The Central Bank of Kenya (CBK) has been granted extended authority by Members of Parliament to scrutinize not only directors and senior managers but also beneficial owners of banks.
This move comes as part of a legislative update aimed at bolstering the regulation of reporting institutions in matters concerning anti-money laundering, terrorism financing, and proliferation financing (availing resources to be used in the acquisition, manufacture or possession of weapons).
The adjustment, made through modifications to the Central Bank of Kenya Act, involves amendments to the Proceeds of Crime and Anti-Money Laundering Act of 2009.
Under the revised law, CBK is empowered to oversee, supervise, and ensure adherence to compliance measures related to anti-money laundering, terrorism financing, and proliferation financing for all reporting institutions governed by the Central Bank’s regulations.
This oversight also encompasses proposed significant shareholders, beneficial owners, directors, and senior officers of these reporting institutions as reported by Business Daily.
Presently, reporting institutions, including banks, are obligated to alert the Financial Reporting Centre (FRC) about suspicious financial transactions, particularly those involving covert business proprietors with political or criminal affiliations. The recent proposal by the Cabinet raised the threshold for cash disclosures from Ksh1.4 million to Ksh2.1 million.
The modified CBK Act, put forth by Molo MP Kuria Kimani, the chairperson of the Finance and National Planning Committee, introduces a range of measures. These include on-site inspections, off-site surveillance, and comprehensive supervision of reporting institutions and their affiliated groups.
CBK is also granted the authority to demand the submission of documents or information necessary to fulfill its supervisory role according to the Proceeds of Crime and Anti-Money Laundering Act of 2009.
The amended law also grants CBK the ability to impose monetary, civil, or administrative penalties for any breaches related to anti-money laundering, terrorism financing, and proliferation financing objectives.
Furthermore, CBK can require financial institutions and designated non-financial businesses and professions to collaborate and exchange information to enhance anti-money laundering and counter-terrorism financing efforts.
Parliamentarians have intensified the penalties for violations related to money laundering and terrorism financing. The new law stipulates that no money remittance, foreign exchange bureau, digital credit provider, or individual shall disregard or fail to adhere to any provisions of the Proceeds of Crime and Anti-Money Laundering Act of 2009, or any associated regulations, guidelines, rules, directions, or instructions.
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In the event of non-compliance, institutions violating the law could face fines not exceeding Ksh5 million, while individuals may incur fines of up to Ksh1 million. Additionally, reporting institutions and individual directors could be liable for an additional penalty not surpassing Ksh200,000 for each day or part thereof during which the non-compliance persists.