While traditionally viewed as a financial crime issue confined to the banking sector, Anti-Money Laundering (AML) has evolved into a critical compliance obligation affecting businesses and professionals across various industries. In Kenya, adherence to AML requirements is no longer optional, as the government intensifies efforts to get off the Financial Action Task Force (FATF) grey list. As Kenya strengthens its AML framework to meet global standards, all sectors are now required to integrate robust compliance practices and manage associated risks effectively. As a result, for businesses, advisors, and practitioners alike, a sound understanding of AML is now essential.
Kenya’s fight against money laundering, where illicit funds are disguised as legitimate, relies on a comprehensive legal and regulatory framework. The principal legislation is the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), supported by various statutes and sector-specific guidelines. Enforcement of AML obligations is led by the Financial Reporting Centre (FRC), Kenya’s financial intelligence unit, in collaboration with sector regulators such as the Central Bank of Kenya and the Capital Markets Authority.
In the recent past, AML obligations in Kenya have expanded beyond traditional financial institutions to include designated non-financial businesses and professions (DNFBPs), such as accountants, legal practitioners, company secretaries, and real estate agents, among others. Accordingly, professional bodies including the Law Society of Kenya, the Institute of Certified Secretaries, and the Institute of Certified Public Accountants of Kenya, have been mandated to play an active role in AML supervision and enforcement and are recognized as reporting institutions under the relevant legislation.
AML prevention and compliance enforcement efforts include the mandatory requirement to have a Money Laundering Reporting Officer (MLRO) for all reporting institutions. The MLROs are responsible for overseeing AML compliance and submitting monthly reports to the FRC on any suspicious transactions. The FRC also provides guidance and training on key AML risk areas to help practitioners identify red flags. High-risk areas have been indicated to include complex corporate structures, cash-intensive sectors such as real estate and construction, cross-border transactions involving high-risk jurisdictions, and money lending businesses. Vigilance in these areas is critical to preventing financial crime, maintaining regulatory compliance, and avoiding sanctions.
Professional advisors and practitioners are often the first line of defense against money laundering. Their role goes beyond onboarding clients; they must actively apply a risk-based approach and monitor transactions on an ongoing basis. AML obligations demand vigilance, proactivity, and robust compliance practices. Client Due Diligence (CDD) and Know Your Customer (KYC) procedures are no longer a box-ticking exercise; practitioners must take reasonable steps to understand the origin of funds, identify and verify beneficial owners in complex ownership structures, and conduct enhanced due diligence for high-risk clients. Ongoing monitoring is essential, including regularly checking the FRC’s updated watchlists to ensure that no existing or prospective clients appear on them. In the end, effective AML compliance helps practitioners protect themselves, their clients, and the wider financial system.
