Fresh bid to force lawyers to report clients’ dirty cash

The Financial Reporting Centre (FRC) has forwarded to the Treasury the draft changes to the money laundering law in a fresh bid to compel lawyers to start disclosing suspicious financial deals involving their clients.

The anti-money laundering watchdog says the proposed amendments to the Proceeds of Crime and Anti-Money Laundering Act (Pocamla) are being fast-tracked to designate advocates, notaries and other independent legal professionals as reporting entities for dirty cash dealings.

The renewed bid comes ahead of a second assessment of Kenya for compliance with international ant-money laundering rules this year after the first one in 2010 found deficiencies in curbing illicit cash transactions.

The FRC is making a second stab to include lawyers as its agents after a similar move in 2019 was thwarted by lawmakers on grounds of “violating advocate-client privilege”.

National Assembly speaker Justin Muturi had also faulted the tabling of the legal changes through the Finance Bill 2019, ruling that they be made via a substantive amendment to the anti-money laundering law.

“They (Treasury) have prioritised that (draft changes to Pocamla). They already have our recommendation to amend the principal legislation,” FRC director-general Saitoti ole Maika said.

“We want to table it in parliament before this financial year lapses (June).”

If FRC has its way, law firms will be required to report suspicious dealings of their clients and keep record of cash transactions totalling at least Sh1 million ($10,000) and above.

The targeted transactions relates to buying and selling of property; creation, operation and management of companies as well as management of bank, savings and shares accounts on behalf of clients.

FRC fears non-designation of advocates amongst reporting institutions, through amendment of Section 44 of the Pocamla law, may result in Kenya being flagged as a high-risk country for money laundering and terrorism financing as was the case in 2010.

The legislators and individual lawyers, including Professor Tom Ojienda, had protested the “offensive clause” to amend the Pocamla law violated other legislations such as Section 134 of the Evidence Act and Section 18 of Pocamla Act which protects client-advocate privilege.

“There’s no law which prohibits lawyers from making disclosure when someone is engaging in illegal activity,”Mr Maika said.

“When you look at the amendment we are bringing we are not touching on anything which borders on litigation or information you give to a lawyer to advance your case in court.”

The Pocamla law, first enacted in 2009, has since undergone several amendments to address changing dynamics and include more non-financial institutions with potential to pose risks to the integrity of the global financial system.