Title: New AML Law in Kenya: Extensive Disclosure Obligations for Companies and LLPs
Effective Date: September 15, 2023
Kenya’s newest legislation, the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023, introduces significant changes to the business landscape in Kenya. Following is an overview of the new regulations and their implications for local and foreign companies, branches, and Limited Liability Partnerships (LLPs).
Key Changes
Under the new law, beneficial ownership disclosures have been extended to local and foreign companies and LLPs. This amendment aims to help authorities uncover hidden ownership structures.
The following definitions based on the Companies Act, 2015, have been included:
- A nominator is an individual or legal entity that issues instructions to a nominee.
- A nominee is an individual or legal entity that represents the nominator.
Changes for LLPs
The term beneficial owner is defined as a natural person who holds ultimate ownership or control. A nominee partner is an individual or legal entity appointed by the nominator to act on their behalf. Compliance with these definitions is mandatory for all domestic and foreign LLPs.
Documentation and Reporting Requirements
During the preregistration phase, the following documents must be provided to the Registrar:
- A register of beneficial owners.
- A register of nominee directors (for companies).
- A register of nominee partners (for LLPs).
Existing entities are required to submit these documents within 60 days of the Act’s enactment (i.e., by November 15, 2023). Failure to comply may result in striking off the company or LLP register.
Any modifications to these records must be reported to the Registrar within 14 days of the change. If a person ceases to be a beneficial owner, the entity must maintain their records for 10 more years.
Local Representation
Companies
Private companies with a paid-up capital of less than KES 5,000,000 (approx. USD 33,758) and companies limited by guarantee are required to:
- Appoint a company secretary.
- Appoint a resident director.
- Designate a contact person who is a natural person with permanent residency in Kenya.
Companies established before this legislation came into force are required to comply by November 15, 2023.
Foreign LLPs
Foreign LLPs intending to carry out business activities in Kenya must register under the Limited Liability Partnerships Act and establish a local registered office. They must also appoint a local representative:
- A natural person residing permanently in Kenya.
- A Kenyan citizen with ordinary residency.
Implications
Businesses must evaluate their current ownership structures and disclose their beneficial owners and nominee arrangements to maintain compliance. These changes promote greater transparency and accountability while increasing the compliance burden. Despite the challenges, the advantages far outweigh the challenges, marking a crucial advancement in combating illicit funds in Kenya’s business sector.
For more information, contact Ernst & Young (Kenya):
- Christopher Kirathe, Partner, Tax and Law
- Milly Mbedi, Senior Manager, Law
- Lavine Sange, Associate, Law
[Please note, the contact information is provided for informational purposes only and is subject to possible changes.]