Title: New Anti-Money Laundering Law: Enhancing Business Transparency in Kenya with Strict Disclosure Obligations

Introduction

Kenya’s new Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023, signed into law on 1 September, brings about significant changes to the business landscape in Kenya, focusing on enhanced transparency and stricter disclosure obligations.

Definitions

The Act introduces new definitions for various entities and individuals under the Companies Act, 2015, and the Limited Liability Partnerships Act, 2011. Some of the key definitions include:

Beneficial owner: A natural person who ultimately owns or exerts control over a legal entity or arrangement.
Nominee: A person who acts on behalf of another person.
Companies: Registered and unregistered companies.
LLPs: Limited liability partnerships.
Associates: Spouses, close relatives, and entities that hold significant influence or control.

Disclosure Requirements

Effective 15 September 2023, all local and foreign businesses must comply with the following disclosure obligations:

Register of beneficial owners: All local and foreign businesses must maintain and submit a register of beneficial owners to the Registrar as part of pre-registration documentation. Existing companies and LLPs must lodge these records within 60 days of the law’s enactment.
Register of nominee directors (for companies): Companies must maintain and submit a register of nominee directors.
Register of nominee partners (for LLPs): LLPs must maintain and submit a register of nominee partners.

Failure to comply with these obligations may lead to de-registration. Any amendments to the documents should be reported to the Registrar within 14 days, and records of former beneficial owners must be kept for an additional 10 years.

Additional Requirements

Private companies with a paid-up capital below KES 15,000,000 or companies limited by guarantee can choose to appoint a company secretary or a resident director. If they opt not to, they must have a contact person who is a permanent resident of Kenya. These entities need to lodge their appointment documentation by 15 November 2023.

Foreign LLPs intending to conduct business in Kenya must be registered under the Limited Liability Partnerships Act and appoint at least one local resident representative before the same deadline.

Implications

Businesses must review and update their current ownership structures and beneficial information to comply with these changes. While these requirements may signify additional compliance burdens, they will foster greater transparency and accountability, strengthening Kenya’s defenses against financial crimes.

For detailed guidance on how these changes impact your business, contact:

Ernst & Young (Kenya)

Christopher Kirathe, Partner, Tax and Law
Milly Mbedi, Senior Manager, Law
Lavine Sange, Associate, Law

References

KES refers to the Kenyan shilling.