Kenya is a member of the Eastern and Southern Africa Anti–Money Laundering Group (ESAAMLG) which comprises 20 member countries from Eastern and Southern Africa including Botswana, Lesotho, Malawi, South Africa, Tanzania, and Uganda among others. Some of the main objectives of ESAAMLG are to implement measures to combat the financing of terrorism and implement any other measures contained in the multilateral agreements and initiatives relevant to the prevention and control of laundering of proceeds of all serious crimes and the financing of terrorism and proliferation of weapons of mass destruction. Over the years money laundering and the financing of terrorism have sparked concern due to the negative impact these activities have on a country’s financial systems. To streamline the financial sector supervision and regulation, good governance, judicial and legal reform, effective law enforcement, and compliance with all United Nations treaties and resolutions on money laundering and terrorist financing which Kenya has ratified, on September 1, 2023 the President assented into law The Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023 (the “AMLCTL”).
The AMLCTL is a piece of legislation that amends a series of existing Acts such as the Extradition Act (Contiguous and Foreign Countries) Act, Extradition (Commonwealth Countries) Act, Capital Markets Act 5, Banking Act, Anti-corruption and Economic Crimes Act, The Mutual Legal Assistance Act, Limited Liability Partnership Act, Companies Act, Prevention of Terrorism Act, amongst others. In total, the AMLCTL amends at least sixteen (16) written laws and for purposes hereof, we shall discuss a few of those laws affected by this new Act and the discuss some of the amendments introduced by the AMLCTL.
Some of the current Acts that have been amended include;
Extradition (Contiguous and Foreign Countries)) Act (Cap. 76); amendment to this Act introduces what it refers to as “simple extradition” which allows a fugitive to consent to an extradited to that requesting State without conducting formal extradition proceedings. Previously the extradition process the long and odious, the new amendment by the AMLCTL further sets out the requirements and procedures for “extradition by consent” in the new Section 10A (2).
Anti-Corruption and Economic Crimes Act (No. 3 of 2003); an amendment by the AMLCTL now criminalizes the laundering of the proceeds of corruption as an economic crime. Prior to the amendment of the Ethics and Anti-Corruption Commission’s (EACC) power economic crimes were limited to public property as defined in Section 45 and offenses involving dishonesty under any written law providing for the maintenance or protection of the public revenue. The EACC is not vested with the power to investigate money laundering crimes shifting this power from the previous office of the Director of Criminal Investigations (DCI).
The Proceeds of Crime and Anti-Money Laundering Act, 2009 defines a reporting institution to mean a financial institution and designated non-financial business and profession. The Fourth Schedule of the Act placed an obligation on all reporting institutions to file a report on cash transactions exceeding US$ 10,000 or its equivalent in any other currency carried out by it. This requirement would require members of the public to provide documentary evidence and in certain instances explain the source of any amount over US$ 10,000. The AMLCTL amends the Fourth Schedule by increasing the reporting threshold to US$15,000.
National Police Service Act, 2011 (No.11A of 2011); amendment to this Act now introduces the concept of “controlled delivery” which is defined as the technique of allowing illicit or suspect consignments to pass out of, through, or into the territory of Kenya, with the knowledge and under the supervision of an authorised officer. The idea behind this is to facilitate the investigation of an offence and the identification of persons involved in the commission of the offence. We shall wait to see the nature of the regulations on the issue of controlled deliveries if/when they are published.
Limited Liability Partnership Act No. 42 of 2011; recognizing that Foreign Limited Liability Partnerships are a reality in today’s time, part of the amendments to this Act is the introduction of section 34A – 34H. Briefly, the Act now codifies the requirement that a foreign limited liability partnership shall, for purposes of operating in Kenya, appoint at least one local representative who shall be a permanent resident in Kenya; or a Kenyan citizen who ordinarily resides in Kenya. Once a foreign limited liability partnership ceases its operation in Kenya, is dissolved, liquidated, and struck off the registrar, the newly introduced Section 34H, places an obligation on the local representative to keep records of the entity for at least seven years after the limited liability partnership has been struck off.
With these new changes, we should expect to see an increase in both civil and criminal enforcement actions by requisite bodies. An argument the AMLCTL could have the effect of facilitating enforcement actions by relevant authorities against the vast network of individuals who may be engaged in money laundering activities or activities that support the financing of terrorism or proliferation acts. Individuals or entities rendering legal services, advice, or compliance services must enhance their internal due diligence process, assess their client’s potential exposure, and advise their clients as appropriate in light of the amendments by the AMLCT.
This alert is for informational purposes only and should not be construed as a legal opinion. If you have any queries or need clarifications, please do not hesitate to contact Gregory Makambo, Partner, (gmakambo@makambolaw.com), Kelvin Mwaniki, (k.mwaniki@makambolaw.com) or your usual contact at our firm, for legal advice.