Financial Crime World

Kenya’s New Financial Crime Legislation: AML and CFT Amendments Fortify the Fight Against Money Laundering and Terrorism Financing

Nairobi, Kenya - September 15, 2023

On September 1, 2023, President Uhuru Kenyatta assented to the Anti-Money Laundering and Combating of Terrorism Financing (AML and CFT) Laws (Amendment) ACT, 2023, which came into effect on September 15. This Amendment Act underscores Kenya’s commitment to combating illicit financial flows and enhancing financial sector transparency.

The Amendment Act affects several key statutes:

  • Proceeds of Crimes and Anti-Money Laundering Act (POCAMLA)
  • Companies Act
  • Limited Liability Partnership Act
  • Insurance Act
  • Capital Markets Act
  • Banking Act
  • Central Bank of Kenya Act
  • Anti-corruption and Economic Crimes Act

Proceeds of Crimes and Anti-Money Laundering Act (POCAMLA)

Kenya’s primary money laundering statute, the Proceeds of Crimes and Anti-Money Laundering Act (POCAMLA), undergoes the following amendments:

1. Financial Groups Held Culpable

  • The definition of a financial group is expanded, enabling it to be held legally responsible for offenses related to money laundering, not just the group entity but also the wider organization.
  • Legal professionals are now required to report any suspicious transactions they encounter.

3. Reporting Threshold Raised

  • The reporting threshold for suspicious transactions has increased, from USD 10,000 to USD 15,000.

4. Penalties Intensified

  • Offenders face penalties of up to 50% of the monetary instrument involved in the offense, a significant increase from the earlier penalty of 10%.

Companies Act

The Companies Act is updated with the following new requirements:

1. Extensive Record Keeping

  • Companies are now obliged to preserve all relevant data relating to their directors, shareholders, and beneficial owners for ten years following their departure from the company.

2. Recognition of Nominee Directors

  • The Amendment Act acknowledges nominee directors and imposes upon companies with nominee directors the responsibility to maintain a register of such directors.

3. Appointment of Company Secretaries or Contact Persons

  • For private companies without a resident director in Kenya, the Amendment Act mandates the appointment of either a company secretary or a contact person with a permanent address in Kenya.

4. Post-Striking Off Record Keeping

  • Companies that have been struck off must preserve selected records for at least seven years from the date they are removed from the register of companies.

Limited Liability Partnership Act

The Limited Liability Partnership Act is updated with the following new obligations:

1. Register of Nominee Partners

  • LLPs are required to keep a register of nominee partners, as well as the person appointing them.

2. Record of Beneficial Owners

  • Records relating to LLPs’ beneficial owners must be preserved for ten years following their departure.

Insurance Act, Capital Markets Act, Banking Act, CBK Act

Regulators under the Insurance Regulatory Authority (IRA), Capital Markets Authority (CMA), and Central Bank of Kenya (CBK) will be granted enhanced supervisory powers to monitor financial services players within their respective jurisdictions.

State Corporations Act

The Financial Reporting Centre (FRC) is withdrawn from the State Corporations Act, allowing the FRC to maintain its autonomy in the financial crimes reporting framework and prevent potential state interference.

Anti-corruption and Economic Crimes Act

The definition of economic crimes is expanded under the Anti-corruption and Economic Crimes Act, extending the Ethics and Anti-Corruption Commission’s (EACC) mandate to include investigations of money laundering of corruption proceeds.

With these amendments, Kenya solidifies its stance against financial crimes, bolstering transparency, accountability, and efficacy in its anti-money laundering and counter-terrorism financing efforts.