Kenya Strengthens Fight Against Terrorism Financing with New Laws and Regulations
Nairobi, Kenya - In a bid to combat terrorism financing and money laundering, Kenya has enacted the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023.
New Law Introduces Extensive Disclosure Obligations for Companies
The new law introduces extensive disclosure obligations for companies, branches, limited liability partnerships (LLPs), and foreign LLPs, aimed at increasing transparency and accountability among legal entities in the country. These obligations include:
- Appointing a company secretary, resident director, or contact natural person with permanent residence in Kenya for private companies with a paid-up capital of less than KES 5,000,000 (approximately US$33,758)
- Maintaining and lodging a copy of the register of beneficial owners, register of nominee directors (for companies), and register of nominee partners (for LLPs) with the Registrar as part of preregistration documentation
Definitions and Requirements for Existing Entities
The law also introduces definitions of “beneficial owner”, “nominee”, and “nominator” from the Companies Act, 2015, and the Limited Liability Partnership Act, 2011. Existing entities and persons registering companies and LLPs, both local and foreign, are required to:
- Maintain and lodge a copy of the register of beneficial owners, register of nominee directors (for companies), and register of nominee partners (for LLPs) with the Registrar as part of preregistration documentation
- Lodge these documents within 60 days of the law coming into force, with an option of applying for an additional 30-day extension
Penalties for Non-Compliance
Failure to comply with the requirement to disclose beneficial owners could lead to a company or LLP being struck off the register by the Registrar, while entities and officers involved could also be exposed to various administrative penalties for non-compliance.
Changes for Private Companies and Foreign LLPs
The law gives private companies with a paid-up capital of less than KES 5,000,000, and companies limited by guarantee, the discretion to appoint a company secretary. If these entities do not appoint either a company secretary or resident director, they are now required to appoint a contact person who is a natural person with permanent residence in Kenya.
Foreign LLPs that intend to carry on businesses in Kenya are now required to:
- Be registered under the Limited Liability Partnerships Act
- Have a local registered office in Kenya
- Appoint at least one local representative who resides permanently in Kenya or a Kenyan citizen who ordinarily resides in Kenya
Compliance and Review of Ownership Structures
In view of these changes, businesses are advised to thoroughly review their current ownership and control structures, identify their beneficial owners and nominee arrangements, and update the information in their records accordingly to ensure compliance within the deadlines stipulated. While the new regulations carry an increased compliance burden on affected entities, they are a welcome development aimed at ensuring greater transparency and accountability among legal entities in Kenya.
Contact Ernst & Young (Kenya) for Additional Information or Guidance
For additional information or guidance on this topic, please contact Ernst & Young (Kenya), Nairobi.