Anti-Money Laundering Policy (Kenya)

An Anti-Money Laundering Policy in Kenya records the organisation's binding rules on the matter it addresses.

The Financial Reporting Centre (FRC), established under Section 21 of the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 and reinforced by the Financial Reporting Centre Act No. 11 of 2012, is Kenya's primary financial intelligence unit. The FRC collects, analyses, and disseminates financial intelligence from reporting institutions to law enforcement agencies including the Directorate of Criminal Investigations (DCI), the Assets Recovery Agency (ARA), and the Ethics and Anti-Corruption Commission (EACC). The FRC is a member of the Egmont Group of Financial Intelligence Units and coordinates with the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG).

Section 9 of the POCAMLA designates certain entities as reporting institutions — entities that are obligated under Kenyan law to adopt and implement AML compliance programmes. Reporting institutions include: commercial banks and microfinance institutions licensed by the Central Bank of Kenya (CBK) under the Banking Act (Cap. 488); insurance companies regulated by the Insurance Regulatory Authority (IRA) under the Insurance Act (Cap. 487); capital markets intermediaries supervised by the Capital Markets Authority (CMA) under the Capital Markets Act (Cap. 485A); advocates and notaries in the conduct of financial or real estate transactions; accountants and auditors; real estate agents and developers; money remittance and payment service providers; and dealers in high-value goods (precious stones, metals, and luxury vehicles). Non-reporting institution companies that operate in high-risk sectors or that are required by their investors, counterparties, or regulators to maintain AML programmes also adopt AML policies as a matter of commercial practice.

Kenya was placed under enhanced follow-up by the Financial Action Task Force (FATF) — the international AML standard-setter — in October 2022, following its Mutual Evaluation Report which identified significant weaknesses in Kenya's AML/CFT framework. As a condition of being removed from enhanced follow-up, Kenya committed to: increasing the number of reporting institutions with effective AML programmes; improving the quality of Suspicious Transaction Reports (STRs) filed with the FRC; and strengthening beneficial ownership transparency through the Business Registration Service (BRS). These commitments directly increase the regulatory pressure on Kenyan businesses to adopt formal AML policies.

The Proceeds of Crime and Anti-Money Laundering (Amendment) Act No. 8 of 2017 significantly expanded the POCAMLA's scope — extending the definition of reporting institution, strengthening the FRC's supervisory powers, and increasing penalties for non-compliance. The Prevention of Terrorism Act No. 30 of 2012 and the Prevention of Organised Crimes Act No. 6 of 2010 add further obligations on organisations to detect and report terrorist financing and organised crime proceeds, both of which are treated as AML predicate offences under POCAMLA.

The Kenya Revenue Authority (KRA) is active in the AML ecosystem: tax evasion is a predicate offence under POCAMLA, and the KRA's intelligence unit shares information with the FRC under a Memorandum of Understanding. Companies that receive large unexplained cash deposits, engage in unusual cross-border transactions, or deal with counterparties in high-risk jurisdictions (as listed by the FATF or the FRC's own watch-list) face elevated AML scrutiny from both the FRC and the KRA.

An Anti-Money Laundering Policy in Kenya is required — or strongly advisable — in the following specific circumstances.

An Anti-Money Laundering Policy is required by law for every entity designated as a reporting institution under Section 9 of the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA). Reporting institutions must register with the Financial Reporting Centre (FRC) via the FRC's online portal, appoint a Money Laundering Reporting Officer (MLRO), and maintain a written AML programme that covers Customer Due Diligence (CDD), Suspicious Transaction Reporting (STR), record-keeping, and staff training. Failure to maintain a compliant AML programme is an offence under Section 17 of the POCAMLA, attracting fines of up to KES 5,000,000 for individuals and up to KES 25,000,000 for corporate bodies.

An Anti-Money Laundering Policy is needed for any company that deals in cash transactions above prescribed thresholds. Under the POCAMLA and FRC guidelines, reporting institutions must file Cash Transaction Reports (CTRs) with the FRC for all cash transactions above KES 1,000,000 (or equivalent in foreign currency) in a single day. Companies that routinely accept large cash payments — such as real estate developers, luxury goods dealers, car dealers, and hospitality businesses — must have AML policies documenting how they identify and report high-value cash transactions.

An Anti-Money Laundering Policy is required when a company raises funding from development finance institutions, multilateral lenders, or international private equity funds. All major development finance institutions — the IFC, AfDB, and British International Investment — require their investee companies to maintain AML policies consistent with FATF recommendations and local law as a condition of the investment agreement.

