IRA Intensifies Efforts to Combat Financial Crime Through Anti-Money Laundering Regulations
The Insurance Regulatory Authority (IRA) is taking proactive steps to safeguard Kenya’s financial systems from illicit activities by increasing its focus on Anti-Money Laundering (AML) regulations within the insurance sector1. By providing comprehensive education and guidance to insurance providers, the IRA aims to enhance regulatory compliance and promote transparency across the industry.
Sensitization and Guidance for Insurance Providers
The IRA conducted a workshop aimed at life insurers and investment-related insurance providers. The goal of this workshop was to ensure these entities fully understand their responsibilities in maintaining financial integrity and adhering to AML regulations.
“Reporting Institutions” and Their Obligations
Under the Proceeds of Crime and Anti-Money Laundering Act, life insurers and investment-related insurance providers are classified as “reporting institutions”. This designation requires them to implement strict measures for customer identification and verification to prevent financial crimes such as money laundering1. Guidelines on AML/CFT can be found on the IRA website.
Strengthening Public Confidence in the Insurance Sector
With Kenya’s insurance penetration rate at 2.39 percent, which is significantly below the global average, boosting public trust in the sector is essential1.
Statements from IRA Leadership
IRA Director of Supervision, Kalai Musee, emphasized the significance of robust compliance frameworks and transparency in fostering trust among policyholders and enabling sustainable growth. Musee highlighted that the IRA is committed to providing insurance providers with the necessary tools and knowledge to enhance customer verification processes and risk assessments1. He also stressed the critical role of Know Your Customer (KYC) procedures in protecting financial systems from illicit activities.
The Impact of Financial Crimes on Economic Stability
Musee addressed the broader implications of financial crimes, including money laundering and terrorist financing, which can erode customer confidence and undermine the financial sector’s contribution to economic growth.
Call to Action and Continued Commitment
Musee urged the insurance industry to take a leadership role in implementing compliance measures to help Kenya be removed from the Financial Action Task Force’s (FATF) “grey list”. He mentioned that the IRA is developing Guidance Notes to assist insurance industry stakeholders in refining their AML/CFT programs.
The IRA urges life insurers to prioritize the implementation of Customer Identification Policies to detect and deter AML/CFT activities within their organizations and enhance the industry’s overall compliance efforts1.
Joint Financial Sector Regulators Forum
This workshop is a result of resolutions made during the 15th Joint Financial Sector Regulators Forum last year. During this forum, financial sector regulators agreed to improve integrity in the financial sector by continually improving the supervisory framework on AML/CFT within their specific industries. The Joint Forum includes members from the Central Bank of Kenya (CBK), Insurance Regulatory Authority (IRA), Retirement Benefits Authority (RBA), Capital Markets Authority (CMA), and Saccos Societies Regulatory Authority (SASRA).
Regulatory Framework
The IRA provides a regulatory framework and legal notices to help insurance providers comply with the anti-money laundering and combating the financing of terrorism (AML/CFT) regulations45. These regulations, such as the Insurance (AML CFT) Regulations, 2020, require regulated entities to develop a compliance policy statement demonstrating the commitment of senior management and the board to anti-money laundering efforts5.
Additional Resources
The IRA provides additional guidelines for insurers to help them with implementation of crime and anti-money laundering acts. Kenya has also taken steps to address anti-money laundering, with the Insurance Regulatory Authority enhancing its AML/CFT risk-based supervision7. The Anti-Money Laundering (Amendment) Act, 2023, further strengthens the legal framework for combating financial crimes8. Compliance with these regulations is essential, and reporting institutions are required to submit to the Financial Reporting Centre (FRC) as per the Proceeds of Crime and Anti-Money Laundering Regulations, 20239.
