Regulatory Alerts2023-11-08
Payments Circular No. 13 of 2023 CDD EDD and Record Keeping
This is a response from Kenya's Central Bank which provides guidance for financial institutions on Customer Due Diligence (CDD), Enhanced Due Diligence (EDD) and Record Keeping in the context of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations. The Central Bank highlights that all financial institutions must implement CDD measures on customers, regardless of whether they are individuals or entities, to verify their identity and understand the nature of their business relationship. This includes obtaining, verifying and recording necessary information about the customer, such as name, address, date and place of birth, identification document numbers, etc. In addition, financial institutions must apply EDD measures when dealing with high-risk customers or transactions that present a higher risk of money laundering or terrorist financing. These measures may include obtaining additional information about the customer's source of funds, conducting enhanced verification procedures, and maintaining ongoing monitoring of the customer's activity. The Central Bank also emphasizes the importance of record keeping for all financial institutions. They must maintain records of all transactions, both domestic and international, for a minimum period of seven years from the date the relevant business or transaction was completed or following the termination of an account or business relationship. These records should include copies or records of official documents like passports, identification cards, or similar documents, as well as details of any suspicious activities or unusual transactions. The guidance also addresses remote on-boarding and the use of third parties, emphasizing that financial institutions must ensure that adequate CDD and EDD measures are implemented, regardless of the location where the on-boarding or use of third parties occurs. In summary, this circular from Kenya's Central Bank provides important information for all financial institutions about implementing proper AML/CFT procedures. It reminds them of their obligations under Kenyan law to apply CDD and EDD measures when dealing with customers, as well as the importance of maintaining accurate records of all transactions.