The US Bureau for International Narcotics and Law Enforcement Affairs published a report that indicated the now famed Somalia’s Hawalas or remittances banks are the major source of finance for the terror activity in the East African Region.
The report indicated that that the lack of a financial intelligence unit in Kenya caused the uncontrolled flow of cash into the region and therefore making the Kenyan financial system vulnerable. The absence of the unit inhibits the Central Bank’s capability to supervise and regulate the hawalas.
Somali doesn’t make the work any easier as she does not have a commercial banking sector or laws and procedures that require collection of data for suspicious money transfers or transactions. This makes money transacted in Somalia untraceable.
The lack of a fully functional government in Somalia which translates to no budget led to its incapacity to investigate and prosecute terrorist funding according to list given by the United Nations. The list from the UN contained names of terrorists, terrorist entities and financial services’ ledgers.
The 233-page report attributed Kenya being a financial facilitation hub for the Al-Shabaab to its proximity to Somalia. It also said that the funding did not only come in terms of remittances but also in trade goods that were used as counter-valuation of the Hawalas.
This is therefore a clear indicator for the urgent need to have financial intelligence that will work hand in hand with other forms of intelligence in the wagging war against the jihadists. Financial decapitation will be a crucial step in deal with the menace with which the first steps have been taken by the closure of all Al-Shabaab linked hawalas in Kenya.
The Hawalas is operating just like any other money transfers service. The fact that terrorist group can abuse or misuse the money transfer services is not limited to ha was but even other formal monet transfer like western union or Mpesa can be used without been suspected by authorities.