Point in Time
Act No: No. 9 of 2009
Act Title: PROCEEDS OF CRIME AND ANTI-MONEY LAUNDERING
[ Date of commencement: 28th June, 2010. ]
[ Date of assent: 31st December, 2009. ]
Arrangement of Sections
PART I – PRELIMINARY
1.
Short title

This Act may be cited as the Proceeds of Crime and Anti-Money Laundering Act, 2009.

PART II – MONEY LAUNDERING AND RELATED OFFENCES
3.
Money laundering

A person who knows or who ought reasonably to have known that property is or forms part of the proceeds of crime and—

(a)

enters into any agreement or engages in any arrangement or transaction with anyone in connection with that property, whether that agreement, arrangement or transaction is legally enforceable or not; or

(b)

performs any other act in connection with such property, whether it is performed independently or with any other person,

whose effect is to—

(i) conceal or disguise the nature, source, location, disposition or movement of the said property or the ownership thereof or any interest which anyone may have in respect thereof; or
(ii) enable or assist any person who has committed or commits an offence, whether in Kenya or elsewhere to avoid prosecution; or
(iii) remove or diminish any property acquired directly, or indirectly, as a result of the commission of an offence,

commits an offence.

5.
Failure to report suspicion regarding proceeds of crime

A person who wilfully fails to comply with an obligation contemplated in section 44(2) commits an offence.

6.
Defence

If a person is charged with committing an offence under section 3, 4 or 5, that person may raise as a defence the fact that he had reported a suspicion under the terms and conditions set forth in section 44 or, if the person is an employee of a reporting institution, that he has reported information pursuant to section 47(a).

7.
Financial promotion of an offence

A person who, knowingly transports, transmits, transfers or receives or attempts to transport, transmit, transfer or receive a monetary instrument or anything of value to another person, with intent to commit an offence, that person commits an offence.

9.
Misrepresentation

A person who knowingly makes a false, fictitious or fraudulent statement or representation, or makes, or provides, any false document, knowing the same to contain any false, fictitious or fraudulent statement or entry, to a reporting institution, or to a supervisory body or to the Centre, commits an offence.

10.
Malicious reporting

Any person who wilfully gives any information to the Centre or an authorised officer knowing such information to be false commits an offence.

11.
Failure to comply with the provisions of this Act
(1)

A reporting institution that fails to comply with any of the requirements of sections 44, 45 and 46, or of any regulations, commits an offence.

(2)

In determining whether a person has complied with any requirement of the provisions referred to in subsection (1), the court shall have regard to all the circumstances of the case, including such custom and practice as may, from time to time, be current in the relevant trade, business, profession or employment, and may take account of any relevant guidance adopted or approved by a public authority exercising supervisory functions in relation to that person, or any other body that regulates or is representative of the trade, business, profession or employment carried on by that person.

13.
Misuse of information
(1)

A person who knows or ought reasonably to have known—

(a)

that information has been disclosed under the provisions of Part II; or

(b)

that an investigation is being, or may be, conducted as a result of such a disclosure,

and directly or indirectly alerts, or brings information to the attention of another person who will or is likely to prejudice such an investigation, commits an offence.

14.
Failure to comply with order of court

A person who intentionally refuses or fails to comply with an order of a court made under this Act, commits an offence.

15.
Hindering a person in performance of functions under this Act

A person who hinders a receiver, a police officer or any other person in the exercise, performance or carrying out of their powers, functions or duties under this Act, commits an offence.

18.
Client advocate relationship
(1)

Notwithstanding the provisions of section 17, nothing in this Act shall affect or be deemed to affect the relationship between an advocate and his client with regard to communication of privileged information between the advocate and the client.

(2)

The provisions of subsection (1) shall only apply in connection with the giving of advice to the client in the course and for purposes of the professional employment of the advocate or in connection and for the purpose of any legal proceedings on behalf of the client.

(3)

Notwithstanding any other law, a Judge of the High Court may, on application being made to him in relation to an investigation under this Act, order an advocate to disclose information available to him in respect of any transaction or dealing relating to the matter under investigation.

(4)

Nothing in subsection (3) shall require an advocate to comply with an order under that subsection to the extent that such compliance would be in breach of subsection (2).

19.
Immunity where actions are exercised in good faith

A suit, prosecution or other legal proceedings shall not lie against any reporting institution or Government entity, or any officer, partner or employee thereof, or any other person in respect of anything done by or on behalf of that person with due diligence and in good faith, in the exercise of any power or the performance of any function or the exercise of any obligation under this Act.

20.
Protection of information and informers
(1)

Where any information relating to an offence under this Act is received by the Centre or an authorised officer, the information and the identity of the person giving the information shall be kept confidential.

