Kenya Conducts National Risk Assessment on Money Laundering and Terrorism Financing of Legal Persons and Arrangements
Nairobi, Kenya - A Crucial Step Towards Strengthening Anti-Money Laundering and Counter-Terrorism Financing Regulations
The government of Kenya has conducted a national risk assessment on money laundering (ML) and terrorism financing (TF) threats associated with legal persons and arrangements. The assessment was carried out in collaboration with the World Bank Group and other international organizations.
Objective of the Assessment
The objective of the assessment was to identify the ML/TF risks associated with different types of legal structures created in Kenya, including:
- Private limited companies
- Public limited companies
- Companies limited by guarantee
- Unlimited companies
- Foreign companies
- Limited liability partnerships
- Trusts
The study also assessed the ML/TF risks to which Kenya may be exposed, associated with different types of foreign-created legal structures.
Methodology and Findings
The assessment was based on a comprehensive methodology that considered qualitative and quantitative data from primary and secondary sources. The data was collected through:
- Semi-structured questionnaires
- Secondary data collection data sheets
- Open-source information
The information obtained was analyzed using the World Bank Group Legal Persons and Legal Arrangements Risk Assessment Tool (WB Tool) to establish the ML/TF threat, risks, and national vulnerability on a scale ranging from 0 to 1.
Key Findings
The assessment identified several areas of concern, including:
- Lack of transparency in beneficial ownership structures: Kenya’s legal persons and arrangements are vulnerable to ML/TF threats due to the lack of transparency in beneficial ownership structures.
- Limited availability of information on nominee and bearer shares: The limited availability of information on nominee and bearer shares contributes to the risk of abuse.
- Need for improved registration data and requirements: Registration data and requirements for entity formation or registration need improvement.
- Complex corporate structures may be used to obscure transparency: Complex corporate structures may be used to obscure transparency, which can be leveraged by persons to perpetrate crimes.
Recommendations
The assessment provides several recommendations to mitigate the identified ML/TF risks, including:
- Improve registration data and requirements for entity formation or registration: Improve registration data and requirements for entity formation or registration.
- Enhance transparency in beneficial ownership structures: Enhance transparency in beneficial ownership structures.
- Implement measures to mitigate the identified ML/TF risks: Implement measures to mitigate the identified ML/TF risks.
- Conduct regular risk assessments: Conduct regular risk assessments to monitor and update the assessment findings.
Conclusion
The national risk assessment on money laundering and terrorism financing of legal persons and arrangements is a crucial step towards strengthening Kenya’s anti-money laundering and counter-terrorism financing regulations. The government’s commitment to implementing effective measures to mitigate the identified risks demonstrates its dedication to protecting the country’s financial system from illicit activities.