State proposes new PBO Act rules for civil society operations
The government has published a raft of regulations under the Public Benefit Organisations (PBO) Act, which was enacted in 2013 but was not operationalised until May last year following a directive by President William Ruto.
Under the new rules, all persons subject to this Act shall enjoy all rights and fundamental freedoms enshrined in the Constitution unless limited to the extent specified in Article 24 of the Constitution, this Act or any other Act.
The regulations mandate the PBO Authority to regulate, supervise, and enforce compliance with anti-money laundering, counter-terrorism financing, and anti-proliferation financing measures among all reporting institutions under its oversight, as per the Proceeds of Crime and Anti-Money Laundering Act, 2009.
"Pursuant to sections 2A, 36A, 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act, 2009, the Central Bank shall 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 Central Bank and to whom the provisions of the Proceeds of Crime and Anti-Money Laundering Act, 2009 apply," the draft regulations state.
In undertaking its mandate, the Central Bank may vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution; through onsite inspection, offsite surveillance, consolidated supervision of an institution and its group or compel the production of any document or information the Central Bank may require for the purpose of discharging its supervisory mandate under the Proceeds of Crime and Anti-Money Laundering Act, 2009.
The regulations further allow it to impose monetary, civil or administrative sanctions for violations related to anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes.
"This Act shall apply to matters relating to combating money laundering, combating terrorism financing and combating the financing of proliferation of weapons of mass destruction," the draft document states.
The PBO Act stipulates that a reporting institution shall file reports on all cash transactions exceeding USD 15,000 or its equivalent in any other currency carried out by it.
Under the new regulations, a gazetted officer in the rank of an Inspector and above may, if he or she considers it necessary to do so, be allowed "controlled delivery" with a view to investigating an offence and the identification of persons involved in the commission of the offence.
In this case, officials from state agencies and organs in that category may grant the Ethics and Anti-Corruption Commission (EACC) access to relevant information in the prevention and investigation of economic crime.
The regulations further add that where the Registrar determines that a limited liability partnership is not carrying on business or is not in operation, the Registrar may send to the registered address of the limited liability partnership or by other means as Regulations may prescribe, a communication inquiring whether the limited liability partnership is carrying on business or is in operation.
Such instances can be occasioned by situations where a limited liability partnership has failed to file annual returns for a period of five years or more; or where a limited liability partnership has failed to comply with the requirement to lodge a copy of the register of beneficial ownership after being issued with a directive in accordance to the law.
Where the Registrar does not receive any response as required under subsection (4), the Registrar shall notify the limited liability partnership that no response has been received; and in instances where no response is received within one month after the date of notification under this subsection, the limited liability partnership shall be struck off.
"Where a company is struck off pursuant under any other provision in this Act, it shall be the duty of the officers, administrator or liquidator to maintain all the company records required to be maintained by the company under this Act for at least seven years from the date of the strike off," the regulations note.
Additionally, the regulations direct that a foreign limited liability partnership shall not carry on business in Kenya unless it is registered as a foreign limited liability partnership under this Act.
Those who contravene commit an offence and shall be liable, on conviction, to a fine not exceeding Sh250,000, or to imprisonment for a term not exceeding three years, or to both.
In a bid to tame commission of terror crimes by funds circulating in this sector, the regulations note that a person who finances the travel of an individual to a state other than that individual's State of residence or nationality for the purpose of the perpetration, planning, or preparation of, or participation in, a terrorist act or the providing or receiving of terrorist training commits an offence.
Compliance with this section shall be aided by the Counter Financing of Terrorism Inter-Ministerial Committee that is comprised of, amongst others, the CS Interior, Finance, Foreign and Diaspora Affairs, AG, DG NIS, IG, GD Immigration, Director National Counter Terrorism Centre, CBK and the DG Financial Reporting Centre.
"The Committee may co-opt such other persons whose presence, participation, knowledge or skills are necessary for the proper functioning of the Committee," the document adds.
Principal Secretary for Internal Security and National Administration, Dr Raymond Omollo, who presided over the launch of the Draft Regulations in Nairobi, said the launch of the Regulations affirms the government's commitment to fulfilling its pledges and strengthening the legal framework guiding the operations of civil society organisations in the country.
He noted that the PBO Act is progressive, as it provides mechanisms for asset protection, outlines procedures for registration, enhanced transparency, and establishes a dispute resolution process through a Tribunal under the Judiciary.
The PS called on stakeholders to fully engage in the development of the regulations, which will determine how the Act functions in practice, as members of the public add their input to ensure the resulting regulations serve the intended objectives of the Act.
According to the Annual Sector Report, the sector received Sh196 billion in project support and employed approximately 80,000 persons, earning a key role in national development, through their contribution to service delivery, job creation, and resource mobilisation.