(2)

Subsection (1) shall not apply to information and identity of a person giving the information—

(a)

where it is for the purposes of assisting the Centre or the authorised officer to carry out their functions as stated under this Act; or

(b)

with regard to a witness in any civil or criminal proceedings—

(i) for the purposes of this Act; or
(ii) where the court is of the opinion that justice cannot fully be done between the parties without revealing the disclosure or the identity of any person as the person making the disclosure.
PART III – FINANCIAL REPORTING CENTRE
21.
Establishment of a Financial Reporting Centre

There is established a centre to be known as the Financial Reporting Centre, (hereinafter referred to as the “Centre”) which shall be a body corporate, with perpetual succession and a common seal and shall be capable, in its corporate name, of—

(a)

suing and being sued;

(b)

taking, purchasing or otherwise acquiring, holding or disposing of movable and immovable property;

(c)

entering into contracts;

(d)

doing or performing such other things or acts necessary for the proper performance of its functions under this Act which may lawfully be done by a body corporate.

22.
Headquarters

The headquarters of the Centre shall be in Nairobi.

36.
Obligation of a supervisory body and its staff
(1)

A supervisory body and its staff shall report to the Centre any suspicious transaction that the supervisory body or its staff may encounter during the normal course of their duties.

(2)

A person who as an employee of a supervisory body deliberately or with intention to deceive does not make a report in accordance with this section commits an offence.

(3)

A person who contravenes the provisions of this provision is liable on conviction to—

(a)

in the case of a natural person, imprisonment for a term not exceeding three years or a fine not exceeding one million shillings, or to both; and

(b)

in the case of a body corporate, a fine not exceeding five million shillings.

37.
The Centre’s power to obtain a search warrant
(1)

The Centre or the appropriate law enforcement agency, may apply to the High Court for a warrant to enter any premises belonging to or in the possession or control of a reporting institution or any officer or employee thereof, and to search the premises and remove any document, material or other thing therein for the purposes of the Centre, as ordered by the High Court and specified in the warrant.

(2)

The High Court may grant the application if it is satisfied that there are reasonable grounds to believe that—

(a)

the reporting institution has failed to keep or produce documents, records, or report on a suspicious transaction, as required by this Act; or

(b)

an officer, employee or partner of a reporting institution is committing, has committed or is about to commit any offence under this Act.

38.
Property tracking and monitoring orders

For the purpose of determining whether any property belongs to or is in the possession or under the control of any person, the Centre, may upon application to the High Court, obtain an order—

(a)

that any document relevant to—

(i) identifying, locating or quantifying that property; or
(ii) identifying or locating any document necessary for the transfer of that property, belonging to, or in the possession or control of that person,

be delivered forthwith to the Centre;

(b)

that the reporting institution forthwith produce to the Centre or the appropriate law enforcement agency all information obtained about any transaction conducted by or for that person during such period before or after the order as the High Court may direct.

39.
Orders to enforce compliance with obligations under this Act
(1)

A person who fails to comply with any obligation provided for under this Act, commits an offence.

(2)

The Centre may, upon application to the High Court, after satisfying the Court that a reporting institution has refused to comply with any obligation, request or requirements under this Act, obtain an order against all or any officers, employees or partners of the reporting institution in such terms as the High Court may deem necessary, in order to enforce compliance with such obligation.

(3)

In granting the order pursuant to subsection (2), the High Court may order that should the reporting institution fail, without reasonable excuse, to comply with all or any provisions of the order, may order such institution, its officers, employees or partners to pay a fine not exceeding one million shillings for an individual and a fine not exceeding five million shillings for a body corporate.

40.
Constitution of funds

The funds of the Centre shall consist of—

(a)

money appropriated by Parliament for the purposes of the Centre;

(b)

any Government grants made to it;

(c)

any other money legally acquired by it, provided that the Centre may accept donations only with the prior written approval of the Minister.

41.
Financial year

The financial year of the Centre shall be a period of twelve months ending on the thirtieth June of each year.

42.
Annual estimates
(1)

At least three months before the commencement of each financial year, the Centre shall cause to be prepared estimates of the revenue and expenditure of the Centre for that year.

(2)

The annual estimates shall make provision for all the estimated expenditure of the Centre for the financial year and in particular, the estimates shall provide for—

(a)

the payment of salaries, allowances and other charges in respect of the staff of the Centre;

(b)

the payment of pensions, gratuities and other charges in respect of the staff of the Centre;

(c)

the proper maintenance of the buildings and grounds of the Centre;

(d)

the maintenance, repair and replacement of the equipment and other property of the Centre.

(3)

The annual estimates shall be approved by the Board before the commencement of the financial year to which they relate and shall be submitted to the Minister for approval and after the Minister’s approval, the Centre shall not increase the annual estimates without the consent of the Minister.

43.
Books of accounts, records, audit and reports
(1)

The Centre shall cause to be kept proper books of accounts and records of accounts of the income, expenditure, assets and liabilities of the Centre.

