Economy

Lawyers fail to block Bill on dirty cash deals

lawyers

A team of lawyers proceeding to the Public Service Commission offices in Nairobi on Wednesday, October 13, 2021. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • Speaker Justin Muturi overruled attempts by MPs with a legal background to block amendments to the anti-money laundering law on grounds of unconstitutionality.
  • Several MPs who are lawyers led by Tharaka Nithi lawmaker George Muruwari had demanded that the Speaker stop the processing, through the second reading, the Proceeds of Crime and Anti-Money Laundering Bill, 2021.

Lawyers have once again failed to stop Parliament from enacting a Bill that will compel them to start disclosing suspicious financial deals involving their clients.

Speaker Justin Muturi overruled attempts by MPs with a legal background to block amendments to the anti-money laundering law on grounds of unconstitutionality.

Several MPs who are lawyers led by Tharaka Nithi lawmaker George Muruwari had demanded that the Speaker stop the processing, through the second reading, the Proceeds of Crime and Anti-Money Laundering Bill, 2021.

The Bill, which is one step away from becoming law, seeks to designate advocates, notaries and other independent legal professionals as reporting entities for dirty cash dealings.

The State is seeking to obligate advocates, notaries and other independent legal professionals to report suspicious financial transactions to the Financial Reporting Centre (FRC).

The State, through the FRC, sponsored changes to the Proceeds of Crime and Anti-Money Laundering Act in a bid to seal deficiencies in curbing illicit cash transactions.

MPs yesterday unanimously voted to approve the Bill through its second reading and is now awaiting the third reading before being forwarded to the President for assent.

“I, therefore, find that Proceeds of Crime and Anti-Money Laundering (Amendment) Bill 2021 is properly before the House and nothing precludes the House from considering the Bill in the remaining stages,” Moses Cheboi, the Deputy Speaker ruled.

Mr Murugara and several other MPs had argued that singling out advocates and accountants among all other professions and designating them as reporting institutions violates Article 27(4) of the Constitution which prohibits any form of discrimination

He said requiring advocates under the law to report financial dealings of their clients would erode the settled legal principle of advocate-client confidentiality.

But the Speaker dismissed the arguments saying several other professionals including accountants had been designated as reporting agents and therefore including advocates will not amount to discrimination.

“Iinclusion of advocates as reporting institutions for suspicious financial transactions in the manner proposed in the Proceeds of Crime and Anti-Money Laundering (Amendment) Bill, 2021 does not, at face value, erode legal principle of advocate-client confidentiality,” Mr Cheboi ruled.

The Speaker also set aside arguments that the Bill violates Article 25 of the Constitution as it seeks to limit fundamental freedoms.

“The Constitution allows this House to limit any other right or fundamental freedom subject only to the protections outlined by the Constitution,” he said.

Mr Cheboi drew the attention of MPs to section 18 of the Proceeds of Crime and Anti-Money Laundering Act, 2009 which currently provides for the entrenchment of the advocate-client confidentiality principle.

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”.

Speaker 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.

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

The targeted transactions relate to buying and selling of property; creation, operation and management of companies as well as management of the 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.

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