Govt Moves to Tame Money Launderers Targetting Pension Schemes

NSSF building in Nairobi's Upper Hill.
NSSF building in Nairobi's Upper Hill.
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NSSF

The Retirement Benefits Authority (RBA) has published new regulations in a bid to deal with money laundering targeting various pension schemes.

In the new regulations, published on Friday, October 28, pension schemes will be required to monitor the transactions of their members and report suspicious transactions.

RBA noted that suspects involved in money laundering could take advantage of the inadequate laws in the sector to invest their money in various retirement plans.

"A person engaging in money laundering separates the illicit proceeds from their source by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity and the funds might be channelled through the purchase and sales of products in the sector such as investment into a pension fund, purchase of annuities or purchase of an income drawdown," read the regulations in part.

File image of Kenyan bank notes
File image of Kenyan bank notes
File

The published regulations also stipulated that the pension schemes will have to conduct a detailed background study of their customers to ascertain whether money contributed to the retirement plans are from crime.

Pension schemes will also be referencing the names of their customers with those published by global bodies.

"Customer due diligence measures are to be undertaken by a reporting institution to enable it to identify the customer and verify that customer’s identity using reliable, independent source documents, data or information;

"It will also help identify the beneficial owner, and take reasonable measures to verify the identity of that beneficial owner," read the regulation in part.

Some of the documents required during registration include; a National ID, postal address, and an income tax pin number. 

Pension schemes will also be required to maintain records of transactions of their customers, which can be referred to by agencies when doing investigations.

"All details of internal reports and registers of suspicious activity shall be held by the Money Laundering Reporting Officer and excluded from a member’s files to avoid inappropriate disclosure of information and protect against the risk of tipping off.

"A person shall not disclose to an unauthorized person when a suspicious transaction report is being prepared, has been or is about to be sent to the centre as required," read the regulation in part.

Signage of pension plan next to a gavel.
Signage of pension plan next to a gavel.
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