(2)

The Centre shall within three months of the closure of the financial year submit to the Controller and Auditor-General—

(a)

a statement of income and expenditure during that period;

(b)

a statement of the assets and liabilities of the Centre on the last day of that year.

(3)

The accounts of the Centre shall be audited and reported upon in accordance with the Public Audit Act (Cap. 412B).

PART IV — ANTI–MONEY LAUNDERING OBLIGATIONS OF A REPORTING INSTITUTION
45.
Obligation to verify customer identity
(1)

A reporting institution shall take reasonable measures to satisfy itself as to the true identity of any applicant seeking to enter into a business relationship with it or to carry out a transaction or series of transactions with it, by requiring the applicant to produce an official record reasonably capable of establishing the true identity of the applicant, such as—

(a)

in the case of an individual—

(i) a birth certificate;
(ii) a national identity card;
(iii) a driver’s licence;
(iv) a passport; or
(v) any other official means of identification as may be prescribed; and
(b)

in the case of a body corporate—

(i) evidence of registration or incorporation;
(ii) the Act establishing the body corporate;
(iii) a corporate resolution authorising a person to act on behalf of the body corporate together with a copy of the latest annual return submitted in respect of the body corporate in accordance with the law under which it is established; and
(vi) or any other item as may be prescribed;
(c)

in the case of a government department, a letter from the accounting officer.

(2)

Upon the coming into force of this Act, a reporting institution shall undertake customer due diligence on the existing customers or clients.

(3)

Where an applicant requests a reporting institution to enter into—

(a)

a continuing business relationship; or

(b)

in the absence of such a relationship, any transaction,

the reporting institution shall take reasonable measures to establish whether the person is acting on behalf of another person.

(4)

If it appears to a reporting institution that an applicant requesting to enter into any transaction, whether or not in the course of a continuing business relationship, is acting on behalf of another person, the reporting institution shall take reasonable measures to establish the true identity of a person on whose behalf or for whose ultimate benefit the applicant may be acting in the proposed transaction, whether as trustee, nominee, agent or otherwise.

(5)

In determining what constitutes reasonable measures for the purposes of subsection (1) or (3), regard shall be given to all the circumstances of the case, and in particular to—

(i) whether the applicant is a person based or incorporated in a country in which there are in force applicable provisions to prevent the use of the financial system for the purpose of money laundering; and
(ii) any custom or practice as may, from time to time, be current in the relevant field of business.
(6)

The Minister may, by notice in the Gazette, list the countries to which subsection (5)(i) applies.

(7)

Nothing in this section shall require the production of any evidence of identity where there is a transaction or a series of transactions taking place in the course of a business relationship, in respect of which the applicant has already produced satisfactory evidence of identity.

47.
Obligation to establish and maintain internal reporting procedures

A reporting institution shall establish and maintain internal controls and internal reporting procedures to—

(a)

identify persons to whom an employee is to report any information which comes to the employee’s attention in the course of employment and which gives rise to knowledge or suspicion by the employee that another person is engaged in money laundering;

(b)

enable any person identified in accordance with paragraph (a) to have reasonable access to information that may be relevant in determining whether a sufficient basis exists to report the matter under section 44(2); and

(c)

require the identified person in paragraph (a) to directly report the matter under section 44(2) in the event that he determines that sufficient basis exists.

48.
Application of reporting obligations

The reporting obligations under this Part shall apply to accountants when preparing or carrying out transactions for their clients in the following situations—

(a)

buying and selling of real estate;

(b)

managing of client money, securities or other assets;

(c)

management of bank, savings or securities accounts;

(d)

organisation of contributions for the creation, operation or management of companies;

(e)

creation, operation or management of buying and selling of business entities.

PART V – THE ANTI-MONEY LAUNDERING ADVISORY BOARD
51.
Conduct of business of the Board

The business and affairs of the Board shall be conducted in accordance with the provisions of the Fifth Schedule but subject thereto, the Board may regulate its own procedure.

PART VI – THE ASSETS RECOVERY AGENCY
52.
Definitions applicable to Parts VI-XII
(1)

In Parts VI to XII, except where it is inconsistent with the context or clearly inappropriate, any reference to—

(a)

a person who holds property shall be construed as a reference to a person who has any interest in the property, and—

(i) if the estate of such person has been sequestrated, also to the trustees of his estate; or
(ii) if the person is a company or other legal entity which is being wound up, also to the liquidator thereof;
(b)

a person who transfers property to another person shall be construed as a reference to a person who transfers or grants to any other person any interest in the property;

(c)

anything received in connection with an offence shall be construed as a reference also to anything received as a result of and in connection with the commission of that offence.

(3)

For the purposes of Parts VI to XII, a person will have benefited from an offence if that person has at any time, whether before or after the commencement of this Act, received or retained any proceeds of crime.