The Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) creates a comprehensive framework for detecting, preventing, and reporting money laundering in Kenya. While banks and financial institutions have long been subject to AML obligations, many non-financial businesses remain unaware that POCAMLA applies to them too.
Who Is a Reporting Institution?
POCAMLA’s scope extends well beyond banks. Reporting institutions include commercial banks, microfinance institutions, and money remittance providers; insurance companies and brokers; securities dealers and investment advisors; real estate agents; motor vehicle dealers (above prescribed thresholds); accountants and auditors; and advocates and law firms. Law firms are designated non-financial businesses and professions (DNFBPs) subject to the same reporting and compliance obligations as financial institutions. Compliance is supervised by the Financial Reporting Centre (FRC).
Customer Due Diligence (CDD)
Before establishing a business relationship or conducting a transaction above prescribed thresholds, you must verify the identity of the customer using reliable, independent documents (national ID, passport, CR12 for companies); identify the beneficial owner of any legal entity; understand the nature and purpose of the business relationship; and conduct ongoing monitoring. Enhanced due diligence applies to politically exposed persons, high-risk jurisdictions, and complex or unusually large transactions.
Record Keeping
POCAMLA requires records of all transactions and CDD information to be maintained for at least seven years after the end of the business relationship and to be available for inspection by the Financial Reporting Centre.
Suspicious Transaction Reporting
If you know, suspect, or have reasonable grounds to suspect that a transaction involves proceeds of crime or relates to money laundering or terrorism financing, you must file a Suspicious Transaction Report (STR) with the Financial Reporting Centre. This obligation applies regardless of the transaction amount. You must not disclose to the customer that an STR has been filed — the tipping off prohibition itself carries criminal penalties.
Internal Compliance Programme
Reporting institutions must establish written AML policies and procedures, appoint a compliance officer, conduct regular staff training on AML obligations, and maintain an independent audit of the compliance programme.
Our Regulatory & Compliance practice advises on POCAMLA compliance programmes and DNFBP obligations. Contact us for a consultation.
