If you are a bank or an individual carrying out a financial transaction above  KES 850,000 ($10,000), you will be investigated. This will be done in order to find out the purpose of the transactions and the origin of the payments as well, a move that comes after a new legislation that seeks to combat financing of terrorism activities in the country. The legislation stipulates significant policy requirements that will affect several sectors of the economy. It will follow the coming to effect of an anti-money laundering legislation published by the Financial Reporting Centre (FRC).

Anti-Money Laundering Act (AML)

The Proceeds of Crime and Anti-Money Laundering Act (AML) has been around since June 2010 but only became operational recently when relevant structures were set up at the FRC. Money transfer platforms such as M-Pesa and players within the wider financial sector like insurance companies and designated non-financial institutions such as real estate agents, dealers in precious stones and metals and casinos will also be put on notice by the new Act.

Financial Reporting Centre (FRC), is an independent body that was launched in April to monitor and track Kenya’s financial system for suspicious transactions. Earlier in the year Central Bank of Kenya (CBK) issued a circular under the Central Banks of Kenya Act. The circular required all banks, non-bank financial institutions, mortgage financial institutions and Forex bureaus to forward to the Financial Reporting Centre all suspicious transactions reports, with effect from October 10, 2012.

The Laundering Black Book

In June of this year Financial Action Task Force (FATF) had said Kenya did not meet the requirements for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), thus advised Kenya to come up with measures that ensured that the country is not blacklisted by other countries as is like Iran and North Korea.

 FATF is a “policy-making body” inter-governmental body established in 1989, which works to generate the necessary political will to bring about national legislative and regulatory reforms in money laundering, terrorist financing and other related threats to the integrity of the international financial system.

However as a country, we were spared from the laundering black book in October after FATF concluded that the steps taken by Kenya were sufficient. The measures included the enactment of the Prevention of Terrorism Act, 2012; the Capital Markets (Amendment) Act, 2012; the Proceeds of Crime and Anti-Money Laundering (Amendment) Act, 2012; and the establishment of the Financial Reporting Centre among other measures .