Lawyers will from next month be required to report suspicious transactions by their clients to the Financial Reporting Center (FRC) under the Anti-Money Laundering Amendment Act, 2023.
The Anti-Money Laundering and Combating of Terrorism Financing (Amendment) Act, 2023 is expected to take effect from March 15, 2024.
In an interview with the Star, LSK President Eric Theuri however, said that the society as the supervisory body will do the reporting on behalf of its members.
He said lawyers will not report directly to the Financial Reporting Center.
“This is intended to insulate client advocate privilege,” said Theuri.
He added that the Law Society of Kenya will also review the reports and only refer to FRC those transactions it deems suspicious.
In September 2023, President William Ruto signed the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill, 2023 into law.
The law will help address deficiencies limiting the fight against money laundering and terrorism in the country.
It allows for the surrendering of a fugitive criminal who consents to be extradited to a requesting State.
The anti-corruption law further seeks to trace monies lawyers’ clients have used in buying and selling business entities.
Lawyers initially opposed the plans when the Bill, 2019, proposed that they disclose their clients’ transactions.
Law Society of Kenya officials then said the proposed law “substantially affected the practice of law, rule of law and administration of justice”.
“The subject of legal professional privilege or advocate-client privilege is cemented under the law by the evidentiary rule of privilege under the law of evidence and common law principle adopted under the Judicature Act,” the LSK said in its memorandum submitted to Parliament at that time.
Lawyers further stated that the proposed amendment “impacted several legal principles, practices, and laws”, citing emerging issues to include “confidentiality, the role of lawyers, constitutional rights, evidentiary rules, criminal law principles and procedures, and the self-regulation of professional bodies”.
In the Act, the Capital Markets Authority has been empowered to enforce the compliance of its licenses with the laws on anti-money laundering and combating terrorism financing and proliferation financing.
Under the new development, the Insurance Regulatory Authority now has the power to enforce the compliance of its licensees with the laws on anti-money laundering and combating terrorism financing and proliferation financing.
It will also harmonize the licensing regime under the Act with the Financial Action Task Force (FATF) Standards.
The Central Bank of Kenya (CBK) will supervise financial institutions and agents of reporting institutions.
The Act has included the laundering of the proceeds of corruption under the definition of “economic crime”.
