How the State plans to stop dirty cash movements through Kenya

Finance Bill

Members of the National Assembly during a sitting. 

Photo credit: File | Nation Media Group

Individuals moving large undeclared cash volumes through Kenya face stiffer penalties in proposals meant to tighten Kenya’s anti-money laundering and counter-financing of terrorism.

In the amendments to the Anti-Money Laundering and Combating of Terrorism Financing Law (Amendment) Bill, 2023, such individuals will attract fines of up to 50 percent of the flagged cash volumes, a jail term of up to five years or both.

Currently, the law does not prescribe a jail term for such individuals but imposes a fine of up to 10 percent of the cash volumes involved.

“A person who contravenes the provisions of Section 12 (3) is, on conviction, liable to a fine not exceeding fifty percent of the amount of the monetary instruments involved in the offence, or imprisonment for a term not exceeding five years, or to both,” reads the proposed change.

The stiffer penalty is desired to deter the use of the country’s borders as a hub for international crime including money laundering and the financing of terrorism which often involves large cash transactions.

The amendment will come off the back of the recent recording of incidents where individuals have been nabbed trying to smuggle large cash volumes into or out of the country.

In February last year, for instance, a Kenyan man travelling from Burundi was arrested at the Jomo Kenyatta International Airport (JKIA) with Sh284.7 million in foreign currency.

The man was detained on suspicion of being part of a money-laundering scheme having failed to declare the cash.

Meanwhile, in October, six women were arrested at the same hub while trying to push Sh102 million into the country from India.

Incidents of undeclared large cash volumes in foreign currency have not been exempt with the Kenya Revenue Authority (KRA) blocking such suspicious transactions with more frequency in recent years.

A person intending to convey monetary instruments over the amount prescribed (Sh1.423 million/$10,000) to and from Kenya is required to make a declaration to the Financial Reporting Centre (FRC).

Failure to make the declaration amounts to an offence leading to the seizing of the cash.

The amendments to the Proceeds of Crime and Anti-Money Laundering Act of 2009 are aimed at tightening enforcement and preventative measures to seal the lid on money laundering and the financing of terrorism.

“The bill seeks to extend the application of preventative measures and enforcement measures applicable to anti-money laundering under the Act to combating terrorism financing and combating the financing of the proliferation of weapons of mass destructions,” reads a notice from the National Assembly.

Further, the changes which are at the public participation stage seek to align provisions of the principal Act to the Financial Action Task Force (FATF) standards.

FATF is a global money laundering and terrorist financing watchdog with States as members and is involved in the setting of international standards to prevent illegal activities.

The intergovernmental organisation's most recent recommendation has been on the adoption of a sector risk-based assessment of anti-money laundering, countering the financing of terrorism approach, covering the most vulnerable sub-sectors including real estate, virtual assets and legal professionals.

In April this year, the Treasury formed a task force to review anti-money laundering policies.

The task force that was led by the exchequer was tasked with reviewing policies, strategies, and legislation and making recommendations to the Treasury.

The new proposed amendments follow last year’s enactment of the Proceeds of Crime and Anti-Money Laundering (Amendment) Act.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.