CIVIL societies’ finances are set to come under sharp scrutiny of the state as President William Ruto’s administration steps up the war against money laundering.
The government has proposed a law, which, if enacted, would empower the Public Benefits Regulatory Authority to monitor and report NGO finances to the government.
The Anti-Money Laundering and Countering Terrorism Financing Laws (Amendment) Bill, 2025, seeks to empower the authority to “safeguard for civil society groups from the risk of money laundering and terrorism financing”.
In the endeavour sponsored by Majority leader Kimani Ichung’wah, a number of agencies and business players are being brought under the scrutiny of anti-money laundering agencies.
Betting firms, retirement benefit schemes, saccos and sacco owners, accountants, estate agents and certified public secretaries are targeted in the enhanced laws. Persons engaged in the production of precious minerals, buying or brokering of the same, manufacturing of jewelry and retail selling of precious stones would be monitored as well.
For NGOs, the regulator would oversee and monitor civil society organisations that are at risk of terrorism financing.
It would also periodically identify organisations that are likely to be at risk of terrorism financing abuse.
The authority would also periodically conduct an assessment of the terrorism financing risks posed to public benefit organisations.
The only rider is that while at it, the state would “ensure the measures do not undermine the legitimate operations of the organisations.”
A section of NGOs and civil society groups have been on the state’s radar after the June 2024 protests against President Ruto’s administration tax proposals.
A number of organisations, including the US’s Ford Foundation, were accused of having a hand in the upheavals that culminated in youth storming Parliament Buildings.
At the time, government functionaries warned of sanctions against the public benefits organisations and their financiers.
Several NGOs have been targeted in governments’ past crackdowns, among them the Kalonzo Musyoka Foundation whose accounts were frozen on charges it was funding activities outside its licence.
In the same period, the government revoked the permit of Evans Kidero Foundation on allegations of unexplained cash.
The former Nairobi governor blamed it on politics. In 2017, the NGO Board accused the Kenya Human Rights Commission and Africog of operating illegal bank accounts.
The two entities were raided by state agents. Ruto’s administration has also been calling for scrutiny of the sources of financing for various NGOs, especially those at the forefront to champion human rights.
“The bill seeks to allow the public benefits regulatory authority to oversee and monitor public benefits organisations that are at risk of terrorism financing in the country,” Ichung’wah said in the bill’s memo.
Kenya was grey listed by the Financial Action Task Force (FATF) on February 24, 2023, following concerns that the efforts to combat money laundering were wanting.
A grey list means the country should work with the FATF to strengthen anti-money laundering measures, including improving laws, enhancing enforcement and ensuring agencies coordinate better.
Failure to address the issues could make a country blacklisted, resulting in severe consequences to the economy.
“The bill seeks to address the technical compliance deficiencies identified arising from the Eastern and Southern Africa Anti-Money Laundering Group re-rating and review by FATF and matters incidental thereto,” Ichung’wah explained.
If enacted, those who fail to report transactions to the Financial Reporting Centre would be liable for a jail term of seven years or a fine of not more than Sh10 million or both. Organisations in breach of the antimoney laundering law would also be fined Sh20 million for such violations.
The bill has empowered the Financial Reporting Centre, supervisory agencies and selfregulating agencies to supervise and enforce measures to combat the financing of terrorism.
The centre would supervise and enforce the implementation of targeted financial sanctions by reporting institutions and freeze funds suspected to be from money launderers.
The centre is further being empowered to prevent funds or other assets from being made available directly or indirectly to agencies involved in money laundering.
In the proposed dispensation, the BCLB would vet proposed significant shareholders of betting firms, proposed beneficial owners, proposed directors, and senior employees.
The board would also be required to conduct onsite inspections, offsite surveillance and undertake consolidated supervision of the firms under its purview.
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