Financial Crime World

New Anti-Money Laundering Law in Kenya: Reinforcing Transparency and Combating Financial Crimes

The Kenyan government signed the Anti-Money Laundering and Combating of Terrorism Financing (AML and CFT) Laws (Amendment) ACT, 2023, into law on September 15, 2023. This legislation marks a crucial step forward in Kenya’s dedication to combating illicit financial flows and improving financial regulations. This article outlines the key changes brought about by the Amendment Act.

Statutes Affected

  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
  8. Anti-corruption and Economic Crimes Act

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

Key Enhancements

1.1. Legal Person Liability: Legal entities may now be held liable for money laundering offenses. This liability can extend to the larger group. 1.2. Reporting Requirements for Lawyers: Legal professionals are required to report any suspicious transactions. 1.3. Reporting Threshold Increase: The threshold for reporting suspicious transactions has increased from $10,000 to $15,000. 1.4. Stricter Penalties: Penalties have been imposed, including a penalty of up to 50% of the monetary instrument involved in the offense.

Companies Act

New Compliance Requirements for Companies

2.1. Record Keeping & Duration: Companies must maintain records of directors, shareholders, and beneficial owners for a minimum of ten years from when they cease to be a part of the company. 2.2. Recognizing Nominee Directors: The concept of a nominee director is now recognized, and companies must maintain a register of nominee directors. 2.3. Company Secretary or Contact Person: Private companies without a Kenyan resident director must appoint either a company secretary or a contact person (a natural person) with permanent residence in Kenya. 2.4. Record Keeping Post-Striking Off: Upon being struck off the Companies Register, companies must keep certain records for at least seven years from the date of striking off.

Limited Liability Partnerships Act

Changes for Limited Liability Partnerships (LLPs)

3.1. Register of Nominee Partners: LLPs must maintain a register of nominee partners, which includes the nominee partner’s particulars and the person giving the nominee directions. 3.2. Record Keeping for Beneficial Owners: LLPs are required to keep records of beneficial ownership for a minimum of ten years beyond the person’s exit from the partnership.

Impact on Financial Sector Regulators

This Act grants expanded regulatory powers to financial sector regulators, ensuring consistency with POCAMLA provisions. Key bodies include:

  • Insurance Regulatory Authority (IRA)
  • Capital Markets Authority (CMA)
  • Central Bank of Kenya (CBK)

Changes to the State Corporations Act

The Financial Reporting Centre (FRC) has been excluded from the State Corporations Act. The FRC plays a crucial role in the AML and CFT framework as it receives, analyzes, and disseminates financial intelligence to law enforcement agencies and other competent authorities. This exclusion ensures the FRC’s independence and protection from state interference.

Expanded Definition of Economic Crimes

The Amendment Act now defines economic crimes to include laundering proceeds of corruption. Previously, economic crimes were limited to fraudulent dealings in public property. This expansion extends the Ethics and Anti-Corruption Commission (EACC) mandate to money laundering and authorizes it to investigate corruption-derived proceeds.

In conclusion, the Kenyan government’s commitment to upholding internationally accepted standards in the battle against money laundering and terrorism financing is reinforced through these regulatory amendments. This new legislation will improve financial transparency and accountability within the country.