Title: New AML and CFT Laws in Kenya: Tightened Compliance Rules for Financial Institutions and Companies
Since September 15, 2023, Kenya’s financial markets have been subject to improved regulatory frameworks following the enactment of the Anti-Money Laundering and Combating of Terrorism Financing (AML and CFT) Laws (Amendment) ACT, 2023. Here’s a brief overview of the changes impacting various legislations:
Impacted Statutes
- Proceeds of Crimes and Anti-Money laundering Act, No. 9 of 2009 (POCAMLA)
- The Companies Act, No. 17 of 2015
- Limited Liability Partnership Act, No. 42 of 2011
- Insurance Act, Cap 487
- Capital Markets Act, Cap 485A
- Banking Act, Cap 488
- Central Bank of Kenya Act, Cap 491
- and Anti-corruption and Economic Crimes Act, No. 3 of 2003
POCAMLA Amendments
Now, let’s delve deeper into the changes made to POCAMLA.
Liability of Financial Groups
Financial groups are now held collectively responsible for money laundering offenses. Consequences may be applied to the entire group.
Reporting Suspicious Transactions by Legal Professionals
Legal professionals are obligated to report any suspicious transactions.
Increased Reporting Threshold
The reporting threshold for suspicious transactions has risen from USD 10,000 to USD 15,000.
Penalties
Penalties have been increased up to 50% of the monetary instrument involved in the offense (previously 10%).
Changes to the Companies Act
Companies registered in Kenya are subject to the following additional regulatory requirements.
Extended Record-Keeping Requirements
Companies must keep all information related to directors, shareholders, and beneficial owners for a ten-year period following their departure.
Nominee Directors
Nominee directors have been recognized, and companies with such directors must create a register disclosing nominee directors and the individuals giving instructions.
Company Secretary or Contact Person for Private Companies
Private companies without a Kenyan resident director are required to appoint a company secretary or contact person resident in Kenya. The contact person is responsible for maintaining records and providing information to the authorities on request.
These reforms and others, concerning insurance, capital markets, banking, central bank, and anti-corruption, aim to enhance transparency, accountability, and efficiency in combating money laundering and terrorism financing within Kenya’s financial sector.