Bill proposes tough penalties for terrorism financiers
Some of the arms that were allegedly recovered in the house of the terror suspect who was killed in Bakarani area in thispicture taken on 17 June 2013 on display at provincial police headquarters. Photo/Laban Walloga.
What you need to know:
Rotich seeks to amend law, enhance penalties for collaborators as Kenya moves to clear its name from list of blacklisted nations.
Convicted collaborators will pay millions of shillings in fines and serve jail terms of up to 20 years if the Bill is passed.
The proposed amendments by the Treasury are contained in the Finance Bill that is now before Parliament.
Companies and individuals doing business with terrorists will face steep fines and longer jail terms if Parliament passes proposed amendments to the Prevention of Terrorism Act.
The proposed amendments by the Treasury are contained in the Finance Bill that is now before Parliament.
“Offences under this section shall be deemed to be committed irrespective of any occurrence of a terrorist act … or whether the funds have actually been used to commit such act,” reads part of the amendment.
The proposal means that it is now the responsibility of individuals and businesses to ensure that they are dealing with entities that have no links with terrorism, a move that is set to intensify profiling and background checks in key sectors such as financial services, real estate, transport and hospitality.
Convicted collaborators will pay millions of shillings in fines and serve jail terms of up to 20 years if the Bill is passed. Treasury Secretary Henry Rotich said the Bill seeks to address deficiencies in the criminalisation of terrorism financing in order to comply with the Financial Action Task Force standards.
This is the global agreement that countries have signed under the UN leadership in the fight against terrorism.
Analysts warned that despite their good intentions, the amendments are likely to raise the cost of doing business in Kenya and expose local non-compliant institutions such as banks to the risk of being blacklisted by countries like the United States.
“I expect the amendments to face opposition from various quarters,” said Robert Bunyi, an analyst at Mavuno Capital.
“What constitutes terrorism and how somebody is classified as a terrorist should be made clear to eliminate the risk of ad hoc convictions.”
The Bill proposes that individuals and corporate entities be labelled as terrorists by the Inspector-General of Police if the officer has reasonable grounds to believe that they have committed or are planning to carry out a terrorist attack.
It then goes on to define a terror attack as an act intended to cause death or serious bodily injury to any person not actively involved in armed conflict in order to intimidate a population or to compel a government or an international organization to do or abstain from doing any act.
These include shootings, kidnappings, and bombings, whose escalation in Kenya prompted the government to send its army into Somalia in pursuit of terror group Al-Shabab.
The AML Act now prohibits the electronic transmission of cash to terrorist groups who will not need to have committed terror acts to be classified as such.
Financial services providers, including banks, insurers, and money transfer firms are particularly exposed to the broad definition of terrorists, leaving them with multi-million-shilling fines if found guilty of handling dirty cash.
Handling or transporting money or other valuables that aid another person to commit a crime attracts a 14-year jail term and/or a fine not exceeding Sh5 million or the value of the property involved, whichever is higher.
Companies will pay up a maximum of Sh25 million in fines or an amount equivalent to the value of the property, whichever is higher.
Business leaders said they expect punitive measures in the twin laws to slow down financial transactions and the pace of investments in sectors such as real estate that has long been suspected of thriving on demand from criminals.
Enhanced scrutiny of customers also calls for further investments in staff training and technology to boost compliance, leading to increased operating costs for businesses.
“Banks are incurring additional compliance costs but this is necessary to improve the country’s rating in terms of financial integrity,” said Habil Olaka, the chief executive of Kenya Bankers Association.
Banks, insurance firms, the Capital Markets Authority, the Insurance Regulatory Authority, the Central Bank of Kenya, and Retirements Benefits Authority are required to report suspicious transactions to the Financial Reporting Centre.
Some banks have started hiring staff specifically to ensure compliance with the AML rules while others are assigning the role to existing employees.
Kenya has been under pressure from the United States and the United Nations to tighten its anti-terror and anti-money laundering laws to reduce its use as a hub for terrorist operations.
“The Bill seeks to extend the funding of a terrorist individual or organisation for any purpose to be an offence as well as recognise terrorism financing to include acts criminalised under the Treaties listed in the Annex to the 1999 International Convention for the Suppression of the Financing of Terrorism.”
Last year, the US placed Kenya on a blacklist of countries that do not support the fight against terrorism, piling pressure on the government to seal loopholes in the anti-terror laws.
The move came after Kenya was found to be lagging behind in the adoption of the Financial Action Task Force standards in its regulations.
The amendments are expected to bring Kenya into compliance, helping the country to improve its foreign direct investments and participate freely in global financial markets.
