Title: Kenya Fortifies Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) Systems in the Face of Domestic and International Threats
Kenya: A Critical Gateway Amidst High-Risk Factors
Nairobi, Kenya - Located in the strategic heart of Eastern and Central Africa, Kenya serves as a vital gateway to global trade and a potential hotbed for money laundering and terrorism financing risks. Exposed to external challenges from neighboring countries like Ethiopia, Somalia, and South Sudan, the country faces a significant risk of terrorism financing 1. Moreover, endemic corruption, openly acknowledged by the Kenyan Government, adds to the internal challenges fueling illegal financial activities.
The Post-2010 Era: AML/CFT Evolution
Kenya’s AML/CFT system underwent a significant transformation following the acknowledgement of its inherent weaknesses in the late 2000s. The outdated legal framework, the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), 2009, failed to meet international benchmarks and was widely criticized for its ineffectiveness 2. This prompted a paradigm shift as the nation recognized the importance of shoring up its AML/CFT capabilities.
The Enactment of the 2010 Constitution
The enactment of Kenya’s 2010 Constitution marked a turning point, necessitating a need to reinforce the nation’s AML/CFT measures. The following sections discuss the legislative and institutional reforms that ensued.
Post-2011: Legislative and Institutional Reforms
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Establishment of the Anti-Money Laundering Advisory Board (AMLAB) and the Financial Reporting Centre (FRC)
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Enactment of Legislative Amendments
- The Prevention and Suppression of Economic Crimes Act, 2002 was amended in 2013 to address several AML/CFT deficiencies 5.
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Creation of Institutional Bodies
- The Asset Recovery Agency (ARA) was established in 2015 to trace, freeze, seize, confiscate and recover proceeds of fraud and corruption 6.
The Anti-Money Laundering and Counter-Terrorism Financing Laws (Amendment) Bill 2023
At the end of 2022, the Kenyan Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Laws (Amendment) Bill 2023 7. This law aims to bring Kenya’s AML/CFT framework in line with international standards by placing emphasis on customer due diligence and robust record-keeping measures. It also grants relevant agencies the power to access financial records of persons suspected of money laundering or terrorist financing activities.
Critical Gaps: Addressing PEPs and Kenyan Legal Professionals
Although the new Amendment Act 2023 takes significant steps towards strengthening Kenyan AML/CFT regulations, it falls short in addressing critical issues related to Politically Exposed Persons (PEPs) and Kenyan legal professionals. ESAAMLG’s 2022 report strongly recommended their inclusion as reporting persons 8.
Continuous Adaptation and International Benchmarking
As Kenya continues its efforts to build a compliant AML/CFT framework, it is essential to address these critical gaps and adapt to evolving financial threats. The pursuit of a robust and effective system requires continuous scrutiny, adaptation, and unwavering commitment.
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