From Custodians to Compliance Officers: Recasting the Role of Advocates in Kenya’s AML/CFT/CPF Regime
Introduction
The modern lawyer operates in a world where the lines between legal services and financial accountability are increasingly blurred. In Kenya, the legal profession is no longer peripheral to the architecture of Anti-money Laundering, Combating Financing of Terrorism and Proliferation Financing (AML/CFT/CPF) enforcement. Advocates, particularly those engaged in conveyancing, trust formation and corporate structuring, have become inadvertent intermediaries in the laundering of illicit wealth. As a result, legal practitioners now find themselves not only as officers of the court but also as frontline actors in the global fight against illicit financial flows.
This evolution has not been voluntary. It has been catalyzed by a complex interplay of international obligations, domestic vulnerabilities and recent political developments, most notably Kenya’s placement on the Financial Action Task Force (FATF) grey list in February 2024 and the country’s listing by the European Commission as a high-risk country for money laundering and terrorism financing in June 2025. The designation was a culmination of long-standing regulatory deficiencies, including weak enforcement of AML obligations in the legal, real estate and trust services sectors. It also signaled an inflection point; the legal profession must either adapt to the new global compliance orthodoxy or risk becoming a liability to both the country’s financial integrity and its own credibility.
Kenya’s Grey Listing: An Institutional Reckoning
On 23rd February 2024, the FATF formally grey-listed Kenya, which is a move with far-reaching consequences. The listing followed a detailed evaluation, which exposed Kenya’s failure to develop and implement a clear strategy for the investigation and prosecution of money laundering offences. Further, despite multiple terrorism-related investigations, the country had recorded minimal prosecutions of legal or natural persons for terrorist financing: an incongruity that raised questions about prosecutorial resolve, especially in light of Kenya’s known exposure to terrorism-related threats.
FATF identified the country’s largely unregulated non-profit sector as a key vulnerability, noting that the risk of terrorism financing through this sector remained unassessed and therefore unmanaged. Perhaps most telling was the mismatch between the findings of Kenya’s own National Risk Assessment (NRA), which recognized fraud, forgery and drug-related crimes as the highest threats with relatively low levels of asset recovery in those sectors, particularly when compared to the more successful recoveries involving corruption and abuse of office.
The grey listing of Kenya is more than a reputational blemish. It has tangible consequences for capital flows, trade finance, cross-border investments and the ease of doing business. For the legal profession, it has placed every transaction, every trust instrument and every client relationship under implicit suspicion, especially where AML/CFT obligations are poorly understood or actively neglected.
The Kenyan Legislative Framework: Statutory Mandate and Professional Resistance
Kenya’s AML framework is anchored in the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), first enacted in 2009 and most recently amended through the Proceeds of Crime and Anti-Money Laundering (Amendment) Act, No. 10 of 2023. Section 48 of POCAMLA places affirmative obligations on “reporting institutions”, a category that includes advocates, notaries and independent legal professionals. Under this provision, legal practitioners involved in specified activities such as managing client funds, assisting in the buying or selling of property, or registration of legal entities are required to establish internal control systems, verify client identities, maintain transaction records for at least seven years and promptly report suspicious transactions to the Financial Reporting Centre (FRC).
Section 4A of the Law Society of Kenya Act (as amended) mandates the Law Society of Kenya (LSK) to regulate AML/CFT compliance of all advocates in Kenya. This includes the issuance of binding guidelines, the conducting of risk assessments, and the recommendation of disciplinary measures, among others.
Currently, the LSK’s supervisory powers remain significantly underutilized as the Society grapples with financing and structuring this new regulatory regime. The compliance landscape is characterized more by institutional reluctance than regulatory activism. Many practitioners still regard AML/CFT obligations as foreign impositions that threaten the sanctity of advocate-client confidentiality; a concern not unfounded, but also not insurmountable.
Zones of Vulnerability: Where Law Meets Laundering
The risk exposure of Kenya’s legal sector is not theoretical. Empirical data from the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) points to persistent abuse of client accounts, particularly in real estate transactions, trust management and corporate formations. Advocates act as de facto custodians of client funds through client accounts, which in the absence of transactional due diligence, become ideal vehicles for layering and integration; the second and third stages of classic money laundering schemes.
Conveyancing remains the most prominent risk vector. The acquisition of commercial property through opaque corporate structures, the use of cash for high-value purchases and the involvement of politically exposed persons (PEPs) where the source of funds remains unexplained, all raise serious compliance red flags. Yet, few practitioners interrogate these red flags with the depth or skepticism required by law. The prevailing attitude is one of procedural disengagement-viewing the conveyance as a mechanical act rather than a transaction with economic implications.
Trust and company services present an equally potent risk. The ease with which shelf companies can be incorporated and trusts established, often without disclosing ultimate beneficial ownership, has attracted actors seeking to obscure illicit wealth. Advocates involved in these services often fail to apply enhanced due diligence measures, especially when clients are foreign nationals or acting through proxies.
A particularly insidious method now drawing global attention is the phenomenon of “sham litigation.” In this scenario, parties fabricate commercial disputes, commence proceedings and subsequently enter into a consent judgment or settlement agreement, thereby legitimizing the transfer of illicit funds under court authority. The process is often insulated by the veneer of legal formality, making detection extraordinarily difficult. While no reported Kenyan decision has conclusively ruled on such a case, anecdotal evidence confirms the growing prevalence of this tactic, particularly in civil disputes.
