With Kenya’s elevated vulnerability to anti-money laundering and terrorism activities including threats from within and outside the Country, this recently yielded to the assenting of the Anti-Money Laundering and Combating of Terrorism (AML/CFT) Financing Laws (Amendment) Act, 2023 on 1st September 2023. It is a pivotal development towards filling the voids in the existing laws and heightening vigilance towards combating money laundering and proliferation financing.
The Financial Action Task Force (FATF) recommendations to Kenya seemingly were incorporated in various Acts of Kenya including the Limited Liability Partnerships (LLP) Act “the Act” in the amendment. As part of the registration requirements for an LLP, applicants will also now need to submit a statement of particulars of beneficial owners (BO) of the proposed partnership alongside other registration documents. LLPs are required to have lodged this information within 60 days from the date the Act took effect with an option for seeking an extension from the Registrar. Where a person ceases to be a BO, LLPS are required to file the changes with the Registrar within 14 days.
The Act has also charged the Attorney General, criminal investigation agency established by law, law enforcement agencies including the Financial Reporting Centre and Kenya Revenue Authority (KRA) with designated responsibilities in combatting money laundering. This amendment is in tandem with the FATF recommendation, which had reported that no other competent authority had a record of having requested for and obtained basic and/or BO information from the Business Registration Services (BRS) other than the KRA.
The Act further introduces a new term i.e. “nominator” and a “nominee partner”. A nominator is defined as an individual, group of individuals or legal person that issues instructions directly or indirectly to a nominee to act on their behalf in the capacity of a partner while a nominee partner is defined as an individual or legal person instructed by the nominator to act on their behalf in a certain capacity regarding a limited liability partnership. As part of mandatory compliance requirements, an LLP is required to keep a register of nominee partners at its registered office containing information on the name and address of the nominee partner, the date on which the person became a nominee partner and the name and address of the partner’s nominator.
A new type of LLP known as Foreign Limited Liability Partnership has also been introduced after Section 34 of the Act (new Sec 34A) and which provides an LLP inoperability unless it is registered. However, it is worth noting that the term Foreign LLP is not defined by the Act in as much as there are obligatory requirements such as mandatory appointment of a local representative, a designated registered office in Kenya and filing of annual returns with the Registrar within thirty days of the anniversary of its registration. In filing the annual returns, a foreign LLP must disclose the following information:
The above new amendments seek to enhance the regulators‘ capacity in mitigating potential misuse of LLPS in money laundering. LLPS should therefore aim to stay abreast of their compliance obligations.