The National Treasury has started the push to have all car sellers in Kenya reveal the identity of buyers and their sources of income. This is the latest effort by the National Treasury to curb the flow of illicit money.
According to National Treasury Cabinet Secretary Ukur Yatani, a review of the law will allow filing of transactions in the used car market with the Financial Reporting Centre (FRC). This is the body that is mandated to track illicit cash.
This law review will see second-hand motor vehicle sellers designated as non-financial reporting institutions. They will be joined in this endeavor by casinos, accountants and real estate agents.
To monitor this, the government and the Kenya Revenue Authority will closely monitor the source of cash that car dealers deposit in banks.
The Treasury is hoping that this will help to curb money launderers from using them as front companies that can claim the cash as legitimate business proceeds.
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“Car dealers should be designated as reporting institutions for the purposes of reporting money laundering suspicions to the FRC,” said Treasury CS Yatani in a money laundering risks review report.
“The money laundering threat in second-hand car dealerships is rated as medium high due to the weak regulatory controls. There is a likely increase in the level of threat in the future due to the lack of clear regulations for monitoring the sector.”
In addition to this, car sellers will be obligated to disclose the names, addresses, date of birth, ID number and occupation of buyers as well as date of transaction and amount involved, among others.
The FRC has previously raised concerns that sellers of second hand cars are largely unregulated in Kenya.
“For car dealers, there is a big challenge because it is an industry that is not regulated. Other than the NTSA issuing permit prescribing them as second-hand dealers, it is more or less unregulated. That is a challenge in itself,” said FRC director-general Saitoti ole Maika.
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