Central Bank of Kenya (CBK)

The Central Bank of Kenya (CBK) is the monetary authority of Kenya, responsible for maintaining the stability of the Kenyan shilling and overseeing the country's financial system. It fulfils several key roles:

• Monetary Policy

The CBK formulates and implements monetary policy to achieve price stability, promote economic growth, and foster financial stability. This involves managing interest rates, influencing the money supply, and overseeing foreign exchange reserves.

• Financial Regulation

The CBK acts as the primary financial regulator in Kenya. It issues licenses to banks and other financial institutions, establishes prudential guidelines, and supervises their activities to ensure compliance with regulations and maintain financial system stability.

• Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT)

The CBK plays a critical role in enforcing AML and CFT regulations. It issues guidelines for financial institutions, supervises their compliance efforts, and investigates suspicious activity.

POCAMLA and AML/CFT Compliance

The CBK is responsible for overseeing and enforcing compliance with the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA). POCAMLA establishes a framework for preventing money laundering and terrorist financing in Kenya. Financial institutions under the CBK's purview, such as:

• Commercial Banks

• Mortgage Finance Companies

• Microfinance Banks

• Money Remittance Providers

• Foreign Exchange Bureaus

• Digital Credit Providers

• Payments Service Providers

• Mortgage refinance companies

must comply with POCAMLA regulations.

A central component of CBK's AML/CFT compliance framework is the requirement for financial institutions to conduct regular AML risk assessments. These assessments identify potential money laundering and terrorist financing risks specific to each institution's operations, customers, and geographic locations. The CBK mandates that these risk assessments are:

1. Conducted and documented formally.

2. Updated every two years or when AML/CFT guidelines change.

3. Used to develop and maintain adequate AML compliance programs that mitigate identified risks.

4. Reported to senior management, the board, and relevant internal departments within the institution.

5. The CBK also requires annual updates on risk assessment results by December 31st of each year.

Read more: The Central Bank of Kenya Guidelines on Anti-Money Laundering and How to Meet Them

To learn more about Kenya’s anti-money laundering regulations and how your business can stay compliant in Kenya and other African markets, speak to one of our experts here.