KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
board oversight as they concern enterprise-wide risk management and statutory compliance. Obligations Applicable to All Companies (Including Non-Reporting Institutions) While the Part IV compliance obligations discussed above apply only to reporting institutions, POCAMLA also creates general criminal offences that apply to all persons, including companies that are not reporting institutions. Money laundering offences Under POCAMLA, any person (including a company) commits an offence if they enter into any agreement, arrangement or transaction with respect to property that is the proceeds of crime, knowing or having rea - son to believe that the property is proceeds of crime. Under POCAMLA, any person who acquires, uses or possesses property knowing or having reason to know that it forms part of the proceeds of crime commits an offence. These offences apply to all companies regardless of whether they are reporting institutions. Tipping off and misrepresentation POCAMLA makes it an offence for any person who knows or ought reasonably to have known that a report is being prepared or has been sent to the FRC to disclose information relating to that report. POCAM - LA makes it an offence for any person to knowingly make a false statement or provide a false document to a reporting institution, supervisory body or the FRC. These offences apply to all persons and companies. Cross-border transportation of monetary instruments Under POCAMLA, any person (not only reporting insti - tutions) intending to convey monetary instruments exceeding USD 10,000 or its equivalent into or out of Kenya must declare this to an authorised person. Wilful failure to report or material misrepresentation of the amount, is a criminal offence. This obligation
pliance functions and receiving periodic compliance reports. Directors owe statutory duties under the Companies Act to act in good faith, exercise reason - able care, skill and diligence and ensure the compa - ny’s compliance with applicable laws. A failure by the board to oversee AML compliance or respond to red flags may constitute a breach of statutory duty. Personal Liability (All Companies) POCAMLA provides that where an offence is com - mitted by a body corporate with the consent or con - nivance of any director, manager, secretary or other officer, that person (as well as the body corporate) may be prosecuted. This applies to both reporting institutions and non-reporting companies that com - mit offences under the Act. For reporting institutions, the FRC is empowered to impose civil penalties for non-compliance with the Act or any instruction, direction or guideline issued by the FRC. Penalties may be up to KES5,000,000 for indi - viduals and KES25,000,000 for corporate bodies, with additional daily penalties of KES10,000 for continued non-compliance. The FRC may also issue warnings, compliance orders or request the suspension or revo - cation of licences. 6. Audit, Risk and Internal Controls 6.1 External Auditors Companies are generally required to appoint an inde - pendent auditor to review their annual financial state - ments. There are exemptions for small and dormant companies. • Small company: A company qualifies as “small” if its turnover for the relevant year does not exceed KES50,000,000 (approximately USD387,570) and the value of its net assets at the end of the financial year does not exceed KES20,000,000 (approxi - mately USD155,026). • Dormant company: A dormant company is one that has not traded or has minimal activity during the year. However, this exemption does not apply to companies in specific industries, even if they are dormant. These industries include insurance com - panies, banking companies and e-money issuers.
applies to all persons and companies. Board Oversight and Personal Liability
For reporting institutions, the board bears responsibil - ity for ensuring compliance with Part IV of POCAMLA. This includes approving AML/CFT policies and risk frameworks, ensuring adequate resourcing of com -
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