Lawyers not at liberty to report client ‘shady deals’
By Mercy.Mwai, August 29, 2023Lawyers, notaries and other independent legal professionals will no longer be required to report suspicious transactions relating to money laundering after MPs approved amendments to the law.
This will be on condition that the information was obtained in circumstances that are subject to their professional secrecy or legal profession.
Following the approval of the Anti-money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill which now awaits presidential assent.
According to amendments proposed by the departmental Committee on Justice and Legal Affairs (JLAC) chaired by Tharaka MP George Murugara, the information referred to is the one received from or obtained by the lawyer, notary or other independent legal professional from a client.
According to the committee, the act of a lawyer, notary and other independent legal professional seeking to dissuade a client from engaging in an illegal activity does not constitute the offence of tipping off.
Legal position
“The information referred to is obtained…in the course of ascertaining the legal position of their client, or in performing their task of defending or representing that client in, or concerning judicial, administrative, arbitration or mediation proceedings,” reads the amendments.
JLAC however proposed that LSK and the Financial Reporting Centre (FRC) establish appropriate mechanisms to cooperate for the exchange of information relating to suspicious transaction reporting and supervision.
According to the committee, LSK should regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing for lawyers, notaries and other professionals.
In undertaking its mandate, LSK will have the mandate to impose monetary, civil or administrative sanctions for violations relating to anti-money laundering, combating the financing of terrorism and countering proliferation financing.
Further, it will have powers to conduct onsite inspection and compel the production of any document or information the Society may require for the purpose of discharging its supervisory mandate.
The Society will also have powers to issue regulations, guidelines, directions, rules or instructions, share information, and take such action as is necessary to supervise and enforce compliance by lawyers, and notaries.
“The provisions of this section shall come into effect six months from the date of commencement of this section,” reads the amendments.
The move comes just days after lawyers signed a deal with FRC obligating them to report clients who handle dirty money.
FRC told MPs that the agency has agreed with LSK to withdraw a case that was blocking the implementation of the Proceeds of Crime and Anti-Money Laundering (Amendment) Act that was passed by the National Assembly in 2019.
The LSK through Nairobi-based lawyer Omwanza Ombati, argued that the amendments introduced in the Proceeds of Crime and Anti-Money Laundering (Amendment) Act by the National Assembly were harmful to practising advocates.
The MPs also adopted amendments by Ruaraka MP Tom Kajwang that will only allow the state to snoop on your phone, raid a person’s home, and seize possession of an individual accused of money laundering only if they secure a search warrant from the court.
Initially, the Committee on Finance and Planning had proposed that the right to privacy be limited under Article 24 of the Constitution if the person violates the said law.
Blanket powers
The committee had given the state blanket powers to all to raid a person’s home or property be search, seize the person’s possessions as well and investigate the communications of a person “A limitation of a right shall apply only for the purpose of the prevention, detection, investigation and prosecution of proceeds of crime, money laundering and financing of terrorism,” reads the amendments.
On the role of the Central Bank of Kenya, the departmental Committee on Finance and National Planning has proposed that it be given powers to regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes by all reporting institutions regulated and supervised by the bank and whom the provision of the Proceeds of crime apply.