Anti-Money Laundering, Counter-Terrorist Financing and Sanctions
This domain tests POCAMLA duties, FRC reporting, risk-based CDD and targeted financial sanctions. Kenya's FATF grey-listing in February 2024 makes enhanced supervision and evidence of effectiveness especially examinable.
Core AML/CFT obligations
- POCAMLA 2009 applies to reporting institutions; they register with FRC, appoint a compliance/MLRO function, apply risk-based CDD, identify beneficial owners, screen PEPs, monitor transactions, train staff and retain records for seven years.
- File suspicious transaction reports on suspicion, not proof; file threshold cash transaction reports; do not tip off the customer.
- Sanctions and terrorist financing: the Prevention of Terrorism Act 2012 and UN measures require freezing without delay, no dealing, screening of customers and beneficial owners, and reporting.
Worked example
A bank's client asks to remit funds to a company whose beneficial owner matches a UN designation. The bank must not process the payment; it should freeze or hold the funds and report to FRC and the relevant authorities. It must not tell the client the reason, because that would be tipping-off. It files an STR and checks linked accounts. Suspicion, not proof, triggers the report.
Traps
Filing only when certain; confusing a cash transaction report with an STR; screening only the customer and not the beneficial owner; retaining records for five years; treating FRC as a prosecutor.