The International Monetary Fund (IMF) is pushing the Kenyan government to have all directors and shareholders disclose their identity, in a fresh wave to counter corruption among public servants.
Consequences are that companies which fail to disclose a full list of owners face deregistration.
The National Treasury told the IMF that it has been carrying out activities to sensitize the need of companies – among them revealing identity ownership – through the Business Registration Service (BRS), a state agency in the office of the Attorney General,
The BRS mandate includes overseeing the disclosure of companies’ beneficial owners.
“Following the outreach activities, BRS will strike off companies from the company register for non-compliances,” says the Treasury in documents shared with the IMF as part of conditions to tap loans.
A report by Business Daily says that BRS is also preparing draft amendments to the Companies Act 2015 to give it administrative sanctioning powers to deal with companies that fail to timely submit beneficial ownership information.
It’s not the first time the IMF has been pushing Kenya to clean her record to unlock new doors for future funding.
In December last year, Kenya revealed plans to track the financial dealings of high-ranking politicians, including the President, and their allies starting this year in fresh commitments to the IMF aimed at preventing the country from being locked out of the global financial system for money laundering.
The Treasury told the IMF that the State would track the flow of cash of politically exposed persons, including their bank accounts, to match their known income and their financial dealings.
The Financial Reporting Centre (FRC), the anti-money laundering watchdog has been preparing changes to the law that will require financial institutions to reveal sources of cash for top politicians, families and business associates.
“To help prevent the laundering of illicit proceeds from corruption, the authorities plan by end-June 2023 to submit to the National Assembly, draft amendments to the Proceeds of Crime and Anti-Money Laundering Act and Regulations to address gaps in the AML/CFT legal framework, including requirements on politically exposed persons [PEPs], in line with FATF standards,” the IMF disclosed in the report following approval of Ksh.55.07 billion ($447.39 million) disbursement to Kenya on December 19, 2022.
“To this end, the authorities aim to prioritize ensuring compliance by banks with enhanced due diligence measures for higher risk customers, including PEPs, through AML/CFT risk-based supervision.”
PEPs are generally persons entrusted with prominent public functions and are susceptible to being involved in corruption because of their position of influence.
Kenya has a history of multi-billion shilling scandals that have failed to result in high-profile convictions.
The Treasury last year issued a circular demanding public procuring entities to publish beneficial ownership information as part of the publication of contract awards in the Public Procurement Information Portal (PPIP) but compliance has remained low.
As at the end of May 2023, only 1,476 contracts worth Ksh.77.9 billion had beneficial ownership information published through the PPIP.