For years, major investors in Kenyan firms did not have to reveal their identity, with many companies listing shareholders under nominee accounts, whose beneficiaries are hard to trace. But in new requirements by the government, they will now have to make their identities known.
Filing names of their key owners with the government, the Business Registration Services (BRS) has said, will help fight illicit cash flows such as money laundering and terrorism financing. This is a laudable move to enhance transparency in running of Kenyan firms and a huge step to combat vices. While some shareholders may have reasons to stay behind the scenes, others have taken advantage to clean cash acquired through suspicious transactions.
The move will also help distinguish real businesses from shell companies, which have been used for phony transactions. Other than illicit financial flows, some companies have locally been linked to mega corruption where billions of shillings have been paid for projects never delivered or done shoddily. Investigations have not yielded much and always lead to dead ends.
Working with a deadline of January 31, 2021, BRS has given businesses ample time to understand the regulations and what is required. The companies will also have enough time to weed through complex ownership details and identify the real owners and at the same time notify them before registering them with BRS.
Requirements to firms to register their owners in the jurisdictions they operate is a matter the rest of the world is adopting to fight illicit financial flows. A report by Tax Justice Network says this year, 81 jurisdictions have laws requiring beneficial ownership to be registered with a government agency, up from 34 in 2018.