Revealed: How Money Laundering Is Done Through Vehicle Dealerships And Car Yards In Kenya

You might be wondering why in the last 12 years there’s been an explosion of car dealerships and car yards on populous roads in Nairobi. This explosion came in tandem with the wanton looting of public funds as well as other criminal activities.

A 2019 report on money laundering, criminals are attracted to a lifestyle of consumptive wealth. That’s why they drive flashy cars, wear bling, buying expensive botties at the club… you get the drift.

Typically the cars will be bought in cash.

This is why they’re fond of taking frequent physical trips because it’s quite hard to wire large sums of money without raising suspicion with central banks. You have to physically deliver the money to conduit banks/intermediaries who process the payments.

Trips are crucial to move cash especially to jurisdictions where they’re not strict for you to declare the amount of money you’re carrying.

For instance the UAE barely places restrictions on how much a traveler can carry into their countries. They say the max is $30,000 but they rarely enforce that. So you could get in with a whole lot more.

So how does it work?

You buy the cars with the illegal cash and as soon as it docks the port it is classified as a legitimate asset with no concern for the source of funds of the owner.

Most times these cars are being bought for “individuals” but under company names. Just convoluted paperwork to obscure true ownership and make it harder to seize as an asset.

A lot of dealers accept cash. By accepting cash payments it’s hard to scrutinize the source of wealth that the “buyer” has. You steal your X amount. Schedule a few trips to UAE or other jurisdictions, deposit the money directly into the “sellers” account, then wait for them to ship your cars.

The aviation industry is a key conduit in laundry because with the use of private jets and helicopters, you avoid a lot of the scrutiny that comes from trying to fly coach.i

Vehicle dealerships worldwide are subject to very little scrutiny. They’re not like banks that have to keep meticulous records and be subject to anti money laundering regulations which are brutal. If you have tried to run a microfinance or finance related business you know how stringent those laws are.

Some times these dealerships are just selling cars to each other so as to create clean banking records

Eg. ABCG motors buys a car at 10m using stolen funds and then sells the car to DEFG motors for 20m. Both dealerships are owned by the same criminal entity or individual.

Other times they’re “selling” cars without actually selling them.

Claim you have a car in stock and that so and so bought it however the person never actually collected the car but they deposited 10m with your dealership as the sale amount. This is done to cover up payments for like drug deals or other criminal activities.

So ABCD motors will record a sale of a vehicle and bank the amount. They are not really strict on how the person who bought the “10m” car can afford it. Banking “car sale” proceeds looks normal on paper but what actually happened is the “buyer” of the car was paying for drugs or something else.

These dealerships will go as far as creating “financing firms” to help their clients “finance” to get the cars. Then use the financing companies as an added layer of money laundering and client protection.

Not all vehicle dealerships do this but many many many of them in Kenya are run to hide the proceeds of crime and the money stolen from government

Have you never wondered when you see these fancy cars on the road, where those people are getting the funds to acquire such assets in the middle of such hard economic conditions?

And this isn’t just happening in Kenya. In the UK, the 2017 McMenamy report discovered that the Spanish Kinahan cartel set up entire networks of garages that sold cars acquired through criminal proceeds to launder drug money.

The Central Bank of Kenya (CBK) needs to be more serious in cracking down on money laundering through dealerships.