Regulatory Alerts2023-08-14
Banking Circular No. 6 of 2023 - Implementation of the Recommended Actions in the AML CFT MER of Kenya
This Kenyan Central Bank (CBK) banking circular emphasizes the need for commercial banks, mortgage finance companies, and microfinance banks to address the deficiencies outlined in Kenya's recent mutual evaluation report (MER) on anti-money laundering and combating the financing of terrorism (AML/CFT). The country has been referred to the Financial Action Task Force's (FATF) International Cooperation Review Group (ICRG) process due to identified weaknesses. If progress is not substantial by October 2023, Kenya may face being grey-listed, which could lead to serious consequences such as adverse impacts on international trade and financial transactions involving the European Union (EU) and other regions. CBK issues directives for institutions to: 1. Critically read and understand the MER, specifically chapters related to money laundering/terrorism financing risks, national policies, preventive measures, and supervision. 2. Develop an action plan addressing deficiencies and implement it expeditiously. A copy of this action plan should be submitted by August 31, 2023. 3. Prepare a report on the institution's current status concerning identified deficiencies and provide it to CBK by August 18, 2023. 4. Allocate sufficient resources, such as time, personnel, and finances, to efficiently implement action plans. 5. Prioritize addressing MER deficiencies given the tight deadline for submitting a progress report to ICRG. 6. Document every action taken to address deficiencies and accompanying documentation should be submitted. 7. Submit a report on the status of implementation by September 15, 2023. This is crucial as it supports CBK's consolidated banking sector report submission to ICRG by September 30, 2023.