New anti-money laundering rules target public officials
Central Bank governor Njuguna Ndung’u who has been in the front line in the war against against money laundering. Photo/File
What you need to know:
The regulations against money laundering focus sharply on State and public officers as a conduit of money acquired from illicit activities.
The rules giving teeth to the Proceeds of Crime and Anti-Money Laundering Act 2010 were published last Friday by Finance minister Njeru Githae.
They limit the amount of money that one can travel while entering or leaving Kenya at $10,000 or Sh855,000 at current exchange rates.
Dealings by elected officials and top public servants will be placed under close scrutiny under a new regulatory regime meant to keep dirty money out of circulation.
The regulations against money laundering focus sharply on State and public officers as a conduit of money acquired from illicit activities like drug and human trafficking, wildlife poaching and trade in arms.
“A reporting institution (mostly commercial banks) will be required to take adequate measures to establish the source of wealth and the source of funds which are involved in the proposed business relationship or transaction where a customer or beneficial owner is a politically exposed person,” the new regulations state.
The rules giving teeth to the Proceeds of Crime and Anti-Money Laundering Act 2010 were published last Friday by Finance minister Njeru Githae.
They limit the amount of money that one can travel while entering or leaving Kenya at $10,000 or Sh855,000 at current exchange rates.
“Any person intending to convey into or out of Kenya monetary instruments equivalent to or exceeding US$ 10,000 or its equivalent in Kenya shillings or any other currency, shall before doing so declare the particulars of those monetary instruments to a customs officer,” the rules state.
The focus on politicians is aimed at curbing illegal dealings that have in the past compromised the integrity of civil servants especially during the Goldenberg and Anglo Leasing scandals.
Those to be placed on the watch list for money laundering activities include members of the Cabinet, senior executives of State corporations, top political party officials, senior military officials and other members of the disciplined forces and members of the Judiciary.
Others are officials of international organisations and the immediate family members or close business associates of those affected.
The Proceeds of Crime and Anti-Money Laundering Regulations 2013 obligates all reporting institutions to obtain approval from senior management to transact or establish relationship with top public officers who are politically exposed.
The institutions, where public officials will be seeking to transact business, will be required to obtain information on the immediate family members or close associates of the officers with authority over the account.
“A reporting institution shall have appropriate risk management systems to determine whether the customer or beneficial owner is a politically exposed person,” the rules state.
The reporting institutions will be filing their money laundering findings with the Financial Reporting Centre with regard to purpose of the transaction, volume and nature of account.
“A reporting institution will be required to review public sources of information on the politically exposed person,” the rules say.
Reporting institutions will be expected to identify, assess, monitor, manage and mitigate the risks associated with money laundering. The rules require commercial banks to demand written statements confirming the legitimacy of proceeds disclosing the business activity and its ability to generate substantial amounts of cash where deposits and withdrawals are large, frequent or unusual.
For large, frequent or unusual currency exchanges, customers will make a written statement to banks explaining the need for the conversion. A similar statement will be required for multiple or nominee accounts for a related transaction.
“For large, frequent or unusual transfers or payments of funds, appropriate documentation as to the identity of the recipient (or sender) of the transferred or paid funds, and the reason underlying for the transfer or payment, will be required,” the rules add.
Requests for advice or services will also be taken through the same checks with financial institutions bearing the burden of satisfying that the transactions are legitimate.
A person, reporting institution or supervisory body that contravenes the regulations will be liable to a fine of Sh5 million or a three year imprisonment or both on conviction.
