Recovering Stolen or Hidden Assets: Freezing Orders and Kenya’s POCAMLA Forfeiture Regime

Asset recovery in Kenya runs through two quite different legal channels, and choosing the right one decides whether a fraud victim or a state agency actually gets the money back. A private litigant chasing a fraudster or a defaulting counterparty uses the civil freezing injunction. A state agency pursuing the proceeds of crime uses civil forfeiture under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA). Both channels fight the same risk, that assets disappear before a court can rule, but they operate under different rules, burdens and institutions.

Freezing orders in private litigation

Kenyan courts have adopted the English Mareva injunction, now usually called a freezing order, to stop a defendant from dissipating assets before a claimant can enforce a judgment. The orders are sought under the court’s powers in the Civil Procedure Act and Civil Procedure Rules. We have not verified which rule a Kenyan court will treat as the primary basis, and the decisions we have seen do not all rely on the same one, so plead the basis carefully.

The substantive test is more settled in principle. An applicant is generally expected to show:

• a good arguable case on a cause of action the court has jurisdiction to hear;
• that the defendant has assets within the jurisdiction;
• a real risk that those assets will be removed or dissipated if no order is made; and
• that the balance of convenience favours the order.

A freezing order is usually sought ex parte, meaning without notice to the defendant. The applicant therefore owes the court full and frank disclosure of every material fact, including the facts that hurt its case. An order obtained by concealment is vulnerable to being set aside once the defendant discovers the omission. The applicant should also expect to give an undertaking to compensate the defendant if the order proves to have been wrongly granted, so the application is not a costless step. Courts treat the remedy as exceptional because freezing a party’s assets can cripple its business.

Civil forfeiture under POCAMLA

Where the asset is suspected to be the proceeds of crime, the state tool is civil forfeiture. The Assets Recovery Agency is a body corporate established under section 53(1) of POCAMLA. It proceeds in two stages, and the sections matter because the Act prescribes the sequence.

Stage one: preservation. Under section 82, the Agency Director-General may apply ex parte for an order prohibiting any person from dealing with property. The court must make the order if there are reasonable grounds to believe the property has been used or is intended for use in an offence, or is proceeds of crime. The court also authorises seizure by a police officer. Within 21 days of the order, the Director-General must notify known interested persons and publish a notice in the Gazette (section 83). An interested person then has 14 days to give notice that they intend to oppose forfeiture or to claim an exclusion of their interest, supported by an affidavit stating the nature of their interest and the reasons relied on.

A preservation order expires 90 days after the Gazette notice unless a forfeiture application is pending, an unsatisfied forfeiture order is in force, or the order is rescinded earlier (section 84). The court may appoint a manager to run or preserve the property, including a business (section 86), and may direct the Registrar of Lands to restrict dealings in land (section 87). Section 89 allows a person affected to apply to vary or rescind the order where it deprives them of reasonable living expenses and the hardship outweighs the risk of the property being lost or hidden.

Stage two: forfeiture. While a preservation order is in force, the Director-General may apply to the High Court under section 90 for forfeiture to the Government, giving 14 days notice to those who served notice. Under section 92(1), the High Court makes the order if it finds on a balance of probabilities that the property has been used or is intended for use in an offence, or is proceeds of crime. Section 92(4) provides that the validity of a forfeiture order is not affected by the outcome of criminal proceedings or an investigation. This is the defining feature of the regime: forfeiture does not need a conviction.

A forfeiture order does not take effect until the period for an application under section 89 or an appeal has expired or been disposed of (section 92(6)). A person who claims an interest in the property can apply to be protected. Sections 93 and 94 protect a person who was not involved in the offence and who, where they acquired the interest after the offence, gave sufficient consideration and had no knowledge or reasonable suspicion that the property was tainted. A late claimant can apply within 12 months of the forfeiture order, with leave if they knew of the application or appeared at the hearing.

For a business or individual facing a preservation order, the practical lessons are to calendar the 14-day notice period immediately, to file the affidavit on time, and to gather evidence of how and when the interest was acquired. Section 91 allows an application to serve notice out of time within 14 days of becoming aware of the order, but that is a fallback and not a strategy. We have not verified any recent Supreme Court decision on the evidential threshold for forfeiture, so an affected party should obtain current case law before relying on the burden of proof described here.

Tracing assets that have moved

Both routes often require tracing, which means following property, or the funds it has been converted into, through a chain of transactions. Tracing is most useful where trust property was misappropriated or where proceeds were converted into land, vehicles or a third party’s account. The claimant or agency must be able to document the link between the current asset and the original wrongdoing, so keep bank records, transfer instructions and corporate documents from the first sign of loss.

Asset recovery in Kenya across borders

A Kenyan freezing or preservation order binds parties before the Kenyan court. It does not automatically compel a foreign bank or registry to act. Recovering assets moved abroad generally requires a parallel application in the foreign court where the assets sit, or mutual legal assistance between Kenya and that state. Both are slower than most domestic litigants expect, so build that timeline into any plan for asset recovery in Kenya that involves foreign accounts or property.

Choosing a route

If you are a private party, the freezing injunction and a civil claim are your route, and the Agency is not your counsel. If you suspect the funds are proceeds of crime, you may report the matter and the Agency decides whether to apply. Where suspicious transactions triggered the investigation, the anti-money laundering reporting duties of businesses often run alongside a recovery action, and our regulatory compliance practice covers those duties.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.