KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
Suspicious transaction reporting POCAMLA imposes mandatory monitoring and reporting obligations on reporting institutions. Report - ing institutions must monitor all complex, unusual, suspicious or large transactions on an ongoing basis. Upon suspicion that any transaction could constitute or be related to money laundering, terrorism financing, proliferation financing or the proceeds of crime, the reporting institution must file a suspicious transac - tion report (“STR”) with the Financial Reporting Centre (“FRC”) within two days after the suspicion arose. The obligation arises upon reasonable suspicion and does not require proof of criminal conduct. In addition to STRs, reporting institutions must file reports on: • large and unusual transactions; • cash transactions exceeding USD 15,000 or its equivalent (per the Fourth Schedule to POCAMLA); and • cross border transportation of monetary instru - ments. Customer due diligence and beneficial ownership Reporting institutions must: • verify customer identity; • identify and verify beneficial owners; • maintain customer and transaction records for at least ten years; and • disclose beneficial ownership information to rel - evant authorities. These obligations were strengthened by the Anti Mon - ey Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023, which aligned Kenyan law with FATF Recommendations on transparency and beneficial ownership. Internal controls and compliance POCAMLA requires reporting institutions to establish and maintain internal controls and internal report - ing procedures. This includes identifying persons to whom employees should report suspicious activities, ensuring those persons have access to relevant infor - mation and requiring direct reporting to the FRC where a sufficient basis exists. These functions fall within
be presumed to be inactive or not operating, which could result in their removal from the official register of companies. 5.4 Global Anti-Money Laundering Kenya’s AML framework is aligned with international standards established by the Financial Action Task Force (“FATF”). As a member of the Eastern and Southern Africa Anti-Money Laundering Group, Kenya has incorporated these standards into domestic law through the Proceeds of Crime and Anti-Money Laun - dering Act, Cap. 59A (“POCAMLA”) and its subsidiary legislation. POCAMLA distinguishes between obliga - tions that apply specifically to “reporting institutions” (as defined in the POCAMLA) and general criminal offences that apply to all persons, including compa - nies that are not reporting institutions. Obligations Applicable to Reporting Institutions Definition of reporting institutions Under POCAMLA, a “reporting institution” means a financial institution or a designated non-financial busi - ness or profession. These are the entities to which Part IV of POCAMLA applies. The categories include: • financial institutions – entities conducting activi - ties such as accepting deposits, lending, money transmission, foreign exchange, securities trading, portfolio management, insurance underwriting and money changing; and • designated non financial businesses and profes - sions (“DNFBPs”) – casinos (including internet casinos), real estate agencies, dealers in precious metals and stones, accountants, advocates, nota - ries and other independent legal professionals and trust and company service providers. Companies operating within these categories are “reporting institutions” for the purposes of POCAMLA and are subject to the full suite of AML compliance obligations set out in Part IV of POCAMLA. A com - pany that does not fall within either category is not a reporting institution and is not subject to Part IV obligations (though it remains subject to the general criminal offences discussed below).
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