Central Bank of Kenya Gains Enhanced Powers to Vet Beneficial Owners and Regulate Large Cash Transactions
The Central Bank of Kenya (CBK) has been granted expanded authority to scrutinize not only directors and senior managers but also beneficial owners of banks, following amendments to the law regarding reporting of suspicious large cash transactions. The amendment empowers the CBK to regulate, supervise, and enforce compliance related to anti-money laundering, combatting the financing of terrorism, and countering proliferation financing across all reporting institutions under its regulation and supervision.
The National Assembly introduced changes to the Central Bank of Kenya Act through a Bill that amends the Proceeds of Crime and Anti-Money Laundering Act, 2009. As part of its new mandate, the CBK will conduct vetting processes for proposed significant shareholders, beneficial owners, directors, and senior officers of reporting institutions.
Current law mandates reporting institutions, including banks, to report suspicious financial transactions to the Financial Reporting Centre (FRC), which monitors illicit cash activities. These transactions involve secret business owners with political exposure or connections to criminal activities.
The amendments also empower the CBK to perform onsite inspections, offsite surveillance, and consolidated supervision of reporting institutions and their groups. The regulator gains the authority to compel the submission of necessary documents or information to fulfill its supervisory role under the Proceeds of Crime and Anti-Money Laundering Act, 2009.
Moreover, the CBK can impose monetary, civil, or administrative penalties for violations related to anti-money laundering, terrorism financing, and proliferation financing. The CBK is authorized to demand cooperation and information-sharing from financial institutions and designated non-financial businesses and professions for anti-money laundering and countering the financing of terrorism (AML/CFT) purposes.
The amendments also enhance penalties for offenses related to money laundering and terrorism financing. Those violating or failing to comply with the law could face fines of up to Ksh 5 million for institutions and Ksh 1 million for individuals. Additionally, reporting institutions or individuals’ directors may incur further penalties not exceeding Ksh 200,000 per day for each violation or non-compliance.