Perceived effects of money laundering on international business:A case study of banks in Kenya

Abstract

Money laundering has been defined as the act of a person who engages, directly or indirectly, in a transaction that involves proceeds of any unlawful activity; or acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes, uses, removes from or brings into a country proceeds of any unlawful activity; or conceals, disguises or impedes the establishment of the true nature, origin, location, movement, deposition, title of, rights with respect to, or ownership of, proceeds of any unlawful activity. International business, being transactions that are devised and carried out across national boundaries to satisfy the objectives of individuals and organizations, has grown rapidly and has reached unprecedented proportions due to global linkages brought about by the advancement in technology and economic integration among other factors. The resulting growth in international business as a result of globalization has produced many positive effects. Nevertheless, every coin has two sides, such that the resulting liberalization of international capital flows and the making of money transfer easier has also led to the problem of money laundering. The importance of banking industry in the conduct of international business cannot be over emphasized. Similarly, the benefits which accrue to the banking industry from international trade are immense. This study therefore sought to find out the perceived effects of money laundering on international business in Kenya as a case study of the banking industry in the country. The broad objective of the study was to find out the main sources of laundered funds in Kenya and the most significant perceived effect of money laundering on international business in Kenya. The study found out that the most significant perceived effect of money laundering on international business was assets seizure leading to loss of wealth. The study also found out that the main source of laundered funds in Kenya was corruption. The study recommends further research into other key sectors of the economy such as real estate;hotel and tourism industry;trade in precious metal;casinos;and the stock market.Further reseach should also be carried to determine how well the country is prepared to tackle the problem of money laundering.