Government of Kenya to start spying on bank accounts of high-profile Kenyans; politicians, judges, ministers in IMF deal.
In new promises to the International Monetary Fund (IMF), Kenya intends to spy on the financial activities of senior officials, including the President, and their allies beginning next year in an effort to avoid being barred from the global financial system for money laundering.
The Treasury has informed the IMF that the State will monitor the movement of money for people who are politically exposed, including their bank accounts, to match their known income and financial transactions.
Changes to the law are being prepared by the Financial Reporting Centre (FRC), the anti-money laundering watchdog, which will oblige financial institutions to disclose the sources of funding for prominent politicians, their families, and business associates.
The proposed amendments to the Proceeds of Crime and Anti-Money Laundering Act and Regulations are aimed at preventing the laundering of illicit proceeds from corruption.
The proposed amendments come in response to a devastating analysis by a global anti-money laundering team that highlighted flaws in Kenya’s anti-money laundering law’s reporting requirements for financial transactions involving politically exposed persons (PEPs), their families, and associates.
PEPs include the president, ministers, MPs, CEOs of parastatals, senior judges, senior military personnel, and members of the boards of prestigious companies.
“To help prevent the laundering of illicit proceeds from corruption, the authorities plan by end-June 2023 to submit to the National Assembly, draft amendments to the Proceeds of Crime and Anti-Money Laundering Act and Regulations to address gaps in the AML/CFT legal framework, including requirements on politically exposed persons [PEPs], in line with FATF standards,” the IMF disclosed in the report following approval of Sh55.07 billion ($447.39 million) disbursement to Kenya on Monday.
“To this end, the authorities aim to prioritize ensuring compliance by banks with enhanced due diligence measures for higher risk customers, including PEPs, through AML/CFT risk-based supervision.”
Kenya has a history of multi-billion shilling scandals that have failed to result in high-profile convictions.
The State scandals often involve bogus tenders and suppliers that allegedly result in the theft of hundreds of millions of shillings, turning public servants on low pay into overnight multi-millionaires.
Public servants are required by law to reveal their incomes, bank deposits, and assets such as land, buildings, and vehicles once every two years.
The filing must also capture the wealth of their spouses and children below 18 years.
Financial Action Task Force (FATF) — the global money laundering and terrorist financing watchdog — requires financial institutions to conduct “enhanced ongoing monitoring” of business relationships involving PEPs.
The amendments to Kenya’s money laundering law will be modeled on the requirements set by FATF and followed in the developed world.\
Kenya will be required to have appropriate risk-management systems in place to determine whether a customer or beneficial owner is a PEP and “take reasonable measures to establish the source of wealth and source of funds”.
Where there are higher risks identified, financial institutions led by banks are required to conduct enhanced scrutiny on the whole business relationship with a PEP and make a suspicious transaction report to the FRC.