• +91 33 4001 6189
  • Toll Free 844-INFO-DPP
in-home services for the elderly in Kolkata, Delhi & Gurgaon
Nov 23, 22

Money Laundering Laws in Kenya

Laws to combat the scourges of money laundering existed in some countries as early as the 1930s. In the United States, for example, these laws were implemented during the prohibition era, when the sale of alcohol was illegal. In addition, the war on drugs in the 1980s prompted the U.S. government to track down and confiscate the proceeds of drug-related crime to capture the organizers and individuals who run drug empires. The Act established three bodies to comply with and enforce the anti-money-laundering requirements imposed by law. These are the Accounting Centre (§ 21), the Asset Recovery Office (§ 53, paragraph 1) and the Advisory Council for Combating Money Laundering (§ 49). Of these, the first two are the most active. Therefore, money laundering according to POCAMLA is a civil offense. This also means that the limitation period does not apply and therefore there is no time limit within which the authorities must take enforcement action. The FATF public statement of 18 October 2013 identified Kenya as a jurisdiction with strategic AML/CFT deficiencies that has not made sufficient progress in implementing its action plan within the agreed timeframe. The explanation can be found here: www.fatf-gafi.org/countries/j-m/kenya/documents/fatf-public-statement-oct-2013.html#kenya An example of an underlying crime is drug trafficking.

The production, trafficking and subsequent consumption of ever-increasing narcotics have led to an ever-increasing flow of drug money, not to mention that the ever-improving ease of transferring large sums of money electronically allows criminals to transfer money from one corner of the world to another in a fraction of a second. But at the same time, it helps regulators examine and monitor international fund movements and detect unusual trends in fund movements. In the fight against money laundering, the focus is no longer only on the underlying crime of drug trafficking, but also on what happens to the huge sums of money that are the proceeds of this crime. Money laundering is a process by which the illicit source of assets obtained or generated by criminal activity is masked in order to conceal the link between the funds and the original criminal activity. Terrorist financing includes the acquisition and processing of assets in order to provide terrorists with the necessary resources to carry out their activities. Although these two phenomena differ in many ways, they often exploit the same vulnerabilities in financial systems, allowing for an excessive degree of anonymity and a lack of transparency in the execution of financial transactions. In addition, the bill seeks to give the centre the power to suspend a transaction for up to five business days if there are indications of suspicious activity. This will give the center enough time to investigate the transaction. The bill also seeks to introduce provisions restricting the right to privacy enshrined in Kenya`s 2010 constitution with respect to the prevention, detection and investigation of money laundering and terrorist financing.

In 2009, Kenya enacted the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA). This was the first substantive anti-money laundering legislation for the country. The purpose of the Act, as set out in its preamble, is to provide for the offence of money laundering, the introduction of measures to combat the offence, the identification, tracing, freezing, seizure and forfeiture of proceeds of crime and related purposes. The law established 3 compliance and enforcement agencies as follows: Money laundering has probably been around for as long as money itself has existed. However, it is a relatively new crime in the world, because in the past no one considered it a crime as such. The law tended to focus on the underlying crime rather than what was done with the proceeds of that crime. The bill expands the definition of “whistleblower” in the act.

These now include: lawyers, notaries and other independent legal professionals who practise alone, as partners or employed in professional law firms, so that the obligations to monitor complex, unusual, suspicious, significant or other transactions and to report transactions that may constitute or are related to money laundering apply to them under Part IV of the Act. Kenya is therefore not lagging behind in the global fight against money laundering: it has signed and ratified all United Nations conventions on combating money laundering and the financing of terrorism and is a member of a regional body known as the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). The ESAAMLG is an 18-member organization dedicated to global AML/CFT standards. The EAAFLG is an associate member of the Global FATF. The other members of this regional body are Angola, Botswana, Eswatini, Ethiopia, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. Paragraph 9(1)(d) of the PCMLTFR states: “An enhanced due diligence procedure should be applied to persons and business relationships, as well as to high-risk transactions and persons established in jurisdictions that do not have adequate anti-money laundering systems.” The FRC is the financial intelligence unit of the Kenyan government. It is responsible for compiling statistics and records based on the information received, and it shall establish and maintain a database of suspicious transactions. The database helps detect money laundering and contact money laundering intelligence agencies outside Kenya.