Money laundering, the process of disguising illicit funds as legitimate income, poses a significant threat to economic stability, legal integrity, and national security. It enables criminals to operate with impunity, undermining trust in financial systems.
Kenya has established a comprehensive legal framework to combat money laundering.
- The Proceeds of Crime and Anti–Money Laundering Act (POCAMLA), 2009
This legislation, along with the subsequent legislation form the cornerstone of the country’s regulatory framework. This Act provides for the offence of money laundering and introduces measures for combating the offence, to provide for the identification, tracing, freezing, seizure, and confiscation of the proceeds of crime.
Section 21 of the Act establishes a centre to be known as the Financial Reporting Centre, whose main objective is to assist in the identification of the proceeds of crime and the combating of money laundering.
Section 24 proceeds to give the functions and powers of the Centre to include; it receiving and analyzing reports of unusual or suspicious transactions made by the reporting institution under the Act’s provisions, sending the reports received to the appropriate supervisory body for further handling if the Director (of the Centre) has reasonable grounds to suspect that the transaction is suspicious, among other key functions.
The Act also mandates reporting and regulatory institutions to report suspicious or unusual transactions. The Centre, may, under Section 24A(3), delegate powers to a supervisory body to issue instructions, directions, guidelines or rules regarding the application of the Act to reporting institutions regulated or supervised by the supervisory body. The supervisory body has to however consult with the Centre first before issuing any instructions, directions, guidelines or rules.
The Act under Part IV provides for the Anti-Money Laundering Obligations of a reporting institution. A reporting institution is defined as a financial institution and designated non-financial business and profession. Such an institution is mandated to monitor on an ongoing basis all complex, unusual, suspicious, large or such other transactions as may be specified in the regulations.
Part V of the Act proceeds to establish the Anti-Money Laundering Advisory Board which shall be to advise the Director generally on the performance of his function and the exercise of his powers under the Act and to perform any other duty assigned to it.
- The Anti–Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023.
This new recent legislation was enacted on the 1st of September 2023 and was effected on the 15th of September of the same year. It mainly amends various laws and gives more onus to the fight against money laundering and terrorism in Kenya.
The Act was enacted to amend the laws relating to anti-money laundering and combating terrorism financing and proliferation financing. The Act introduces robust obligations for companies, branches, limited liability partnerships and foreign limited liability partnerships. Further, this was done to align our Anti Money Laundering and Combating of Terrorism Financing laws with international standards.
Several Acts have been amended and they include; The Prevention of Terrorism Act, National Payment System Act, Microfinance Act, Insurance Act, State Corporations Act, Extradition Act (Contagious and Foreign Countries) Act, Extradition (Commonwealth Countries) Act, Banking Act, Central Bank of Kenya Act, Anti-Corruption and Economic Crime, National Police Service Act, Proceeds of Crime and Anti-Money Laundering Act, Mutual Legal Assistance Act and the Limited Liability Partnership Act.
These amendments were made to address the perks that were noted in the Mutual Evaluation Report of 2022 which Eastern and Southern Africa Anti-Money Laundering Group did.
Conclusion.
Kenya has implemented a robust legal framework to combat money laundering and terrorism financing, aligning with international standards. The principal legislation includes the Proceeds of Crime and Anti–Money Laundering Act, which establishes comprehensive measures for detecting, preventing and prosecuting money laundering activities.
These, among many other laws, are enforced by key institutions such as the Financial Reporting Centre (FRC) and the Asset Recovery Agency (ARA), which play crucial roles in investigating and curbing illicit financial activities.
“The information provided in this article is intended for general legal advice and does not constitute legal advice for any specific transaction or case. Since each transaction presents a unique legal context, it is advisable to retain a legal adviser for specific transactions.”
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