Financial Crime World

Kenya Strengthens Its Anti-Money Laundering and Counter-Terrorism Financing Regime with New Law

The Kenyan government passed the Anti-Money Laundering and Combating of Terrorism Financing (AML and CFT) Laws (Amendment) ACT, 2023, marking a significant step forward in the East African nation’s fight against financial crimes and terrorism financing. President Uhuru Kenyatta assented to the bill on September 1, 2023, and it came into force fifteen days later. Here’s how the law impacts key statutes:

Impacted Statutes

  1. Proceeds of Crimes and Anti-Money laundering Act, No. 9 of 2009
  2. The Companies Act, No. 17 of 2015
  3. Limited Liability Partnership Act, No. 42 of 2011
  4. Insurance Act, Cap 487
  5. Capital Markets Act, Cap 485A
  6. Banking Act, Cap 488
  7. Central Bank of Kenya Act, Cap 491
  8. Anti-corruption and Economic Crimes Act, No. 3 of 2003

Proceeds of Crimes and Anti-Money laundering Act, No. 9 of 2009

The primary statute defining, criminalizing, and penalizing money laundering in Kenya is the Proceeds of Crimes and Anti-Money laundering Act (POCAMLA). The amendment act enhances its provisions in the following ways:

1.1. Financial Groups Accountable

Financial groups, which can be held liable for money laundering offenses, face stricter penalties. Liabilities against the group entity may extend to the wider group.

Legal professionals are now required to report suspicious transactions.

1.3. Increased Reporting Threshold

The reporting threshold has risen from USD 10,000 to USD 15,000.

1.4. Heavier Penalties

The penalty for monetary instrument involvement in offenses increases from ten percent (10%) to fifty percent (50%).

Companies Act, No. 17 of 2015

2.1. Extended Record Keeping

Companies are required to keep information relating to directors, shareholders, and beneficial owners for a minimum of ten years from the date they cease to hold those positions.

2.2. Nominee Directors Recognized

The concept of a nominee director is now acknowledged. Every company with nominee directors must maintain a register of nominee directors, disclosing the particulars of the nominee director and the person providing instructions.

2.3. Private Companies’ Requirements

Private companies with no resident directors in Kenya must now appoint either a company secretary or a contact person with permanent Kenyan residence. Contact persons are responsible for record keeping and providing government authorities with information regarding the company.

2.4. Post-Dissolution Record Keeping

Upon a company’s striking off from the register, certain records must be kept for at least seven years from the date of strikethrough.

Limited Liability Partnership Act, No. 42 of 2011

3.1. Nominee Partner Registration

Limited Liability Partnerships (LLPs) are required to maintain a register of nominee partners, including the nominee partner’s particulars and the person under whose instructions they serve.

3.2. Records of the LLP

LLPs must keep records pertaining to beneficial owners for a minimum of ten years after their departure from the partnership.

In subsequent parts, we will cover the amendments to the Insurance Act, Capital Markets Act, Banking Act, Central Bank of Kenya Act, State Corporations Act, and Anti-corruption and Economic Crimes Act. Stay tuned to learn more about how these changes aim to strengthen Kenya’s AML and CFT framework.