Cabinet Approves Bill That Grants More Powers To Financial Reporting Centre

NAIROBI Kenya July 18 -The Cabinet has approved a Bill that will enhance powers of the Financial Reporting Centre (FRC).

The draft Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill, 2023, seeks to give FRC sweeping powers to impose sanctions for violations of the proceeds of crime.

If enacted by Parliament, FRC, the anti-money laundering agency, will have the power to show the instances under which it might request for the revocation of a reporting institution’s license.

The Bill enhances the penalties for violations for declarations for cross-border currency, aligning them with the Financial Action Task Force (FATF) standards.

It further amends the Insurance Act, providing for the licensing of insurance companies.

The current regime provides for registration, which is a deficiency for financial institutions subject to core principles.

The Bill further aligns the reporting requirement by making Reporting Institutions to report suspicious transactions promptly upon forming suspicion.

Besides raising the cash transaction reporting threshold from $10,000 to $15,000, the Bill provides for the requirement for companies to keep a register of beneficial owners.

All companies must disclose full details of the beneficial owners of its shares, and lodge copies with the Registrar of Companies. In the recent past, there was a surge in fraud and corrupt transactions perpetrated by individuals owning phony companies and shell corporations mostly of which only exist on paper and has no office nor employees.

Section 93A of the Companies Act, 2015 requires all Kenyan incorporated companies to keep and lodge with the Registrar of Companies a register of its beneficial owners.

In the case of the multibillion National Youth Service (NYS) scandal, for example, it was established that some of the suspects, including Josephine Kabura were assisted in registering several companies that were irregularly awarded tenders at the institution.

Reports indicate that Kenya acts as a strategic gateway between East and Central Africa and Europe, the Middle East, and Asia and this makes it highly susceptible to acting as a transhipment point for illicit trade and finance.

As a result, the country needs to have effective and adequate anti-money laundering and countering the financing of terrorism (AML/CFT) measures in place.

The US government last year listed Kenya as a “major money laundering jurisdiction,” citing numerous domestic and foreign criminal activities and highlighting that money laundering takes place in both the formal and informal sectors.

After updating its AML/ CFT framework, Kenya was removed from the Financial Action Task Force’s (FATF) list of non-cooperative countries and territories.