Proceeds of Crime and Anti-Money Laundering Act

Prior to the enactment of the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) in December 2009, Anti-Money Laundering initiatives in the country were spearheaded by the National Taskforce on Anti-Money Laundering and Combating the Financing of Terrorism (NTF).  The NTF is a multi-disciplinary Taskforce comprising various government ministries, agencies and departments and was established through a gazette notice in 2003.

The Proceeds of Crime and Anti-Money Laundering Bill, 2009 received presidential assents on the 31st December, 2009 hence making it law. This law is the Proceeds of Crime and Anti-money Laundering Act, 2009 (the “Act”).  The Act creates a comprehensive legislative framework to combat the offence of money-laundering in Kenya and to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime among other things.

Anti-Money laundering legislation has come a long way since its inception in 2007. The government had published a bill in 2007 and another in 2008, none of which were passed into law during the years they were published.

Before the enactment of the Act, money laundering legislation in Kenya was weak and fragmented. Money laundering was primarily being dealt with under the Narcotic Drugs and Psychotropic Substances (Control) Act, 1994 (the “Narcotics Act”) which only dealt with proceeds of drug trafficking and the Central Bank of Kenya Guideline on Proceeds of Crime and Money Laundering (Prevention)(the “CBK Guideline”) which only applies to banking institutions licensed under the Banking Act.

The Act, which repeals the anti-money laundering provision in the Narcotics Act, applies to all persons whether individual or corporate and to the proceeds from any criminal activity. The CBK Guideline however continues in force and banking and financial institutions will therefore be required to comply with both the Act and the CBK Guideline.

Financial Reporting Centre

The Financial Reporting Centre (FRC) (Kenya’s Financial Intelligence Unit) is established under section 21 of the Proceeds of Crime and Anti-Money Laundering Act, 2009. The FRC is an independent body whose principal objective is to assist in the identification of the proceeds of crime and combating money laundering. The FRC became operational on April 12, 2012.

AML Advisory Board

The FRC works under the strategic guidance of the Anti-Money Laundering Advisory Board (AML Board) which is established under section 49 of POCAMLA. The mandate of the AML Board is to advise the Director General of the Financial Reporting Centre (FRC) generally on the performance of his functions and the exercise of his powers under the Act.