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A Review of the Amendments to the Proceeds from Crime and Anti-Money Laundering Acts Kenya: Implication for Lawyers as Reporting Agents

Abstract

The Proceeds of Crime and Anti-money Laundering Bill (the “Bill”) gazetted on 03 September 2021 seeks to amend the current Proceeds of Crime and Anti-money Laundering Act, 2009 (the “Act”). The Bill seeks to strengthen the current legislation around money laundering in the country by widening the scope of reporting requirements, addressing loopholes that have previously been used by money launderers in the past and is intended to improve vigilance in the financial sector.

Introduction

Attempts have been made by the Kenyan government to prevent Money Laundering ‘ML’. A regulation against ML which will form the basis of this study, is the Proceeds of Crime and Anti-money Laundering Bill (the “Bill”) gazetted on 03 September 2021, which seeks to amend the current Proceeds of Crime and Anti-money Laundering Act, 2009 (the “Act”).

The Bill

The amendments here seeks to strengthen the Act, bringing a lot of changes aimed at combating the current ML problem in Kenya. One major change that concerns this article is the expansion of the definition of ‘reporting persons’ under the Act, to now include;

  1. Advocates
  2. Notaries
  3. Independent Legal Professionals
  4. Partners or employee with professional firms.

Lawyers have commended and supported the efforts of the Kenyan Legislative arm towards fighting ML. The amendment however affects the practice of law and several legal principles.

The Implication for Lawyers as Reporting Persons

The amendment compels lawyers to disclose suspicious financial deals involving their clients, violating Rule 7 of the Code of Conduct and Ethics for Advocates, Kenya 2016 on Client Confidentiality. Lawyers have a litigation privilege which protects communications they are privy to for the proposes of gathering evidence for proceedings. A lawyer isn’t permitted to disclose the secrets of his client else he betrays his client’s confidence. Andrew v Solomon I.F .Cas.899,900-01(C.C.D Pa. 1816) (No.378), Rule 7, Law Society of Kenya Digest of Conduct of Etiquette 2000.

Section 131 of the Evidence Act Cap 80, laws of Kenya, and the ‘Act’ in its sections 18-19, place premium on the advocate-client confidentiality.

Conclusion

The amendment compels lawyers to report to the FRC, singles out advocates and accountants among other professionals, prompting lawyers to kick against it as a form of discrimination seeing it violates Article 27 (4) of the  Constitution of Kenya, 2010. It erodes the settled legal principle of advocate-client confidentiality, stating that lawyers may be required to keep records of cash transaction totaling at least Sh Million ($10,000) and above.

This amendment therefore violates the professional ethics of lawyers and will certainly affect the confidence clients repose in their lawyers.