Financial Crime World

CMA Rolls Out Stringent Anti-Money Laundering Guidelines for Capital Markets

Strengthening Anti-Money Laundering Regime in Kenya’s Capital Markets

The Capital Markets Authority (CMA) has issued new guidelines aimed at combating money laundering and terrorist financing in Kenya’s capital markets. The guidelines, which take effect immediately, outline a comprehensive framework for market intermediaries to assess and mitigate money laundering risks.

Key Requirements

  • Market intermediaries must evaluate the risk of money laundering posed by their customers, taking into account factors such as:
    • Country risk
    • Customer type
    • Transaction characteristics
  • Customers from high-risk jurisdictions will require enhanced due diligence.
  • Verify the identity of all customers, including non-resident individuals and corporate entities, through satisfactory evidence of a customer’s identity and legal existence.

Ongoing Monitoring and Training

  • Conduct ongoing monitoring of business relationships to identify potential money laundering risks.
  • Implement regular training programs for employees to ensure compliance with anti-money laundering regulations.

Reporting Requirements

  • Report suspicious transactions to the Financial Reporting Centre within seven days of the transaction date.
  • Report all cash transactions exceeding USD 10,000 or its equivalent to the centre.

New Technologies and Non-Face-to-Face Business Transactions

  • Implement verification checks for new technologies and non-face-to-face business transactions, including:
    • Confirmation of a customer’s address
    • Identification documents

Combating Terrorism Financing

  • Maintain a database of names and particulars of listed persons.
  • Conduct regular checks on new, existing, and potential customers against the list.
  • Freeze funds in the event of a match and inform relevant authorities.

Consequences for Non-Compliance

  • Failure to comply with the guidelines may result in severe consequences, including:
    • Revocation of licenses or approvals
    • Legal action

Conclusion

The issuance of these guidelines marks a significant step forward in the fight against money laundering and terrorist financing in Kenya’s capital markets. The CMA has emphasized the importance of combating illicit activities in the country’s financial system and has warned that non-compliance with the guidelines will result in severe consequences.