Kenya recently made changes to the anti-money-laundering (AML) laws following the promulgation of the Anti-Money Laundering and Combatting of Terrorism Financing Law (Amendment) Act 2023 (the Amendment Act), which bears significant implications for financial institutions, businesses and individuals operating businesses in Kenya. Some of them include:
Simpler extradition procedures – previously, extradition procedures did not contemplate a situation where fugitives consent to extradition to the requesting state. The Amendment Act now provides for quicker surrendering of a consenting fugitive, which avoids the drawn-out extradition procedures;
Greater independence to the Financial Reporting Centre (FRC) – the FRC’s role in AML is to receive and analyse reports of suspicious transactions made by reporting institutions. However, FRC’s previous classification as a state corporation (and thereby governed by restrictive regulations applicable to state corporations) inhibited its operational independence. Under the Amendment Act, the FRC has now been excluded from the provisions of the State Corporations Act, thereby allowing it to exercise more operational independence;
Enforcement powers granted to the Insurance Regulatory Authority (IRA) and the Capital Markets Authority (CMA) - the IRA and the CMA play pivotal roles in Kenya’s financial markets, and the two have now been granted powers to enforce compliance with AML regulations by entities under their auspices;
Alignment of AML laws with the Companies Beneficial Ownership Regulations - the amendment replaces the term “significant shareholder”, previously used in the AML laws, with “Beneficial Owner”. This aligns the AML laws with Kenya’s companies’ laws that facilitate disclosures with respect to the beneficial ownership of companies. This amendment is significant as it is expected to widen the reach of AML regulations to the ultimate owners of any business.
As this new legislation takes effect, we eagerly await and closely observe how businesses will react and adapt to these important changes in the ongoing battle against financial crimes.
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