What do bank robbers and terrorists have in common? It depends on what kind of movies you have been watching. The answer most likely to have popped into your mind at first is that both like to be armed, masked and hooded. Well, both also usually need banks for their activities.

Kenya now has a clear cut anti-terrorism law. After the President’s recent assent to the Prevention of Terrorism Act 2012, the country has now been exonerated after having been named a non-cooperative country by the Financial Action Task Force. The new legislation is aimed at creating stringent punitive measures for the commission of acts of terrorism or for giving any form of support to terrorist groups.

Prominently dealt with in the Act is the provision of financial support and financial services to terrorist groups. Certain provisions in this regard are bound to affect the legal obligations of banks. I'm afraid that in order to cover these succinctly and to give backing to my claims, I will resort to that  annoying lawyer's habit of quoting sections of the law.

Section 5 of the Act creates the offence of providing finance or a service to terrorists or terrorist groups. The test here is whether there were reasonable grounds to believe that the money was going to be used for, or to facilitate, terrorism. While this section does not explicitly state that there is a ‘Know Your Customer’ obligation on banks, its import is that there is indeed such an obligation in the provision of finance or services.

Under Section 8, it is an offence to deal in any way with property linked to a terrorist group. The section however exonerates persons who prove that they took all reasonable action to satisfy themselves that the property was not owned or controlled by a terrorist group. This provision may affect a bank’s obligation to verify ownership whenever they take securities for the advancement of finance. Taking all reasonable action may require more than just a cursory look at title documents.

Through the provision of section 16, it is now an offence to willfully obstruct public officers in the execution of their duties under the Act. This may have the implication that banks must give such public officers access to whatever information they require while investigating terrorists.

Disclosure of information relating to a suspected investigation is also an offence as per the provisions of section 19 of the Act. While not stated explicitly, this provision may affect the disclosure of information by the bank even to its own customer who is affected by an ongoing investigation.

All persons, including banks, are under a duty imposed by section 41 to disclose any information on terrorism. The section however makes an exception for information protected under any written law relating to privilege and non-disclosure.

Section 42 of the Act has provisions relating specifically to banks and other financial institutions. It requires that anyone in possession of control of property that is owned or controlled by a terrorist group must report the existence of that property, any transactions relating to it and other details to the police. Financial institutions are also obliged to report to the Central Bank of Kenya every three months whether it has property or an account owned or controlled by a terrorist group. All financial institutions must “submit to the Central Bank of Kenya, information in relation to a transaction carried out which it has reasonable grounds to believe is intended to facilitate the commission of a terrorist act...”. Any non compliance with these provisions shall constitute an offence.

It looks like banks are on the front line in the battle against terrorist activities; even though there are no bank CEO's raising their rifles in Kismayu to celebrate victory.