The Anti-Money Laundering Act in Kenya is a crucial piece of legislation aimed at combatting financial crimes such as money laundering and terrorism financing.
According to the 2020 Money Laundering and Terrorist Financing Risk Assessment report, Kenya has been identified as a high-risk country for money laundering due to its strategic location as a gateway to East and Central Africa. The report further reveals that between 2017 and 2019, a total of KES 24.6 billion (approximately USD 229 million) was frozen from suspected money laundering activities.
This article discusses the Anti-Money Laundering Act in Kenya and the role it plays in preventing criminal activities and safeguarding the integrity of Kenya's financial system.
What is Considered to be Money Laundering in Kenya?
According to the Kenyan government, a person who is aware or should have been aware that property is the result of criminal activity and:
1. Enters into any kind of agreement, arrangement, or transaction with someone related to that property, whether or not that agreement, arrangement, or transaction is legally binding; or
2. Performs any other action related to that property, either alone or with others, which has the effect of:
- hiding or altering the nature, origin, location, disposition, or movement of that property, or the ownership of it, or any interest anyone may have in it;
- helping anyone who has committed or is committing a crime, whether in Kenya or elsewhere, to evade prosecution; or
- removing or reducing any property obtained directly or indirectly as a result of the commission of a crime.
What is Anti-Money Laundering Act?
The Anti-Money Laundering Act (AMLA) is a set of laws and anti-money regulations aimed at preventing the use of illegally obtained funds for financial transactions.
The act is designed to combat money laundering, which is the process of hiding the true source of funds obtained through illegal activities such as drug trafficking, corruption, and fraud.
What is Anti-Money Laundering Act in Kenya?
The Anti-Money Laundering Act Kenya requires financial institutions, including banks, insurance companies, and money remittance companies, to implement anti-money laundering policies and procedures. This is to ensure KYT compliance with the anti-money laundering act in Kenya.
Also, these institutions must also conduct customer due diligence and report suspicious transactions to the Financial Reporting Centre (FRC), which is Kenya's financial intelligence unit responsible for receiving, analyzing, and disseminating financial information related to suspected money laundering and terrorism financing activities.
Under the Anti-Money Laundering Act Kenya, it is a criminal offence to engage in money laundering activities, and those found guilty may face imprisonment or fines. The act also provides for the freezing of assets that are suspected to be linked to money laundering or terrorism financing activities. Hence all financial institutions are expected to know and monitor their customers' transaction history.
What is the Proceeds of Crime and Anti-Money Laundering Act Kenya 2017 all about?
The Proceeds of Crime and Anti-Money Laundering Act Kenya (POCAMLA) is a law in Kenya that was passed in 2017 to strengthen the country's anti-money laundering and counter-terrorism financing framework. The act is a revision of the previous Anti-Money Laundering Act Kenya of 2009, hence it is called the Proceeds of Crime and Anti-Money Laundering (amendment) act 2017 Kenya.
The POCAMLA is designed to prevent the use of illegally obtained funds for financial transactions within Kenya and to disrupt the financing of criminal activities such as drug trafficking, corruption, and terrorism. It requires businesses and institutions, including financial institutions, lawyers, real estate agents, and casinos, to implement anti-money laundering and counter-terrorism financing policies and procedures.
The proceeds of crime and anti-money laundering act Kenya also establishes the Asset Recovery Agency (ARA), which is responsible for identifying, tracing, freezing, seizing, and recovering proceeds of crime. The ARA is also tasked with enforcing the provisions of the act and working closely with other government agencies to prosecute money laundering and terrorism financing cases.
Under the POCAMLA, it is a criminal offence to engage in money laundering activities or to provide financial services to individuals or entities involved in such activities. The act provides severe penalties for those found guilty, including fines and imprisonment.
The Proceeds of Crime and anti-money laundering act 2009 Kenya, classifies the following as criminal offences punishable under the anti-money laundering act Kenya:
- Money Laundering
- Failure to report suspicion regarding proceeds of crime.
- Acquisition, possession or use of proceeds of crime.
- Financial promotion of an offence.
- Conveyance of monetary instruments to or from Kenya
- Misuse of information
- Tipping off.
- Failure to comply with the provisions of this Act
- Failure to comply with an order of the court.
- Hindering a person in the performance of functions under this Act
- Protection of information and informers
- Secrecy obligations overrode.
- Client advocate relationship.
Overall, the Proceeds of Crime and Anti-Money Laundering Act in Kenya is a critical tool in the country's efforts to combat financial crimes and protect its financial system.
What is the Penalty for Money Laundering in Kenya?
The penalty for money laundering in Kenya is either a maximum of 14 years imprisonment or a fine that is not greater than KShs. 5,000,000/- or the value of the property involved in the offence, whichever amount is higher. It is also possible to receive both a fine and imprisonment.
Who Regulates Anti-Money Laundering Act in Kenya
1. Financial Reporting Centre:
In industries that are regulated, such as banking and insurance, the Financial Reporting Centre collaborates closely with the regulator to ensure that the regulated institutions fulfil their anti-money laundering obligations correctly.
Conversely, in sectors without a regulator, such as the real estate industry or high-value dealers, the Financial Reporting Centre interacts directly with the reporting institutions as the anti-money laundering act regulator in Kenya.
2. The Anti-Money Laundering Advisory Board.
As per Section 49 of the Act, the board was formed with the responsibility of providing policy guidance to the government, identifying proceeds of crime or unlawful activities through best practices, offering advice to the FRC on its functions and powers, and serving as a consultant to various entities.
3. The Assets Recovery Agency.
Established under Section 53 of the Act, the ARA investigate and enforce sanctions against individuals who violate the Act. The Agency is well-known for its authority in obtaining court orders for confiscation, forfeiture, restraint, and preservation of assets that are believed to have been obtained through illegal means.
Complying with the Anti-Money Laundering Act in Kenya is crucial to ensure that financial transactions are conducted legally and ethically. However, staying compliant can be challenging and time-consuming.
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