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Kenya to amend law to tackle money laundering by banks

Saturday April 23 2016
EAMONEYLAUNDERING

The Kenya government will revoke the licences of banks abetting money laundering. PHOTO | FILE

Kenya is to amend its anti-money laundering law to enable the government to revoke the licences of errant financial institutions.

The proposed amendments to the Proceeds of Crime and Anti-Money Laundering Act (2009) come a few months after President Uhuru Kenyatta ordered that tougher action be taken against individuals and institutions for money laundering.

The Act established the Assets Recovery Agency (ARA) and Financial Reporting Centre (FRC) to combat money laundering in Kenya.

If passed, the amended law will give powers to the FRC to seek revocation of licences for financial and real estate institutions that are used as conduits for money laundering activities. The amendment Bill was tabled in the National Assembly in February by majority leader Aden Duale.

The Commercial Bank of Africa and Co-operative Bank have been put on the spot over tax evasion. In January, Family Bank was fined by the CBK for handling money suspected to have been siphoned out of the National Youth Service.

Mr Duale said the amendments will ensure that punitive measures are taken against institutions that abet money laundering.

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“The Act establishes a strong legal framework for dealing with proceeds derived from all crimes, including corruption, but excludes the EACC, the principal agency mandated to prevent and combat corruption. The amendment also seeks to establish an independent Asset Recovery Agency as a body corporate with all capacities requisite for autonomy,” Mr Duale said.

In 2012, Kenya established the FRC under the Proceeds of Crime and Anti Money Laundering (Amendment) Act, 2012, to identify the proceeds of crime and combat money laundering.

Legal experts say the sanctions will affect financial, non-financial and real estate institutions. “What we are seeing here is a tough stance being taken by the law on reporting institutions,” advocate Muthoni Kamau said, adding that the new amendments give the FRC additional powers.

Kenya Bankers Association CEO Habil Olaka said banks are not to blame for malpractices that involve suspicious funds.

“Banks do their due diligence in reporting suspicious transactions to the Financial Reporting Centre. Banks have also sanctioned any of their employees found culpable of abetting financial crimes,” Mr Olaka said.

However, the Africa Legal Network said the amendments do not offer a provision for conducting a hearing before imposing the FRC sanctions, raising concern about fairness.

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