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UNODC Trains Law Enforcement Authorities to Tackle Money Laundering and Terrorism Financing in the High-Stakes Precious Metals and Stones Industry

Nairobi, Kenya, 19 December 2023 – Illicit financial flows (IFFs) have a well-documented negative impact on economic development and prosperity, particularly in the mining and trading sector. However, their national, regional, and global security implications have been consistently overlooked. It is vital to recognize that IFFs are a critical manifestation of the cross-border movement of profit, which is the key driver of transnational organised crime, corruption, and terrorism. 

The sector dealing with precious metals and stones is particularly susceptible to corruption, money laundering, and terrorism financing (ML/TF), which, at the highest levels, inflicts the most damage to democratic governance and the rule of law. This is due to the "high value to mass ratio," which characterizes this industry. A Financial Action Task Force (FATF)[1] study on diamond trading has uncovered a concerning reality: diamonds are now being used as a method of money laundering. Furthermore, precious minerals have been utilized in trade-based money laundering schemes, where they are exploited as a cover for laundering illicit funds through price manipulation or fake invoices for fictitious sales and tax evasion.

UNODC, with the unwavering support of the US government and in partnership with Kenya’s Financial Reporting Centre (FRC), conducted an intensive one-week training program to strengthen Money Laundering and Terrorism Financing Investigations linked to Precious Metals and Stones. By promoting seamless collaboration among five key Kenyan government agencies: the Directorate of Criminal Investigations (DCI), the Office of the Director of Public Prosecutions (ODPP), the Asset Recovery Agency (ARA), the Kenya Revenue Authority (KRA), and the Financial Reporting Centre (FRC), the overall detection, adjudication and prevention posture of the country can increase. The course was specifically designed to deliver invaluable skills, knowledge, and practical training to enable the authorities to take decisive action against supply-chain-related crimes related to precious metals and stones. The course employed the highly influential "follow the money" approach, focusing on asset recovery and countering ML/TF activities. The agencies evaluated and analysed case studies related to precious metals and stones, with the experts leading the program providing in-depth and practical insights into identifying and recommending initiatives to address challenges associated with investigating such cases.

The training course provided the Kenyan government and agencies a unique opportunity to exchange ideas on effective strategies to combat the global problem of ML/TF. Officers gained practical knowledge and skills, including good practices and strategies, to strengthen their capacity.

“Illicit trade intersects with the legitimate economy, making it necessary to identify anomalies and suspicious trade transactions that result in funding terrorism. The precious metals and stones and financial sector are particularly vulnerable to this problem. Through effective joint investigations, law enforcement and other institutions can help ensure legal trade integrity. Although reporting suspicious activity to banks is critical, reporting anomalies in other sectors of the economy is equally essential. Better reporting on beneficial ownership needs to be done to understand who is behind accounts or companies.”  These facts were reiterated by Mr. Neil Walsh, UNODC’s Regional Representative for Eastern Africa.

UNODC’s Anti Money Laundering and Counter-Terrorism Financing (AML/CFT) adviser, Ms. Inneke Geyskens-Borgions, urged, “As law enforcement officers, you play a critical role in addressing the challenges posed by financial crimes associated with precious metals and stones. The supply-chain crimes associated with these sectors have become a significant threat to global financial systems, and we must remain vigilant.” Reflecting on the impactful sessions, one of the delegates expressed, "We have gained critical knowledge and skills during this training program to detect, investigate, and disrupt money laundering and terrorist financing activities. With our enhanced capabilities, we are confident that we will make a significant impact by implementing more stringent measures to ensure that the supply chain of precious commodities remains free from criminal activities. Our contribution to the overall safety and security of the region will be unparalleled."

Consequently, the law enforcement officers arrived at a mutual consensus on priority recommendations for future collaboration. These recommendations were reached after thorough and rigorous presentations, case analysis, evaluation of the course material, and extensive discussions. The officers’ consensus reflects their commitment to working together across agencies and advancing their collective mission to keep Kenya and the region safe. The workshop’s resounding success demonstrates UNODC's unwavering commitment to providing the most rigorous, illuminating, and all-encompassing training programs. The knowledge and expertise instilled in the authorities will profoundly impact their work, resulting in an unprecedented reduction in financial crime related to supply-chain criminality in the natural resource sector in Eastern Africa.

[1] FATF Report (2021), “Money Laundering from Environmental Crime” available at: https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/Money-Laundering-from-Environmental-Crime.pdf