Regulatory Alerts2023-11-03
Central Bank Circular No. 12 of 2023 - AML CFT CPF Obligations on CDD EDD and Record Keeping
The circular emphasizes the importance of Customer Due Diligence (CDD), Enhanced Due Diligence (EDD) and Record Keeping for financial institutions operating in Kenya. It highlights that these measures are critical components of an effective Anti-Money Laundering, Combating the Financing of Terrorism, and Preventing Proliferation Financing (AML/CFT/CPF) regime. The circular provides guidance on CDD requirements, including identifying customers, verifying their identities, understanding the nature and purpose of their business relationships with institutions, and conducting ongoing monitoring of those relationships. It also underscores that institutions should take a risk-based approach to CDD, applying more rigorous measures to higher-risk customers and situations. In addition, the circular discusses EDD requirements, which apply when there are specific reasons for suspecting that a customer or business relationship might involve ML/TF/PF activities. These measures include conducting additional checks on the source of funds, carrying out more extensive background checks, and keeping detailed records of all transactions. Furthermore, the circular emphasizes the importance of maintaining accurate and complete records of all CDD and transactional information for at least seven years. This is necessary to facilitate prompt reporting to relevant authorities in case of any suspicious activities involving financial institutions and their customers.