Kenya’s Anti-Money Laundering Regime: Reporting Persons Must Verify Customer Identity and Report Suspicious Transactions
Introduction
In an effort to combat money laundering and terrorist financing, Kenya has introduced new regulations that require reporting persons to verify customer identity and report suspicious transactions. These regulations aim to ensure that financial institutions and other reporting entities are proactive in identifying and preventing illicit activities.
Verification of Customer Identity
Under the new regulations, reporting persons must verify the identity of their customers before opening an account or conducting a transaction. This involves collecting and verifying information such as:
- Name
- Date of birth
- Address
- Identification documents
Reporting persons are also required to keep records of customer identification for at least five years.
Reporting Suspicious Transactions
The regulations require reporting persons to report any suspicious transactions that may be related to money laundering or terrorist financing. This includes transactions that are:
- Unusual
- Unusually large
- Lack transparency
Reporting persons must report such transactions within 24 hours and provide detailed information about the transaction, including:
- The identity of the parties involved
Consequences of Non-Compliance
Failure to comply with these regulations can result in severe consequences, including:
- Administrative sanctions
- Fines (up to KES 5 million or approximately USD 50)
- Criminal prosecution (up to five years imprisonment)
Internal Reporting Procedures
Reporting persons are required to establish internal reporting procedures to ensure that employees are aware of the regulations and know how to report suspicious activities. This includes:
- Designating a person to whom employees can report any suspicious activity they may observe during the course of their employment
Additional Preventive Measures
In addition to these requirements, reporting persons must take appropriate measures to:
- Make employees aware of domestic laws relating to money laundering and terrorist financing
- Provide employees with training on recognizing and handling transactions related to money laundering or financing of terrorism
Conclusion
The new regulations are an important step in Kenya’s efforts to combat money laundering and terrorist financing. Reporting persons must be proactive in verifying customer identity and reporting suspicious transactions to ensure that the financial system is not used to facilitate illicit activities.
Sources
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- The Anti-Money Laundering Act, 2010
- The Financial Reporting Authority Regulations, 2022
- Kenya’s Central Bank Governor, Dr. Patrick Njoroge, speaking at a recent conference on anti-money laundering measures.