By 
In a strategic move aimed at bolstering the nation’s financial integrity, the Kenyan Cabinet has given its approval to the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill 2023. This legislative step is intended to facilitate a 50% increase in the cash-reporting threshold, raising it from $10,000 (Sh1.4 million) to $15,000. The proposed changes are designed to enhance the efficiency of businesses and individuals by adjusting the cash-reporting requirements, bringing the threshold in line with the maximum limit prescribed by the Financial Action Task Force (FATF).
Despite significant progress in combating money laundering and terrorism financing, Kenya continues to face challenges in these areas. While the establishment of the Asset Recovery Agency (ARA) and the Financial Reporting Centre (FRC) marked positive developments, the ESAAMLG Mutual Evaluation Report in September 2022 identified areas where Kenya’s national strategy to combat these threats fell short.
The country faces substantial money laundering risks from both domestic and international sources, with vulnerabilities observed in its financial system, legal sector, real estate sector, and cross-border trade. Kenya’s geographic location and status as a regional economic hub make it susceptible to being used as a transit route for illegal drug and wildlife trafficking. Additionally, the presence of active terrorist groups in neighboring countries increases the risk of terrorism financing.
To strengthen preventive measures, the country needs to enhance its understanding of terrorism risks, implement risk-based supervision, and enforce preventive measures more effectively. The proposed increase in the cash-reporting threshold calls for stricter Know-Your-Customer (KYC) requirements from financial sector players, with a particular focus on tracing the source of customers’ funds.
The rise of technology in the financial sector, coupled with increased online transactions due to the Covid-19 pandemic, has also elevated the risk of fraud and money laundering. Unregulated firms offering online foreign exchange trading services have become new avenues for illicit activities. As a precautionary measure, Kenyans are urged to conduct their transactions only through licensed companies in the online foreign exchange trading industry.
With the approval of the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill 2023, the Kenyan government is taking significant steps towards enhancing the nation’s financial integrity. The proposed amendments introduce several measures to detect and prevent money laundering activities, including enhanced customer due diligence, strengthened reporting obligations, expanded scope and coverage, and increased penalties and deterrents.
These new regulations align with global standards set by the Financial Action Task Force (FATF), an inter-governmental organization mandated to promote the effective implementation of legal, regulatory, and operational measures in combating money laundering, terrorism financing, and financing of weapons of mass destruction.
Comments