Financial Crime World

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Kenyan Companies Must Disclose Beneficial Ownership Information

In a move to combat money laundering and terrorism financing, the Kenyan government has introduced regulations requiring companies to disclose their beneficial ownership information. Under the new rules, directors of companies are obligated to inform their employers if they are the beneficial owner of the company, as defined under the Companies Act 2015.

Consequences of Non-Compliance

  • Failure to comply with the regulations can result in severe penalties for companies and their directors.
  • The regulations aim to increase transparency and accountability in corporate transactions, thereby reducing the risk of money laundering and terrorism financing.

Challenges in Identifying Beneficial Ownership

  • Identifying beneficial ownership can be a complex process, especially when dealing with foreign legal persons or nominee arrangements.
  • The use of nominees, strawmen, and other relationships that may suggest agency or control by another person can make it difficult to determine the true owner of a company.
  • International standards acknowledge that being listed on a stock exchange already imposes sufficient transparency requirements that would enable financial institutions or designated non-financial businesses and professions (DNFBPs) to accept information that is in a public register or available from the customer or from another reliable source.
  • However, this provision’s usefulness will depend partly on the completeness and reliability of the relevant country’s company listing process, which would need to be enforced robustly.

Call to Action

  • Companies must take proactive steps to ensure they are in compliance with the regulations.
  • This includes maintaining accurate records of beneficial ownership information and providing this information to financial institutions or DNFBPs upon request.

By working together, we can create a more transparent and accountable business environment that reduces the risk of money laundering and terrorism financing.

About Transparency International Kenya

Transparency International Kenya is a non-governmental organization dedicated to promoting transparency and accountability in all aspects of Kenyan life. We work towards a corruption-free society by advocating for reforms, monitoring government activities, and providing training and capacity building programs for civil society organizations.

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