Financial Crime World

Kenya’s New Anti-Money Laundering Laws: A Game Changer in the War Against Financial Crimes

The Kenyan government’s unwavering commitment to combating money laundering and terrorism financing led to the enactment of the Anti-Money Laundering and Combating of Terrorism Financing (AML and CFT) Laws (Amendment) ACT 2023. On Septmeber 1, 2023, President Uhuru Kenyatta assented to this legislation, with implementation beginning on September 15, 2023.

Overview

This law underscores Kenya’s determination to thwart illicit financial flows and enhances customer due diligence across financial markets. It amends seven key acts, including:

  1. Proceeds of Crimes and Anti-Money Laundering Act (POCAMLA)
  2. Companies Act
  3. Limited Liability Partnership Act
  4. Insurance Act
  5. Capital Markets Act
  6. Banking Act
  7. Central Bank of Kenya Act

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

The POCAMLA, which forms the foundation for money laundering prevention and penalties, undergoes several significant changes:

Under this amendment, a financial group faces legal person culpability for money laundering offenses. Consequences can extend to the whole organization.

Legal professionals are mandated to flag suspicious transactions.

1.3 Higher Reporting Threshold

The reporting threshold increases from USD 10,000 to USD 15,000.

1.4 Increased Penalties

Offenders face a penalty equivalent to up to 50% of the monetary instrument involved in the offense, up from a previous penalty of 10%.

Companies Act

The following guidelines apply to companies registered in Kenya:

2.1 Decade-Long Record-Keeping

Companies must retain all relevant information related to directors, shareholders, and beneficial owners for a minimum of ten years after a person ceases to hold the position or the company’s deregistration.

2.2 Nominee Directors Documentation

Companies must document nominee directors and disclose the person who designated the nominee.

2.3 Company Secretary or Contact Person for Private Companies with Foreign Directors

Private companies without a Kenyan resident director must appoint a company secretary or contact person with a permanent residence in Kenya. The contact person’s responsibilities include maintaining records and providing necessary information to government authorities. The Companies Registry is yet to implement this requirement via the Business Registration Service (BRS).

2.4 Post-Striking-Off Records

Certain company records must be retained for at least seven years after the company is struck off the Register of Companies.

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By strengthening transparency, accountability, and effectiveness, the new amendments aim to create a robust framework against financial crimes and safeguard Kenya’s economy.