Financial Crime World

Title: Kenya Cracks Down on Financial Crime: New Laws Reinforce Ethical Business Practices

Nairobi, Kenya

Kenya’s dedication to combating financial crimes and promoting ethical business practices reached a milestone with the passage of the Anti-Money Laundering and Combating of Terrorism Financing (AML and CFT) Laws (Amendment) ACT, 2023. The bill, signed into law by the President on September 1, 2023, came into effect on September 15, 2023.

This article highlights significant amendments to various Kenyan statutes resulting from the new Act and its implications for different sectors.

Key Amendments

1. Proceeds of Crimes and Anti-Money laundering Act (POCAMLA)

  • Accountability for Financial Groups: The Act now regards financial groups as legal entities accountable for money-laundering offenses.
  • Reporting Duty for Legal Professionals: Legal professionals must now report any suspicious transactions.
  • Higher Reporting Threshold: The reporting threshold for suspicious transactions increased from $10,000 to $15,000.
  • Heightened Penalties: Penalties for money-laundering offenses have risen to up to 50% of the monetary instrument involved.

2. Companies Act

  • Preservation of Records: Companies must maintain records relating to directors, shareholders, and beneficial owners for ten years post their departure.
  • Registration of Nominee Directors: Companies with nominee directors must maintain a register detailing the director and the person they act on behalf of.
  • Appointment of Company Secretary or Contact Person: Private companies lacking a local director must appoint a company secretary or a local contact person responsible for maintaining records and providing information to government authorities as required.
  • Continued Record Keeping: Following a company’s striking off, certain records must be retains for at least seven years.

3. Limited Liability Partnerships (LLPs)

  • Register of Nominee Partners: LLPs are obligated to maintain a register of nominee partners, detailing the partner and the person they act on behalf of.
  • Retention of Records: LLPs must preserve records related to beneficial owners for ten years post their departure.

4. Insurance Act, Capital Markets Act, Banking Act, Central Bank of Kenya Act

  • Expanded Supervisory Powers: Regulators responsible for financial services players, including the Insurance Regulatory Authority, Capital Markets Authority, and Central Bank of Kenya, now have expanded supervisory powers to align provisions of the POCAMLA with their respective legislative frameworks.

5. State Corporations Act

  • Financial Reporting Centre (FRC) Exemption: The Financial Reporting Centre has been exempted from the State Corporations Act to ensure its independence and prevent potential state interference in financial intelligence dissemination.

6. Anti-corruption and Economic Crimes Act

  • Expanded Definition of Economic Crimes: The definition of economic crimes under the Anti-corruption and Economic Crimes Act has been broadened to cover money laundering of corrupt proceeds, thereby increasing the Ethics and Anti-Corruption Commission’s mandate to investigate and prosecute such offenses.