New office set to fight money laundering

With just a day to the expiry of an international deadline for Kenya to show progress in combating terrorism financing and money laundering, the Central Bank has relinquished the role of investigating suspicious deals to an independent institution. Read (Central Bank drafts money laundering law as D-day nears)

In a circular issued on Thursday, CBK has directed all financial institutions to forward suspicious transactions reports to the Financial Reporting Centre (FRC).

“The FRC has now been established and is operational. The purpose of this circular, which is being issued under the Central Banks of Kenya Act, is to require all banks, non-bank financial institutions, mortgage financial institutions and forex bureaus to forward to the Financial Reporting Centre all suspicious transactions reports with effect from October 10, 2012,” a circular to the chief executives of the financial institutions read in part.

Kenya had until Sunday to convince the Financial Action Task Force — an international body fighting money laundering and related crimes, that it has the mechanisms to ensure compliance or risk being categorised with Iran and North Korea which are facing international sanctions due to their nuclear development programmes and claims of financing terror groups.

Financial Action had asked Kenya to deal with deficiencies in addressing money laundering and terrorist financing in its recommendations where it raised concerns that the country was yet to make sufficient progress.

Financial Reporting Centre has sweeping powers to investigate unusual activities in different industries including non-financial entities, say, casinos, car dealers and real estate firms to check cases that may relate to money laundering and terrorist financing.

Licences revoked

According to the Proceeds of Crime and Anti-Money Laundering Act, 2009, the FRC is an independent body whose principal mandate is to identify proceeds of crime and combating money laundering.

Institutions are required to report cases of suspicious transactions related to money laundering to the FRC within two weeks failure to which they will face prosecution or have their licenses revoked.

Individuals will also be required to declare any amounts exceeding Sh840,000 ($10,000) at points of entry into the country.

“The FRC has extensive functions and powers including receiving and analysis of unusual or suspicious transactions made by reporting institutions. The FRC is also empowered to develop regulations on anti-money laundering to provide guidance to support the implementation of Anti-Money Laundering Act,” the circular signed by CBK assistant director of Bank supervision Peter Gatere says.