Financial Crime World

New AML Guidelines for Businesses Mandate Enhanced Transparency and Accountability in Kenya

Effective September 15, the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023 has introduced significant changes to combat money laundering and terrorism financing in Kenya. The new guidelines have far-reaching implications for businesses operating in the country.

Key Changes and Requirements

Disclosure Obligations

  • Private companies with a paid-up capital of less than KES 5 million must appoint either:
    • A company secretary
    • A resident director
    • A contact natural person with permanent residence in Kenya
  • Companies and LLPs must maintain and lodge copies of the following registers with the Registrar:
    • Register of beneficial owners
    • Register of nominee directors (for companies)
    • Register of nominee partners (for LLPs) as part of preregistration documentation

Compliance Deadlines

  • Existing entities and persons registering companies and LLPs, both local and foreign, must comply with these new obligations within 60 days of the Act’s coming into force
  • Fully foreign-owned companies with non-resident shareholders and directors must appoint local representatives or company secretaries for their entities before November 15

Additional Requirements

  • Foreign LLPs intending to carry on business in Kenya must:
    • Register under the Limited Liability Partnerships Act
    • Have a local registered office in Kenya
    • Appoint at least one local representative who resides permanently in Kenya or a Kenyan citizen who ordinarily resides in Kenya

Consequences of Non-Compliance

  • Failure to disclose beneficial owners could lead to a company or LLP being struck off the register by the Registrar
  • Entities and officers involved could face administrative penalties for noncompliance

Next Steps

To ensure compliance within the stipulated deadlines, businesses are advised to:

  • Thoroughly review their current ownership and control structures
  • Identify their beneficial owners and nominee arrangements
  • Update information in their records accordingly

These new obligations may carry an increased compliance burden on affected entities, but they are a welcome development expected to enhance transparency and accountability among legal entities in Kenya.

For Additional Information

Please contact Ernst & Young (Kenya), Nairobi for further guidance.