CBK Tightens Legislation Against Dirty Money

To close current gaps and step up efforts to deal with money laundering and the funding of terrorism, the Central Bank of Kenya (CBK) is pushing for changes to the drafted Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) legislation.

This occurs when demand from international partners to bolster anti-money laundering policies grows.

CBK is pushing for harsher sanctions for designated reporting agents found in breach of the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) and its Regulations in order to avoid any setbacks to these initiatives.

Previously, some professionals, such as solicitors, were reluctant to act as reporting agents.

In accordance with the proposed amendments, they would be subject to fines of not more than Sh5 million (Kenyan Shillings) for a violation, with natural persons subject to a maximum fine of Sh1 million (Kenyan Shillings).

There will also be further fines of up to Sh100,000 for every day or part of a day if a violation or non-compliance continues.

Beyond reporting agents, the Act would also forbid violations by banks, money transfer companies, foreign exchange bureaus, digital credit issuers, directors, officers, employers, and individuals.

“The clause will clothe CBK with powers to penalise financial intuitions for POCAMLA violations and violation of regulations, guideline, and instructions issued under the CBK Act. This will enhance effectiveness of AML/CFT laws,” CBK governor Kamau Thugge told the Finance and National Planning Committee yesterday.

CBK is continuing to push for the inclusion of a new definition of “beneficial owner” in key laws, such as the National Payment System Act, Microfinance Act, and CBK Act.

The natural person acting as a party to a transaction is referred to as the “beneficial owner” in this context. A “significant shareholder” as defined by the aforementioned acts would likewise fall under this definition.

These adjustments are projected to strengthen Kenya’s AML/CFT framework and contribute to a more strong financial regulatory environment as pressure from the international community to address these problems grows.

Since then, the Financial Reporting Centre (FRC), which advocates for strict anti-money laundering laws in accordance with the Financial Action Task Force (FATF), has consented to appoint lawyers as agents. The global agency that monitors money laundering and terrorism financing is FATF.