Designating lawyers as reporting entities under the Kenya’s anti-money laundering regime
| Published date | 13 March 2020 |
| DOI | https://doi.org/10.1108/JMLC-07-2019-0063 |
| Date | 13 March 2020 |
| Pages | 637-649 |
| Author | Kennedy Otieno Pambo |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Designating lawyers as reporting
entities under the Kenya’s
anti-money laundering regime
Kennedy Otieno Pambo
Independent Researcher, Nairobi, Kenya
Abstract
Purpose –Kenya has made little progressin its endeavor to categorizelawyers as designated non-financial
businesses and professionals (DNFBPs), despite making spirited attempts in 2007, 2018 and latelyin 2019.
The legal professionalsare, therefore, not bound by the reporting and other stringent obligations imposed by
the Financial Action TaskForce (FATF) to deter possible misuse by money launderers.The purpose of this
paper, therefore, is to enumeratethe ongoing efforts toward designating lawyers as DNFBPs in Kenya. The
paper also assesses the institutional and legislative incentives (as well as barriers) for imposing the anti-
money laundering(AML) duty thereto.
Design/methodology/approach –The paper provides a qualitativereview of Kenya’s AML legislative
framework and the potential support/hindrance to imposing the AML duty on lawyers. Also, this paper
providesa suggestion for possible solutions.
Findings –The legislative framework in Kenya has outlawed money-laundering, and lawyers can be
compelled to disclose confidentialinformation observed in the course of employment if it embodies crimeor
fraud. Thus, imposing the AML obligation on lawyersis nothing out of the ordinary, rather a mere creation
for a formal disclosure mechanism. However, this paper also revealed divergent views that merit
reconciliationfor the seamless designation of lawyers.
Originality/value –To enhance the legislative frameworkin Kenya, the paper borrows from the FATF’s
Interpretive Note to Recommendation23 and suggests a practical solution to the apparent conflict between
the legal professionalprivilege and the AML duty.
Keywords Anti-money laundering, Kenya, Lawyers, Professional privilege
Paper type General review
Introduction
The United Nations’estimates show that illicit transactions of financial nature account for
almost 8 per cent of the international trade, whereas the International Monetary Fund
estimates that the world is losing(on annual basis) between 2 and 5 per cent of global gross
domestic product (GDP), which approximately ranges from US$800bn to US$2tn, through
money laundering (World Bank, 2016;Terry and Robles, 2018). These are conservative
estimates given that some authors (see, for example, Levi and Reuter, 2014) argue that the
loss exceeds 10 per cent of the global GDP since 1994. Apparently, money laundering is a
ubiquitous criminal phenomenon that facilitates many other crimes and threatens the
integrity of the national and internationalfinancial systems (IMF, 2007).
The US Department of State posits that money laundering escalates corruption and
organized crime (USDS, 2019). This argument is echoed by Terry and Robles (2018), who
maintains that:
[...] corrupt public officials need to launder their bribes, kick-backs, and theft of public funds;
while organized crime needs to launder the proceeds of illegal activity such as drug trafficking
and commodity smuggling.
Lawyers as
reporting
entities
637
Journalof Money Laundering
Control
Vol.23 No. 3, 2020
pp. 637-649
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-07-2019-0063
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
To continue reading
Request your trial