Regulatory Alerts2023-11-03
Banking Circular No. 14 of 2023 - AML CFT CPF Obligations on CDD EDD and Record Keeping
The purpose of the circular is to remind and inform financial institutions about their obligations concerning Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), and record keeping according to the provisions of the Proceeds of Crime and Anti-Money Laundering Laws, 2009 (POCAMLA) and the Proceeds of Crime and Anti-Money Laundering (Third Amendment) Regulations, 2016 (POCAMLR). In light of recent updates to these laws, the circular serves as a reminder that financial institutions must fully understand their responsibilities under the amended legislation and apply them accordingly. The circular also addresses specific areas where financial institutions may be falling short in meeting these obligations, such as incomplete or insufficient customer identification procedures, failures in verifying the sources of funds and wealth, and deficiencies in keeping proper records. The circular highlights the importance of identifying customers during remote on-boarding processes, implementing systems to verify source of funds and/or wealth, and ensuring that third parties used by institutions are regulated, supervised or monitored by a competent authority. Furthermore, it emphasizes that financial institutions must maintain accurate and complete records related to customer due diligence measures and transactions for a minimum period of seven years. By addressing these issues, the circular aims to strengthen the compliance efforts of financial institutions in Kenya and ensure that they are effectively implementing the AML/CFT/CPF laws to prevent money laundering, terrorist financing, and corruption within their operations.