CBK races to beat deadline on money laundering rules
Central Bank of Kenya in Nairobi. The regulator seeks to gazette new rules to curb money laundering and financing of terrorism activities ahead of a global meeting in Paris, which is set to discuss Kenya’s progress. Photo/DIANA NGILA
What you need to know:
The govt is rushing to gazette the regulations as it faces a major test when a 34-member group of mainly European and American countries meets next week to assess whether it should be blacklisted for failing to implement anti-money laundering and criminalising financing terrorism (AML/CFT) legislation.
The Financial Action Task Force (FATF) set up by the 34 countries has declared that Kenya has many deficiencies in combating money laundering and anti-terrorism activities, leading to the decision to discuss the possibility of blacklisting it.
During a review of the situation in Kenya last year, the task force tried to find out what the CBK was doing about anti-money laundering and found that monetary penalties had been levied against some commercial banks for flouting the rules.
Among the key provisions in the new regulations are that all financial institutions must report any transaction of Sh850,000 and above.
Bankers have up to Monday next week to give feedback on new regulations meant to curb money laundering ahead of an international review of Kenya’s position on the economic crime.
The government is rushing to gazette the regulations as it faces a major test when a 34-member group of mainly European and American countries meets next week to assess whether it should be blacklisted for failing to implement anti-money laundering and criminalising financing terrorism (AML/CFT) legislation.
A joint statement by the Central Bank of Kenya (CBK), United Nations Office on Drugs and Crime (UNODC) and the Kenya School of Monetary Studies released on Thursday said the meeting would take place from October 14 to 19 in Paris. The UN agency is one of the observers in the 34-member countries group.
The Financial Action Task Force (FATF) set up by the 34 countries has declared that Kenya has many deficiencies in combating money laundering and anti-terrorism activities, leading to the decision to discuss the possibility of blacklisting it.
During a review of the situation in Kenya last year, the task force tried to find out what the CBK was doing about anti-money laundering and found that monetary penalties had been levied against some commercial banks for flouting the rules.
Among the key provisions in the new regulations are that all financial institutions must report any transaction of Sh850,000 and above. Bankers had asked for more time to consider the rules but the meeting set for October 14 means there is little time for gazetting them.
“We are in a crisis situation. We have to finalise the regulations because we are under threat of being blacklisted,” said John Wanyela, chairman of the advisory board of the Financial Reporting Centre (FRC) set up in April to combat money laundering. “Some bankers wanted more time, but we really have no time.”
Mr Wanyela is the former chief executive of the Kenya Bankers Association, the industry lobby.
In order to convince the task force that it is doing all it can to put in place anti-money laundering legislation and is ready to take action, the FRC has also developed a number of activities, mainly training and workshops, targeting stakeholders besides the law.
Prosecutors and judges are supposed to work with the financial intelligence coming from the FRC.
Mr Wanyela said centre had visited Mauritius and South Africa in a bid to learn best practices with regard to anti-money laundering.
Terrorist assets
The task force noted Kenya had not made adequate progress in criminalising money laundering and terrorism financing.
“Despite Kenya’s high-level political commitment to … address its strategic anti-money laundering/criminalising terrorism financing deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain,” said the task force.
It further recommended that Kenya should work on ensuring a fully operational and effectively functioning Financial Intelligence Unit – expected to be part of FRC – and establishing and implementing an adequate legal framework for identifying and freezing terrorist assets.
Authorities were also expected to raise awareness of AML/CFT issues within the law enforcement community and implement effective and dissuasive sanctions in order to deal with people and organisations that do not comply with the national anti-money laundering/criminalising terrorism financing requirements.
“The FATF encourages Kenya to address its remaining deficiencies and continue implementing its action plan, including by implementing the anti-money laundering legislation and operationalising the new AML Advisory board,” said the FATF.
