Fighting cross-sectoral economic crime in Kenya

Economic crime, previously more commonly referred to as white-collar crime, takes many forms. From a private sector perspective, fraud is the most widely spoken about economic crime while corruption tends to be more widely referenced in the public sector. Other economic crimes tend to feature in the context of specific industries for instance money laundering and the financial services sector. Regardless of the type, all economic crime relies on deception to cause economic loss.

Economic crimes seem to be on the rise in Kenya. According to the 2024 Global Economic Crime Survey, which is a biennial cross-sectoral survey undertaken by PwC, an alarming 79% of the respondent organizations in Kenya had experienced economic crime in their organisations in the preceding two years, against the global incidence rate of 41%. In 2023, the Ethics and Anti-Corruption Commission (EACC), undertook a survey on the status and perception of corruption in Kenya. Based on a sample size of 5,100 households, EACC found that majority of respondents (57.3%) perceived corruption to be high in Kenya. The EACC also found that the national average bribe had nearly doubled since the preceding year from KES 6,865 in 2022 to KES 11,625 in 2023. 

The high prevalence of corruption and frauds such as forgery, has created demonstrable material effects and disruption, including as evidenced through international action. In February 2024, for instance, the Financial Action Taskforce, which is the pre-eminent global anti-money laundering and countering the financing of terrorism (AML/CFT) watchdog, placed Kenya on its list of jurisdictions under increased monitoring, commonly known as the grey list.  Subsequently, the United Kingdom and the European Commission placed Kenya on their blacklists. In March 2024, the United States released its National Trade Estimate Report, which cited Kenya’s prevalence of corruption as a “substantial barrier to doing business in Kenya”.

The negative perceptions and developments surrounding economic crime in Kenya have broad, and potentially long term, implications on the Country’s development especially its business environment as well as Kenya’s ability to navigate both the domestic and global financial ecosystem.  

Discourse around economic crimes is skewed to corruption which may be justifiable given the scale of the problem. However, given that corruption tends to be a mirror of society, the same reasons and persons driving corruption in the Country are also likely equally driving the other economic crimes. Thus, in contemplating interventions in the public sector, it is important to keep the private sector in mind. 

To fight economic crime, three ingredients are necessary for both the private and public sectors: (i) the right culture, (ii) ability of entities to detect and respond and (iii) resilience of internal controls. 

It is imperative that the Nation and organisations invest in changing cultural attitudes towards economic crime. This means leveraging and enhancing the capacity of institutions such as the EACC and change agents such as the organizational Heads of Ethics and Fraud Risk Management. Civic engagements will be necessary to achieve a coalition of a citizenry that understand the cost of economic crime, their entitlement for quality services and the role of the private sector and individual citizens/employees in fighting economic crime. As a society, it will be necessary to create a vision where fraud and corruption is not seen as acceptable. 

Private organisations must take intentional action and invest in charting a cultural profile that transcends internal controls and encourages personal ownership of the fight against economic crime. In the public sector, a myriad of laws and institutions already exist. The spirit of the laws, however, is yet to be fully delivered as the cultural fabric is yet to be addressed. There is need to revisit the National Ethics and Anti-Corruption policy document of 2018, which sets out Kenya’s vision for the fight against corruption.

 It is important for the government and individual institutions to take stock of the laws and policies in place, the existing controls and prevailing attitudes, and chart an implementation plan that takes into account the implementation challenges faced in the past. Once grounded in an ethical culture, controls will provide the necessary support to prevent, detect and respond to crimes. It is therefore time that the investments in legal and policy frameworks including anti-corruption laws, risk management frameworks and AML/CFT frameworks and policies is augmented by a commensurate investment in culture change.