Under the new rules, all persons subject to this Act shall enjoy all rights and fundamental freedoms enshrined in the Constitution unless limited to the extent specified in Article 24 of the Constitution, this Act or any other Act.
The regulations mandate the PBO Authority to regulate, supervise, and enforce compliance with anti-money laundering, counter-terrorism financing, and anti-proliferation financing measures among all reporting institutions under its oversight, as per the Proceeds of Crime and Anti-Money Laundering Act, 2009.
"Pursuant to sections 2A, 36A, 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act, 2009, the Central Bank shall 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 Central Bank and to whom the provisions of the Proceeds of Crime and Anti-Money Laundering Act, 2009 apply," the draft regulations state.
In undertaking its mandate, the Central Bank may vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution; through onsite inspection, offsite surveillance, consolidated supervision of an institution and its group or compel the production of any document or information the Central Bank may require for the purpose of discharging its supervisory mandate under the Proceeds of Crime and Anti-Money Laundering Act, 2009.
The regulations further allow it to impose monetary, civil or administrative sanctions for violations related to anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes.
"This Act shall apply to matters relating to combating money laundering, combating terrorism financing and combating the financing of proliferation of weapons of mass destruction," the draft document states.
The PBO Act stipulates that a reporting institution shall file reports on all cash transactions exceeding USD 15,000 or its equivalent in any other currency carried out by it.
Under the new regulations, a gazetted officer in the rank of an Inspector and above may, if he or she considers it necessary to do so, be allowed "controlled delivery" with a view to investigating an offence and the identification of persons involved in the commission of the offence.
In this case, officials from state agencies and organs in that category may grant the Ethics and Anti-Corruption Commission (EACC) access to relevant information in the prevention and investigation of economic crime.
The regulations further add that where the Registrar determines that a limited liability partnership is not carrying on business or is not in operation, the Registrar may send to the registered address of the limited liability partnership or by other means as Regulations may prescribe, a communication inquiring whether the limited liability partnership is carrying on business or is in operation.
Such instances can be occasioned by situations where a limited liability partnership has failed to file annual returns for a period of five years or more; or where a limited liability partnership has failed to comply with the requirement to lodge a copy of the register of beneficial ownership after being issued with a directive in accordance to the law.
Where the Registrar does not receive any response as required under subsection (4), the Registrar shall notify the limited liability partnership that no response has been received; and in instances where no response is received within one month after the date of notification under this subsection, the limited liability partnership shall be struck off.
"Where a company is struck off pursuant under any other provision in this Act, it shall be the duty of the officers, administrator or liquidator to maintain all the company records required to be maintained by the company under this Act for at least seven years from the date of the strike off," the regulations note.
Additionally, the regulations direct that a foreign limited liability partnership shall not carry on business in Kenya unless it is registered as a foreign limited liability partnership under this Act.
Those who contravene commit an offence and shall be liable, on conviction, to a fine not exceeding Sh250,000, or to imprisonment for a term not exceeding three years, or to both.
In a bid to tame commission of terror crimes by funds circulating in this sector, the regulations note that a person who finances the travel of an individual to a state other than that individual's State of residence or nationality for the purpose of the perpetration, planning, or preparation of, or participation in, a terrorist act or the providing or receiving of terrorist training commits an offence.
Compliance with this section shall be aided by the Counter Financing of Terrorism Inter-Ministerial Committee that is comprised of, amongst others, the CS Interior, Finance, Foreign and Diaspora Affairs, AG, DG NIS, IG, GD Immigration, Director National Counter Terrorism Centre, CBK and the DG Financial Reporting Centre.
"The Committee may co-opt such other persons whose presence, participation, knowledge or skills are necessary for the proper functioning of the Committee," the document adds.
Principal Secretary for Internal Security and National Administration, Dr Raymond Omollo, who presided over the launch of the Draft Regulations in Nairobi, said the launch of the Regulations affirms the government's commitment to fulfilling its pledges and strengthening the legal framework guiding the operations of civil society organisations in the country.
He noted that the PBO Act is progressive, as it provides mechanisms for asset protection, outlines procedures for registration, enhanced transparency, and establishes a dispute resolution process through a Tribunal under the Judiciary.
The PS called on stakeholders to fully engage in the development of the regulations, which will determine how the Act functions in practice, as members of the public add their input to ensure the resulting regulations serve the intended objectives of the Act.
According to the Annual Sector Report, the sector received Sh196 billion in project support and employed approximately 80,000 persons, earning a key role in national development, through their contribution to service delivery, job creation, and resource mobilisation.
Public Benefits Organisation
Public Benefits Organisations Act
Public Benefit Organisations Regulatory Authority
Public Benefits Organisations
Public Benefit Organisations Dispute Tribunal
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