrity opening a high end service offering business such as a nail, beauty, or massage parlor. The prices will be set so high such that the average citizen cannot afford to seek services there. Yet, at the end of the day, the business owner will bank millions and name their business as the source. There is no way banks can verify. As a result, a drug dealer will have washed millions of shillings in a single day.

So why is Kenya a favorite choice for money launderers?

The high unemployment rates, scathing corruption, awe-invoking debts, and high poverty rates are some of the factors why Kenya is becoming a major money laundering jurisdiction. Most of the “wash wash” guys strongly blame the government for their decision to participate in the trade. Even when one is lucky enough to secure employment, the salary is often too low to cover for the living expenses, leave alone securing a decent investment return on the education and skill level they possess.

With the ever increasing commodity prices without a corresponding rise income has led to an shoot in the number of frustrated Kenyans. Most people work hard at their workplaces but find it a challenge to meet their daily needs and wants, prompting for a side hustle.

Another reason it is easy to participate in the illegal business is the availability of mobile payment systems, such as Mpesa, which allow people to deposit money into their accounts without answering a single question. With the increased Mpesa limit of Ksh300,000 per day, it is possible for 10 collaborating guys to introduce Ksh30 million of dirty currency into the money supply in the economy. Moreover, we are close to the Somali boarder (more on this on a different post).

Since 2009, money laundering is illegal and it attracts jail terms, charges and fines. Individuals can be jailed for a minimum of 20 years. Corporates that engage in the trade will be fined Ksh25,000,000, a meager figure considering the damages money laundering has in the economy.

It is also dangerous to participate in the business. Many young people have lost their lives for deals that have gone sour. Victims are always looking over their shoulders for the real or imagined threats they face. It must be a hard life.

Is is possible to tell whether someone you know is laundering money? Quite easy. Look at a person that is living a lavish lifestyle claiming to be a CEO of a company that does not generate any income. Or, some of them, for lack of something good to say, claiming to be trading in cryptocurrencies. While some of these ventures may be profitable, be wary of people with so many projects that last for years.

For the dangers you might be exposed to, GMO advices that you avoid any invitations to make quick money. Most of the times, the person luring you has seen a way to clean his or her money through you.

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