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Gov't to track accounts of high-ranking politicians and allies

Kenya intends to monitor the financial transactions of high-ranking officials, including the President, and their associates.

President William Ruto in a meeting with IMF managing director Kristalina Georgieva on November 8, 2022.

Kenya has committed to tracking the financial activities of high-ranking politicians, including the president, and their allies in an effort to prevent the country from being banned from the global financial system for money laundering.

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The National Treasury made the commitment to the International Monetary Fund (IMF), assuring the lender that the government will monitor the financial transactions and bank accounts of "politically exposed persons" (PEPs) to ensure they match their known income.

In financial regulation, a politically exposed person is one who has been entrusted with a prominent public function.

A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold.

To help prevent the laundering of illicit proceeds from corruption, the authorities (Kenyan) plan by end-June 2023 to submit to the National Assembly, draft amendments to the Proceeds of Crime and Anti-Money Laundering Act and Regulations to address gaps in the AML/CFT legal framework, including requirements on politically exposed persons [PEPs], in line with FATF standards,” IMF said in a report following the approval of a Sh55.07 billion ($447.39 million) loan.

The Financial Reporting Centre (FRC), the agency responsible for anti-money laundering efforts, is preparing changes to the law that will require financial institutions to reveal the sources of cash for top politicians, their families, and business associates.

The proposed amendments to the Proceeds of Crime and Anti-Money Laundering Act and Regulations aim to prevent the laundering of illicit proceeds from corruption.

The changes follow a report by an international anti-money laundering team that identified gaps in Kenya's existing anti-money laundering law concerning financial transactions by politically exposed persons, their families, and allies.

PEPs include the president, ministers, MPs, parastatal CEOs, high-ranking judges, high-ranking military officers, and board members of top firms.

The Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing, requires financial institutions to conduct "enhanced ongoing monitoring" of business relationships involving PEPs.

The amendments to Kenya's money laundering law will be based on the requirements set by the FATF and followed in developed countries.

Financial institutions, led by banks, will be required to conduct enhanced scrutiny of their entire business relationship with a PEP and make a suspicious transaction report to the FRC if higher risks are identified.

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