wmlro.com: Kenya brings law into effect
It may be late, it may be weak, it may have important aspects missing and it may have none of the institutions required to make it work but at least Kenya's Anti Money Laundering Act will - at least nominally - come into force today.
The Act was passed on 31 December last year but under Kenyan law does not come into effect until Gazetted - and that must be done no later than six months after the law was passed. That deadline, therefore, expires on 30 June. Last Friday, as criticism mounted, it was announced that the law would be brought into effect today, 28th June.
The law is rudimentary - requiring for the first time KYC and suspicious transaction reporting in cases other than suspicions of the laundering of drugs-trafficking funds. Although some banks have reportedly taken it upon themselves to put in place counter-money laundering policies, these were not backed by any form of law or safe haven provision in the case of loss to customers. The measures were often introduced by banks threatened that they risked losing their access to the international correspondent banking system.
The Act widens the scope of the reporting institutions sector to include lawyers, accountants, insurance companies, securities dealers and others.
However, although the Act provides for the creation of an FIU to receive and analyse suspicious transaction reports, there are no signs of any progress towards its establishment.
Penalties for laundering are jail for up to seven years and / or a fine of up to Kenyan Shillings 2.5 million, a relatively lenient regime by the standards of many countries. But there are also confiscation provisions.
The law is, however, widely regarded as defective: after some five years of bad tempered argument in parliament, the law was eventually passed with a list of predicate offences (rather than the more sophisticated all-crimes approach) which does not include provisions relating to terrorist financing.
That failure is already raising eyebrows within Kenya after a bomb exploded in Uhuru Park in June during a large religious gathering. The police have appealed for information relating to "planners, financiers or foot soldiers" in the attack.
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