Overview of the 2023 Amendment to Kenya's Anti-Money Laundering and Counter-Terrorism Financing Laws
The Government of Kenya, under the leadership of His Excellency the President, enacted the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023, which was signed into law on 1st September 2023 and came into effect on 15th September 2023. This legislative update introduces significant modifications to key statutes governing corporate registration and compliance, notably the Companies Act, 2015, and the Limited Liability Partnerships Act, 2011. These amendments aim to strengthen the financial integrity framework of Kenya by enhancing transparency, record-keeping obligations, and regulatory oversight concerning beneficial ownership and related disclosures.
Scope and Objectives of the 2023 Amendments
The primary focus of the amendments is to align Kenya’s corporate regulatory environment with international standards on anti-money laundering (AML) and counter-terrorism financing (CTF). By imposing stricter obligations on companies and LLPs (Limited Liability Partnerships), the legislation aims to:
- Enhance transparency regarding beneficial ownership and nominee arrangements;
- Improve the capacity of authorities to trace illicit financial flows;
- Ensure timely and accurate filing of corporate information;
- Establish clear procedures for the deregistration of non-compliant entities.
Key Changes to the Companies Act, 2015
1. Beneficial Ownership and Disclosure Requirements
All companies registered in Kenya are now mandated to file beneficial ownership information with the Registrar of Companies. This includes details of individuals who ultimately own or control the company, directly or indirectly. Companies must maintain this information for at least ten (10) years after an individual ceases to be a beneficial owner. Failure to comply with this requirement may result in the Registrar issuing a notice of non-compliance and proceeding to strike off the company from the register.
2. Record-Keeping and Compliance
Officers of companies are required to retain records related to beneficial ownership and other corporate documents for a minimum of seven (7) years following the dissolution of the company. Additionally, companies with a paid-up share capital of less than five (5) million Kenyan shillings must appoint a local director, secretary, or contact person who is a permanent resident of Kenya.
3. Filing and Penalties
Late submissions of beneficial ownership updates attract fines of Ksh. 2,000, with an additional Ksh. 100 for each day of default. Companies are also obliged to file annual returns and financial statements within prescribed timelines, with non-compliance potentially leading to deregistration after five (5) consecutive years of unfiled returns.
Updates to the Limited Liability Partnerships Act, 2011
1. Beneficial Ownership and Nominee Disclosures
LLPs are now required to maintain and file a register of beneficial owners, including details of nominee arrangements, with the Registrar of Companies. This aims to improve transparency regarding the control and ownership of LLPs, particularly those with foreign affiliations.
2. Record-Keeping and Registration Procedures
LLPs must keep records at their registered offices, including details of partners and managers, evidence of registration, and charges against assets. The amendments introduce a clear process for the registration of foreign LLPs and provide for the deregistration of LLPs that fail to comply with filing obligations, including annual returns and financial disclosures.
Implications for Companies and LLPs
Entities registered or operating within Kenya are now required to:
- Ensure the accurate and timely filing of beneficial ownership and nominee information;
- Maintain comprehensive and accessible records at their registered offices;
- Update their information regularly to reflect any changes;
- File annual returns and financial statements promptly;
- Comply with new deregistration procedures for non-compliance over extended periods.
Legal and Regulatory References
The full text of the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023, along with associated regulations, is accessible through the official government portal at https://brs.go.ke/acts/ and https://brs.go.ke/regulations/. These amendments reflect Kenya’s commitment to strengthening its legal framework against financial crimes while safeguarding the rights of registered entities to operate transparently and responsibly.
