KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
11.2 Concerns Raised by Open Banking While there are no regulations that specifically deal with open banking, banks and technology providers would need to be compliant with the Data Protection Act; please see 2.11 Implica- tions of Additional, Non-Financial Services Regulations . 12. Fraud 12.1 Elements of Fraud The key elements of fraud are: • a false representation of a false fact; • with the intention that another party should act on it; and • that party suffers damage. In legal proceedings, an accusation of fraud carries a heightened standard of proof. This standard exceeds the “balance of probabilities” threshold common in civil cases, demanding more substantial evidence. While this standard falls short of the “beyond a reasonable doubt” requirement of criminal cases, it necessitates a significantly more persuasive demonstration of fraudulent conduct. 12.2 Areas of Regulatory Focus Regulators prioritise investigating and taking action against individuals or businesses that conduct regulated financial activities without the necessary licences and those that overcharge interest on their financial products. These fraud - ulent practices harm customers by potentially leading to lost funds and financial vulnerability. Examples of enforcement activities include: • issuing cease-and-desist orders – regulators typically order unlicensed entities to immedi -
Under the VASPs Bill, virtual currencies fall with - in the definition of virtual assets. As such, if the VASPs Bill is implemented in its current form, there would be no distinction between the treat - ment of virtual currencies and the treatment of other virtual assets. 10.12Non-Fungible Tokens (NFTs) There is currently no regulatory framework for NFTs or NFT platforms. However, the VASPs Bill provides for the regulation of NFTs issued by VASPs in Kenya and excludes certain types of NFTs from regulation, including: • NFTs that are not used for payment, invest - ment or any other financial purposes; and • NFTs that, by their nature and function rather than the designation given by their issuer, are not used for payment or investment purpos - es, and are not a digital representation of any financial asset. Kenya currently lacks specific open banking reg - ulations. As such, the sharing of personal finan - cial data with third parties falls under the pur - view of the Data Protection Act. However, within its National Payments Strategy 2022-2025, the CBK has expressed a commitment to develop - ing appropriate API standards and promoting secure data-sharing practices. The adoption of secure APIs by digital financial providers would streamline connectivity between third parties, primarily fintechs specialising in tailored solu - tions, and traditional financial institutions. This integration would lead to enhanced efficiency and security within the financial sector. 11. Open Banking 11.1 Regulation of Open Banking
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