Anti-money laundering Bill stirs storm over lawyer, client privacy

Police officers inspect fake currencies worth Sh45.8 million seized from a house in Annex estate in Uasin Gishu. [Peter Ochieng, Standard]

The attempt to amend the proposed legislation to seal loopholes exploited to launder money or make suspicious transactions has sparked debate in the National Assembly.

Although the Proceeds of Crime and Anti-Money Laundering (Amendment) Bill, 2021, sponsored by the National Assembly Majority Leader Amos Kimunya sailed through the Second Reading in a charged debate, those opposed raised doubts on its legality.

The MPs questioned the constitutionality of the Bill, and faulted the inclusion of lawyers as reporting persons, arguing that it exposes their confidentiality with clients.

MPs Otiende Amollo (Rarieda), George Murugara (Tharaka), Aden Duale (Garissa Township) and Patrick Musimba (Kibwezi West) raised preliminary objections seeking temporary Speaker Christopher Omulele’s ruling on the matter.

But those in support, led by Mr Kimunya (Kipipiri) and the Finance and Planning Committee chair Gladys Wanga (Homa Bay County), maintained that the Bill will enhance vigilance in the financial sector and seal loopholes used by money launderers.

They also warned that Kenya risks being grey-listed, and eventually blacklisted, in the international financial system if the law was not enacted by next month.

“The Eastern and Southern Africa anti-money laundering group of 18 members have passed the law except Kenya and Somalia. All countries in East Africa Community and Comesa have done the same, why are we different?” said Ms Wanga.

Suspicious transactions

Kimunya said according to task force report, the number of suspicious transactions facilitated by lawyers between 2012 and September 8 this year stood at 579. He said 326 transactions were by lawyers.

“This number is growing. We are not talking about lawyers being included from the blues. All they need to do is report suspicious transactions by clients, it will be flagged by Financial Reporting Centre (FRC). They handle clients’ transactions innocently, what they don’t know is that they are proceeds of crime,” he said.

Wanga said lawyers will not be reporting active litigations in court but transaction activities.

“Litigation is not listed as activity the reporting person need to report. We are guided by the international financial action task force report forwarded by the United Nations Security Council where Kenya has a seat as non-permanent member,” said Wanga.

“We entered into the international obligation with our eyes wide open. If we don’t pass by January we will be in the grey list, progressing to the black list, and any transactions outside the country will attract high scrutiny.”

But Mr Duale, Mr Otiende and Mr Murugara termed the Bill discriminating, adding that it touches on legal issues of client/advocate confidentiality. They wondered why Kenya was bowing to external pressure to legislate laws that infringe on the Constitution.

“It is not only discriminating the advocates but burdensome and infringes on the rights to hold client information confidential. It even seeks to avail family information. It is not justifiable in an open and democratic society,” said Otiende.

If approved, the proposed law will widen the scope of the reporting requirement such as advocates, notaries and other independent legal professionals who are sole practitioners, partners or employees within professional firms to monitor and report complex, unusual or suspicious transactions.

But Otiende said independent legal practitioners are not mentioned anywhere in the laws.

“The Bill has introduced a new term not known in the law, the Advocates Act, the Law Society of Kenya Act. Whatever it is, it is not defined in law,” he said.

Duale stated: “These proposed amendments violate Articles 31, 48, 49 and 50 of the Constitution to fair hearing and the basic principles of privacy by intercepting communication.”

He warned that if the Bill sails through, they might also legislate a law to allow doctors to violate the right of a patient by exposing their medical history.

“This is the third attempt at passing this law. It was first tried in 2019 though the Finance Bill and later expunged. It was returned through the Statute Miscellaneous (Amendment) Bill in 2020 and the Speaker expunged it. Now it has been brought through a substantive legislation,” said the MP.

“We are told its pressure from outside. It doesn’t happen in other democracies. I don’t know why this poison is not leaving the corridors of Parliament.”

The legislators called for the withdrawal of the Bill.

“We risk legislating on unconstitutional law that will be struck out and declared null and void by the courts,” said Murugara.

The Bill seeks to introduce provisions that will limit the right to privacy enshrined in the Constitution in relation to the prevention, detection and investigation of money laundering and financing of terrorism.

It also seeks to give FRC authority to interrupt a transaction for not more than five working days where there is evidence of suspicious activity taking place as it will give adequate time to investigate the transaction.

This means it will empower the Central Bank of Kenya’s FRC to freeze transactions for five days before investigations and without a court order.

The Bill proposes the introduction of the asset recovery oversight board.

Kimunya, Wanga, Peter Kaluma (Homa Bay Town), Emmanuel Wangwe (Navakholo), David Sankok (Nominated) backed the Bill, saying it will restore Kenya’s dented image.

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