An Anti-Money Laundering Policy is needed for any Kenyan company that engages in cross-border transactions with counterparties in jurisdictions identified on the FATF grey list or black list, the United Nations Security Council sanctions list, or the US Office of Foreign Assets Control (OFAC) sanctions list. Commercial banks licensed by the Central Bank of Kenya (CBK) will require AML assurances from corporate clients before processing large cross-border payments.

An Anti-Money Laundering Policy is required for any company that is subject to Know Your Customer (KYC) obligations under CBK Prudential Guidelines or FRC Sector Guidelines — including real estate agents conducting property transactions above KES 5,000,000, advocates handling client funds in conveyancing or M&A transactions, and accountants preparing financial statements for high-risk clients.

An Anti-Money Laundering Policy is needed for companies bidding for contracts funded by the World Bank, the African Development Bank, or other multilateral development banks, as these institutions impose AML compliance requirements on implementing agencies and contractors through their procurement regulations and loan agreements.

A Kenya Anti-Money Laundering Policy under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 and the Financial Reporting Centre Act No. 11 of 2012 must include the following essential elements to constitute a compliant AML programme.

Scope and Designation: A statement that the policy applies to all employees, directors, agents, and associated persons of the company, and identifies whether the company is a reporting institution under Section 9 of the POCAMLA. The policy must identify the company's FRC registration number and the name and contact details of the appointed Money Laundering Reporting Officer (MLRO) — who must be a senior officer of the company with sufficient authority to implement compliance measures and file Suspicious Transaction Reports (STRs) with the FRC.

Customer Due Diligence (CDD): Procedures for identifying and verifying the identity of every customer before establishing a business relationship or conducting a transaction, in accordance with the FRC's Customer Due Diligence Guidelines. CDD for individual customers requires: full legal name; Kenya National Identity Card number (for Kenyan citizens) or passport number (for foreign nationals); KRA PIN; residential address; and source of funds declaration. CDD for corporate customers requires: BRS registration number; registered office address; KRA PIN; list of directors; and Beneficial Ownership Declaration consistent with the Companies (Beneficial Ownership Information) Regulations, 2020 under Section 93A of the Companies Act No. 17 of 2015.

Enhanced Due Diligence (EDD): Additional verification procedures for high-risk customers — including Politically Exposed Persons (PEPs) as defined under the Proceeds of Crime and Anti-Money Laundering (Amendment) Act No. 8 of 2017; customers from FATF high-risk jurisdictions; customers involved in high-risk business activities; and customers whose transactions are inconsistent with their stated business profile. EDD requires senior management approval before establishing the business relationship.

Suspicious Transaction Reporting (STR): Procedures for identifying transactions that may involve money laundering or terrorist financing and reporting them to the FRC within 3 working days of the suspicious activity being identified — as required by Section 12 of the POCAMLA and FRC Suspicious Transaction Reporting Guidelines. The MLRO must maintain an internal STR log documenting all reports filed and all reports that were considered but not filed, with reasons. STR reports are filed electronically through the FRC's goAML portal.

Cash Transaction Reporting (CTR): Procedures for identifying and filing Cash Transaction Reports with the FRC for all cash transactions above KES 1,000,000 in a single day, whether received in a single transaction or in a series of related transactions. The policy must address structuring — the splitting of transactions to avoid CTR thresholds — as a suspicious activity that must be reported.

Record-Keeping: Requirements to retain all CDD documents, transaction records, STR logs, and staff training records for a minimum of 7 years from the end of the business relationship or completion of the transaction, in accordance with Section 16 of the POCAMLA and the Tax Procedures Act No. 29 of 2015. Records must be maintained in a format accessible to the FRC, the Central Bank of Kenya (CBK), and law enforcement on demand.

Staff Training: Annual mandatory AML training for all employees, with role-specific training for customer-facing staff, finance officers, and the MLRO. Training records must be documented and available for FRC inspection during supervisory visits.

Tipping-Off Prohibition: A clear statement that employees are prohibited from tipping off a customer or third party that an STR has been filed or is being considered, or that a law enforcement investigation is underway — a violation of Section 14 of the POCAMLA that carries criminal penalties.

The forms-legal.com Anti-Money Laundering Policy template covers all elements required by the FRC's AML Programme Guidelines and the POCAMLA. Companies with complex ownership structures should also complete a Beneficial Ownership Declaration Form and review the Anti-Bribery and Corruption Policy for coordinated compliance.