Banks to be granted access to secret State database to monitor transactions
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Banks to be granted access to secret State database to report suspicious transactions involving people using proxies, to evade the anti-money laundering law
Banks to be granted access to secret State database to report suspicious transactions involving people using proxies, to evade the anti-money laundering law.
Financial institutions will soon be given access to a State database on covert owners of firms, enabling them to quickly identify and report transactions involving individuals who are abusing the anti-money laundering statute by employing proxies, acquaintances, and family.
This is a component of the anti-money laundering law revisions that are currently making their way to Parliament and which aim to lift the blinders that have hampered the efforts of banks to flag questionable transactions.
“Access by banks to the electronic registry will be important in tracking the money deposited by ‘smurfs’ on behalf of a beneficial owner,” the source said.
Banks have been quietly lobbying to be granted direct access to the beneficial ownership database.
The plan has also been revealed by the International Monetary Fund (IMF), in its latest report on Kenya.
The IMF notes that the legal changes will allow financial institutions access to the electronic registry of persons who have beneficial owners of companies domiciled at the Office of the Attorney-General.
The State anticipates that banks will be better equipped to identify unusual transactions associated to covert business owners who are politically exposed (public servants) or criminals once they have access to the records of those who have ultimate control over the company, formally known as beneficial owners.
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As the government steps up its fight against money laundering and terrorism financing, this is part of a larger strategy to improve the Know-Your-Customer (KYC) regulations for lenders.
Under the Proceeds of Crime and Anti-Money Laundering (Amendment) Act, 2022, banks are supposed to establish the ultimate beneficial owners of companies or those with substantial control of the business.
Details required for filing in the beneficial ownership registry include names of the substantial shareholder, KRA PIN, national ID or passport copies, postal address, residential address, occupation, telephone number, and the date when the investor became a beneficial owner.
But banks say currently the electronic register on beneficial ownership (BO) information is only available to the law enforcement agencies such as the KRA, the Ethics and Anti-Corruption Commission (EACC), the Assets Recovery Agency (ARA), security agencies, and the Financial Reporting Centre (FRC).
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