The Departmental Committee on Finance and National Planning chaired by Hon. Kimani Kuria (MP) has been told Kenya risks a lower rating as a regional financial hub if she does not expedite amendment to law of anti-money laundering to align to international standards.

 The revelation emerged even as the Committee moved to expedite consideration of provisions of the Anti-Laundering and Combating of Terrorism Financing Laws (Amendment) Bill, 2023, which affect the finance sector.

 First to appear before the Committee was the Governor of Central Bank of Kenya (CBK) Dr. Kamau Thugge. Dr. Thugge, who expressed the support of the Bank to the Bill, acknowledged that there exists gaps in sectoral laws, which require tightening to not only help combat money laundering and stop illicit cash flows, but to also ensure that the country’s regulatory framework for the Financial Sector is in tandem with international standards. Among the gaps flagged out by Dr. Thugge is the lack of a legal mandate to supervise institutions and enforce compliance of financial institutions for Anti- Money Laundering/ Combating Terrorism Financing (AML/CFT) purposes.

 He also noted that the CBK possesses neither powers to share AML/CFT supervisory information with other supervisors, nor powers to compel financial institutions to produce documents for purposes of AML/CFT supervision. “Hon. Chair, according to the Kenya Mutual Evaluation Report Key Findings, the Proceeds of Crime and Anti-Money Laundering (POCAMLA) law does not provide for terrorist financing and measures to combat it. It does not either provide for monetary penalties for violation of POCAMLA provision”, he explained.

 He lauded the proposed amendments to the Banking Act, Microfinance Act and National Payment System Act which he noted would enable the CBK to conduct onsite inspections and undertake offsite surveillance, compel production of documents by financial institutions and impose monetary, civil and administrative sanctions if the law is passed.

 The Committee in the session chaired by the Vice-Chairman Hon. Benjamin Langat (Ainamoi), also heard that if Kenya does not substantially address the deficiencies including legal reforms by October 2023, the country risks being placed in the Financial Action Task Force (FATF) grey list.

Asked by Members if the National Assembly has the powers to increase the proposed USD 15,000 threshold for reporting cash withdrawals, Dr. Thugge told the Committee that Kenya operates within an international financial system and is bound by certain international obligations to operate within the established framework.