The Central Bank of Kenya (CBK) will now have powers to vet beneficial owners of banks besides just directors and senior managers after MPs tightened the law on reporting suspicious large cash transactions.
MPs passed changes to the current law to empower the CBK to regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing by all reporting institutions regulated by and supervised by the Central Bank, and whom the provision of proceeds of crime apply.
Read: State moves to relax checks on large cash transactions
The National Assembly voted to amend the Central Bank of Kenya Act through changes contained in a Bill that alters the Proceeds of Crime and Anti-Money Laundering Act, 2009.
“In undertaking its mandate, the Central Bank may vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution,” reads the amendment initiated by the Finance and National Planning Committee.
The law currently requires reporting institutions, including banks to report suspicious financial transactions to the Financial Reporting Centre (FRC), which tracks illicit cash transactions.
FRC requires financial institutions to flag and report suspicious transactions linked to secret business owners who are politically exposed (public servants) or criminals.
Cabinet last month agreed to a proposal that increased the cash disclosure threshold by 50 percent from the current $10,000 (Sh1.4 million) to $15,000 (Sh2.1 million).
The latest amendments to the CBK Act, which was moved by committee chairperson Kuria Kimani (Molo), require the CBK to conduct onsite inspection, and offsite surveillance, and undertake consolidated supervision of a reporting institution and its group.
The regulator will also have the power to compel the production of any document or information the CBK may require for purposes of discharging its supervisory mandate under the Proceeds of Crime and Anti-Money Laundering Act, 2009.
“The Central Bank may impose monetary, civil or administrative sanctions for violations related to anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes,” read the new changes.
The CBK will also have powers to require a financial institution and designated non-financial business and profession to co-operate and share information for AML/CFT.
The MPs enhanced penalties for violations relating to money laundering, and terrorism financing.
“No money remittance, foreign exchange bureau, digital credit provider, director, officer, employer, agent or any other person shall violate or fail to comply with any provision of the Proceeds of Crime and Anti-Money Laundering Act, 2009, or any regulation, guideline, rule, direction or instruction issued under the said Act or under this section,” the new law says.
Read: Lawyers sign pact with State to report clients’ dirty cash
Institutions that violate or fail to comply with the provisions of the law face a penalty not exceeding Sh5 million fine while individuals will be slapped with a Sh1 million fine.
The reporting institution or individuals’ directors also face an additional penalty not exceeding Sh200,000 in each case for each day or part thereof during which such violation or non-compliance continues.
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