State to freeze terror funds without notice

The government has tightened the noose on suspected financiers of terrorism and money laundering with the introduction of new measures that would now see funds and assets owned or controlled by terror suspects frozen without delay or prior notice.

The government, through the Financial Reporting Centre (FRC) has strengthened the anti-money laundering and the countering of terrorism financing framework by enacting and adopting several laws that would allow authorities to freeze all assets and funds, even those not tied to a particular terrorist act or threat.

Following the enactment of amendments of the United Nations Security Council 1718 Sanctions list, all reporting institutions and any other person who is authorised to detect, freeze or seize the funds or other assets of a designated entity must freeze funds owned by special entities.

A ‘special entity’ is a person or organisation suspected to have committed, attempted to, or prepared to commit a terrorist act.

In a Notice dated April 16, the FRC Director General Saitoti Maika said the authorities must also immediately verify whether the details of a designated person or entity match with the particulars of any customer, and if so, identify whether the customer owns any funds or other assets in Kenya.

Interior CS Prof Kithure Kindiki yesterday said the government is continuously monitoring financial inflows to protect our country from the harm of money laundering and terrorism financing.

“This is in line with the obligations of the Prevention of Terrorism Act of Kenya and various United Nations Security Council Treaties and Resolutions on the prevention of terrorism and terrorism financing,” the CS said.

Also to be frozen are the funds or other assets that are owned, directly or indirectly, by designated persons or entities; those derived or generated from funds or other assets owned or controlled directly or indirectly by designated persons or entities; and funds or other assets of persons and entities acting on behalf of, or at the direction of, designated persons or entities.

They should, within 24 hours of detecting the funds and freezing them or taking any action in compliance with the prohibition requirements of the relevant United Nations Security Council Resolutions, make a report to the Committee through the FRC.

Terrorism financing

The FRC is tasked with gathering data regarding all suspicious financial transactions linked to terrorism financing from all financial institutions and shares such information with the relevant agencies.

Any person who is designated under these Regulations shall not enter or transit through Kenya, if the entry or transit would be contrary to a determination of the Security Council.

Such people will also not be granted visas under the Kenya Citizenship and Immigration Act, unless the CS has directed that the visa is consistent with sanction.

Under the regulations, any person or financial institution found guilty of unauthorised release of frozen funds or assets linked to terror suspects flagged by the UN would be jailed for up to 20 years in jail.

In August last year, the Law Society of Kenya (LSK) agreed to report suspicious transactions by their clients to the FRC, and agreed to become a reporting entity.

CS Kindiki yesterday chaired the second Quarterly Meeting (2024) of the Counter Terrorism Financing Inter-Ministerial Committee which was attended by Musalia Mudavadi (Prime Cabinet Secretary and Cabinet Secretary for Foreign and Diaspora Affairs), Prof Njuguna Ndung’u (National Treasury), Justin Muturi (Attorney General), Kamau Thugge (Governor, Central Bank of Kenya), Inspector General Japhet Koome, Dr. Rosalind Nyawira (Director, National Counter Terrorism Centre) and Saitoti Maika (Director General, Financial Reporting Centre).

Section 40E of the Prevention of Terrorism Act, 2012 (POTA) confers the Counter Financing of Terrorism Inter-Ministerial Committee the mandate to implement UNSC Resolutions 1267, 1373, 1718 and 1988.

The resolutions relate to the suppression of terrorism financing and the prevention, suppression and disruption of the proliferation of, and financing of, dealings with weapons of mass destruction and such other related resolutions.

The UNSCR pursuant to resolution 1718 (2006) on April 15 2024 enacted amendments to one entry in the 1718 Sanctions List.

Suspicious transaction

“Pursuant to Regulation 8 (3), a reporting institution shall report any attempted transaction by a designated person or entity, by filing a suspicious transaction report to the Financial Reporting Centre in accordance with section 44 of the Proceeds of Crime and Anti- Money Laundering Act, 2009,” Saitoti said.

The regulations also prohibit any person within Kenya from making available any funds or other assets to or for the benefit of designated persons or entities unless licensed by the UNSC resolutions.

The country had also last year conducted a mutual evaluation exercise on Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) in line with Financial Action Task Force (FAFT) recommendations.

The FATF, the global money laundering and terror financing watchdog, has insisted that the implementation of the measures including legal reforms, will lead to tightening the noose on launderers and terrorists.