HIGHLIGHTS ANTI-MONEY LAUNDERING AND COMBATING OF TERRORISM FINANCING LAWS ACT, 2023

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The key aspects of the Anti-Money Laundering and Combating of Terrorism Financing Laws Act, 2023 (AML/CTF Act) in Kenya, based on the information you provided.  This act amends several existing laws to strengthen AML/CTF measures. Here's a breakdown:

1. Purpose & Scope:

Preamble: The core objective is to update and improve laws related to anti-money laundering, combating terrorism financing, and proliferation financing.

Amendment of Existing Laws: The Act modifies various laws governing key sectors and entities in Kenya.  This includes:

  1.     State Corporations Act
  2.     Capital Markets Act
  3.     Insurance Act
  4.     Banking Act
  5.     Central Bank of Kenya Act
  6.     Microfinance Act
  7.     Limited Liability Partnership Act
  8.     Companies Act, 2015

2. Key Changes & Implications

Definition of "Beneficial Owner": The Act adopts the definition of "beneficial owner" as defined in the Companies Act, 2015. This is crucial for identifying the real individuals who own or control companies.

Central Bank of Kenya (CBK) Powers & Responsibilities:The CBK is given a central role in regulating and enforcing AML/CTF compliance for institutions it supervises.  

This includes:

  •   Vetting significant shareholders, beneficial owners, directors, and senior officers.
  •  On-site inspections and off-site surveillance.
  • Consolidated supervision of institutions and their groups.
  • Requiring the production of documents and information.
  •  Imposing sanctions for AML/CTF violations.
  • Issuing regulations, guidelines, and directives.
  • Sharing corporate information related to AML/CTF.

Penalties for Violations: The Act introduces new penalties for legal entities and individuals who fail to comply with AML/CTF regulations.

  • Legal Person (e.g., Company): Penalty up to 20 million shillings.
  • Natural Person (Individual):Penalty up to 1 million shillings.
  • Continuing Violations: Additional penalties of up to 100,000 shillings per day for ongoing non-compliance.

Company Disclosure Requirements: Companies have increased obligations to disclose information about their beneficial owners.  This includes:

  1.     Providing particulars of each beneficial owner.
  2.     Disclosing nominee directors and their nominators.
  3.     Maintaining a register of beneficial owner

  • Submitting the register to the registrar of companies within specified timeframes (new companies at registration, existing companies within 60 days of the Act coming into force, with potential extensions).
  • Retaining records of beneficial owner information for at least ten years.
  • Penalties for Non-Compliance with Company Act (related to beneficial ownership)
  • Initial administrative penalty of 2,000 shillings for failing to maintain or submit the beneficial owner register.
  • Additional daily penalties of 100 shillings for continued non-compliance.
  • Fines upon conviction for failing to comply with submission requirements.

The AML/CTF Act, 2023, significantly strengthens Kenya's legal framework for combating money laundering, terrorism financing, and proliferation financing. It places greater responsibility on the Central Bank, increases transparency requirements for companies, and introduces substantial penalties for non-compliance. 

The focus is on identifying and controlling the individuals who ultimately benefit from or control companies and financial institutions.

 




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