Financial Crime World

Kenya Government Cracks Down on Fraudulent Investment Schemes

In a bid to curb the increasing cases of fraudulent investment schemes, the Kenyan government has introduced new measures to protect citizens from financial losses.

Prevention of Fraud (Investments) Act

The Prevention of Fraud (Investments) Act came into effect yesterday, making it an offense for individuals or entities to engage in activities designed to secure profits by manipulating fluctuations in property values other than securities. The Act aims to prevent fraudulent investment schemes and protect citizens from financial losses.

Key Provisions

  • No person shall distribute or cause to be distributed any documents containing invitations to invest in properties or information calculated to lead directly or indirectly to such investments.
  • Possession of such documents for distribution purposes is also prohibited.
  • Certain individuals and entities are exempted from the provisions of the Act, including:
    • Holders of principal licenses
    • The Central Bank of Kenya
    • Exempted dealers
    • Corporations
    • Unit trusts
    • Co-operative societies
    • Building societies
    • Governments
    • Persons whose ordinary business involves buying and selling properties other than securities

Consequences of Non-Compliance

Offenders under the Act face imprisonment for up to seven years, fines of up to KES 100,000, or both. The court may also order the destruction or disposal of documents produced in evidence of the offense.

Establishment of Regulatory Authority

The government has authorized the Minister to declare any body or association dealing in securities as a recognized stock exchange or association of dealers in securities for the purposes of the Act.

In related news, the Ministry of Finance has announced plans to establish a new regulatory authority to oversee the country’s capital markets. The authority will be responsible for enforcing the provisions of the Prevention of Fraud (Investments) Act and ensuring that investors are protected from fraudulent activities.

Minister’s Statement

“We want to ensure that our citizens are not taken advantage of by unscrupulous individuals who seek to make a quick buck at their expense,” said James Mwangi, Minister for Finance. The new law is aimed at protecting Kenyans from fraudulent investment schemes that have been on the rise in recent years.