Njuguna Ndung'u: East Africa - focus on risk, corporate governance,
anti-money laundering and other challenges
Remarks by Prof Njuguna Ndung'u, Governor of the Central Bank of Kenya, at the East
Africa Risk and Governance Summit, Nairobi, 13 May 2014.
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Mr. Pawan Hegde, Managing Director - Governance Risk and Compliance, Thomson
Reuters;
Mr. Paul Muthaura, Acting Chief Executive Officer; Capital Markets Authority;
Distinguished Participants;
Ladies and Gentlemen:
I am privileged to be with you this morning for this landmark summit. Let me first convey the
best wishes of the Cabinet Secretary, The National Treasury, Mr. Henry Rotich who was
supposed to deliver the opening keynote speech today. Due to emerging exigencies, the
Cabinet Secretary, The National Treasury has asked me to represent him this morning.
Let me also thank the organisers of this conference Thompson Reuters and the Capital
Markets Authority (CMA). Indeed the issues to be discussed at this conference on regional
regulatory trends, corporate governance, anti-money laundering, combatting the financing of
terrorism and fraud are close to the hearts of governments across the East African region. It
is also very apt that the focus is East Africa. This also coincides with the Regional Review
Group for Africa and Middle East of the Financial Action Task Force (FATF) doing their
OnSite Visit on Kenya.
Ladies and Gentlemen: The East African Community (EAC) Heads of State in November
2013 signed the East African Monetary Union (EAMU) protocol. EAMU will work for more
integration and convergence by 2014. EAMU's success will, to a large extent, be anchored
on a seamless, efficient and effective integrated financial services market. To build this
market, EAC member states must elevate their supervisory and legal frameworks and
embrace global supervisory and regulatory standards that converge. However, global
standards must also be customised to cater for our unique East African terrain.
The East African Central Banks are this week meeting here in Nairobi under the auspices of
the EAC Monetary Affairs Committee to discuss some of the key building blocks essential for
integrated banking, payments and financial market systems. The Central Banks will later this
week launch the East African Payments Systems (EAPS). EAPS initially connecting the Real
Time Gross Settlement Systems of the EAC countries, this will facilitate cross border trade
and investment across the EAC countries. This summit comes at a time when it can offer
some insights to this process of integration.
Ladies and Gentlemen: Anti-Money Laundering (AML) and Combatting the Financing of
Terrorism remains a challenge to us all. The heavy cash-based nature of the East African
economies, civil conflicts and porous borders make the region particularly vulnerable to
money laundering and financing of terrorism. However significant progress has been made
across the region in strengthening AML/CFT regulatory regimes particularly with the support
of the Eastern Africa Anti-Money Laundering Group (ESAAMLG). The growth of mobile
phone financial services across the region will also significantly reduce the risk of AML/CFT
with the tractability of mobile phone financial transactions and reduction of usage of informal
financial services. Let us all agree that it is the informality of financial markets that will allow
bad regimes of AML/CFT to thrive - we need then to formalize markets.
Kenya and Tanzania have been incorporated in the Financial Action Task Force (FATF)
public list of countries with deficiencies in their AML/CFT legal and regulatory frameworks.
Uganda has recently been added to this list. Significant progress has been made in both
Kenya and Tanzania in enacting and implementing the requisite AML/CFT regimes. Nairobi
is also this week hosting the FATF Regional Review Group Meeting for Middle East and
Africa that will review progress made in Kenya and Tanzania in addressing AML/CFT
deficiencies. I am sure that we will continue to strengthen our AML/CFT regimes across the
region given the strong political commitment and support from government, the private sector
and the general public. I expect that this summit will also generate practical
recommendations on how AML/CFT regimes across the region can be strengthened.
Ladies and Gentlemen: As I draw to a close, I urge you to draw from the varied experiences
of the high calibre facilitators and participants in this forum to come up with
recommendations that will enhance the East African financial markets' Governance, Risk and
a Policy Convergence Environment. This will in turn enable our envisaged regional financial
markets to attract the capital that is required to finance the EAC's ambitious development
agenda and also leave no room for informal financial markets to thrive.
It is now my distinct honour to declare this summit officially open.
Thank you.