The Cabinet has approved the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill 2023 and sanctioned its transmittal to Parliament for passage.
The Bill proposes legal and policy reforms to address technical compliance deficiencies identified in Kenya’s second Anti-Money Laundering and Counter-Terrorism Financing Mutual Evaluation Report by the Eastern and Southern Africa Anti-Money Laundering Group.
In a statement on Friday, State House Spokesperson Hussein Mohamed said that once enacted into law, it will strengthen Kenya's anti-money laundering and anti-terrorism financing regulations in line with global standards.
"As a progressive member of the Community of Nations, Kenya acknowledges that money laundering poses a significant risk to the integrity of the financial system and the country's overall security," he said.
The approval of the amendment Bill by Cabinet through its delegated Committees structures marks a significant step towards combating money laundering and enhancing Kenya's financial integrity.
The Bill comprehensively reviews laws related to anti-money laundering, anti-terrorism financing and counter-financing of the proliferation of weapons of mass destruction.
"The proposed amendments introduce several measures to detect and prevent money laundering activities in Kenya, including the supervision and enforcement of terrorism financing, reporting of suspicious transactions, transparency of beneficial ownership and combating terrorism financing," Mohamed said.
These include stricter penalties for individuals and entities found guilty of money laundering offences like heavy fines and extended prison terms that are expected to act as deterrents against illicit financial activities.
The amendments will also pave the way for enhanced customer due diligence by financial institutions and designated non-financial businesses and professions.
The entities will be required to conduct thorough customer due diligence to identify and verify their customers.
This will help in mitigating the risk of anonymous transactions and ensure transparency in financial dealings.
The scope of what amounts to money laundering offences will also be expanded to include a wider range of activities such as proceeds of domestic and international criminal activities and terrorism financing.
"The legislation also addresses emerging threats in the digital and crypto-currency space, as well as dangers related to the financing of weapons of mass destruction," the statement from the State House said.
It added that the amendments will also strengthen the reporting obligations of mandated entities on suspicious transactions and activities to the Financial Reporting Centre (FRC) promptly.
The FRC will in turn analyse the reports and share intelligence with relevant law enforcement agencies that will, in turn, initiate investigations and take appropriate action against money laundering perpetrators.