Lawyers whose clients are involved in illicit financial activities will now have a legal obligation to report such clients to the government. This follows the signing of a pact between the Law Society of Kenya (LSK) and the Financial Reporting Centre (FRC).
Officials from the FRC reportedly informed Members of Parliament (MPs) that the agency has reached an agreement with LSK to withdraw a lawsuit that had been blocking the implementation of the Proceeds of Crime and Anti-Money Laundering (Amendment) Act. This amendment mandates lawyers and their staff to disclose potentially suspicious financial transactions involving their clients.
“We have reached an agreement with LSK that it shall [regulate itself] and that lawyers will report on [deals involving dirty cash],” FRC Director-General Saitoti ole Maika said as quoted by the Business Daily.
“The lawyers had raised an issue with the requirement that they report on their clients. They said this goes against client advocate confidentiality but we have agreed in principle that the LSK will be the regulator,” he added.
Ole Maika submitted his remarks to the National Assembly’s Finance and National Planning Committee, which is currently collecting views from the public regarding the Anti-Money Laundering and Combating of Terrorism Financing (Amendment) Bill of 2023.
The Proposed Amendments to the Proceeds of Crime and Anti-Money Laundering Bill of 2023 aim to modify section 36 of the main legislation, with the goal of empowering the Law Society of Kenya (LSK) to oversee, monitor, and enforce adherence to anti-money laundering (AML), counter-financing of terrorism (CFT), and counter-proliferation financing (CPF) regulations within the legal profession, including lawyers, notaries, and other legal professionals.
The Central Bank of Kenya (CBK) has expressed its support for the proposed revisions, stating that the country faces the potential of being categorized on the Financial Action Task Force (FATF) “grey list” unless significant improvements are made, encompassing legal reforms, before the upcoming October deadline.
“This will result in a negative impact on international trade, negative impact on international transactions and termination of banking relationships with international banks due to high AML/CFT/CPF compliance costs,” CBK Governor Kamau Thugge said.
The pact between LSK and FRC concludes a deadlock that had put to the test one of the prerequisites Kenya needed to meet in order to access a loan of Sh334 billion ($2.34 billion) from the International Monetary Fund (IMF).
-Additional Reporting by the Business Daily