Enforcement of AML/CFT in Kenya: A Cautious Start
Although jurisprudence on AML/CFT violations involving legal professionals remains nascent in Kenya, recent judicial developments suggest an emerging willingness to interrogate the professional conduct of Advocates within the framework of financial crime enforcement. In Kaplan & Stratton Advocates v Chief Magistrate’s Court & Another [2018] KEHC 6069, the High Court scrutinized the decision of the subordinate court to issue a preservation order against a leading law firm’s client account. The funds in question, received in connection with the now-notorious National Youth Service scandal, had been deposited by a client for a purported corporate transaction. The court acknowledged that while advocates are fiduciaries, their accounts are not immune from regulatory scrutiny, particularly where credible allegations of money laundering exist. This was a pivotal moment in affirming that professional privilege does not confer blanket immunity from judicial or prosecutorial oversight.
Similarly, professional privilege and confidentiality do not extend to communications intended to facilitate illegal conduct. An advocate may lawfully disclose such information to prevent the commission of a crime. This principle was affirmed by the Court of Appeal in Mohamed Salim Balala & Another v Tor Allan Safaris Ltd, where it was held that advocate-client privilege may be pierced where the communication furthers an unlawful purpose or where the advocate reasonably believes that the privilege is being misused to commit a crime. Such privilege is also inapplicable where disclosure is necessary to serve the public interest.
Beyond the courtroom, institutional enforcement remains cautious but evolving. The Asset Recovery Agency (ARA), which operates under the Office of the Attorney General, has increased its use of civil forfeiture proceedings under the POCAMLA, albeit with limited focus on the legal profession. The FRC has adopted a more robust role since Kenya’s grey-listing in February 2024, including public sensitization, issuance of sector-specific guidance notes and targeted inspections. However, enforcement still faces operational bottlenecks, including inadequate collaboration between the FRC, the Office of the Director of Public Prosecutions (ODPP), the Ethics and Anti-Corruption Commission (EACC) and the Law Society of Kenya. As a result, even where suspicious transactions involving legal professionals are identified, few progress to formal investigation or prosecution.
The Judiciary of Kenya has also shown signs of conceptual alignment with global best practice. Courts have increasingly embraced the principle that “form must not trump substance” when evaluating the role of legal actors in financial flows. In applications for preservation or forfeiture orders, courts are less inclined to treat legal documentation or client instructions as dispositive, particularly where the transaction structure raises red flags or where due diligence obligations appear to have been outsourced to the client.
In the criminal justice arena, the ODPP’s 2023–2027 Strategic Plan includes, for the first time, a commitment to enhance prosecution of complex financial crimes through the Department of Economic Crimes and the Department of International, Transnational and Organized Crimes. While this has yet to produce landmark cases against legal practitioners, it signals a policy shift that may soon crystallize into active prosecutions.
Ultimately, what emerges is a picture of judicial and institutional actors tentatively moving toward a more assertive AML/CFT enforcement culture. However, systemic inertia, fragmented oversight, and professional pushback remain significant barriers. For the legal profession, this transitionary phase offers both a warning and an opportunity to strengthen internal compliance before the judiciary forces the issue or risks being recast not as counsel, but as co-conspirator.
The United Kingdom: A Mirror with Lessons
A comparative glance at the United Kingdom(UK) reveals a more mature and aggressively enforced AML/CFT framework. Legal professionals are subject to the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. These instruments impose obligations to conduct customer due diligence, report suspicions and maintain auditable compliance frameworks. Under Section 330 of the UK’s Proceeds of Crime Act, legal professionals can be prosecuted not only for actual facilitation of laundering, but also for mere failure to report a transaction where there were “reasonable grounds to suspect” money laundering. Importantly, prosecutions such as in the case of R v Duff [2003] 1 Cr App, a sentence of six months’ imprisonment was imposed on a solicitor acting for a client in respect of two money transactions two years prior to the client’s arrest in respect of an alleged cocaine conspiracy. The solicitor failed to make any report as to these transactions at the time or once he was aware of his client’s predicament, although he had sought advice. He was convicted of facilitating the retention of funds. This case demonstrates that courts are prepared to convict Advocates even in the absence of direct benefit if their conduct falls below the standards of reasonable vigilance.
The UK experience illustrates that robust AML/CFT compliance is possible within the legal profession without sacrificing core principles such as legal privilege. The distinction lies in drawing a firm boundary between legal advice and transactional execution. Where an Advocate ceases to advise and begins to transact, they also inherit the attendant risks and responsibilities.
Reimagining Compliance: From Obligation to Institutional Ethics
Kenya’s AML/CFT/CPF framework, as applied to legal professionals, is no longer inchoate but remains largely declaratory. Compliance must move beyond tick-box formalities and become part of the legal profession’s ethical core. This requires internal restructuring within law firms, the appointment of designated AML/CFT compliance officers and sector-wide adoption of risk-based client onboarding protocols. The Law Society of Kenya must elevate its role from passive guideline issuer to active supervisor, conducting
risk-based supervision and inspections, publishing sectoral risk assessments and collaborating with the FRC on reporting mechanisms. Eventually, the Advocates Disciplinary Tribunal needs to be empowered to impose dissuasive sanctions, including license suspensions and referral for prosecution.
Continuing legal education on AML/CFT must continue to be progressively embedded as a foundational element of professional training, and also, where necessary, the LSK can support the inclusion of AML/CFT training within the Advocates Training Program curriculum at the Kenya School of Law and even at the University level. This is not merely to meet FATF benchmarks but to restore public trust in legal processes and institutions, which are increasingly viewed with suspicion in the context of illicit finance.
Conclusion
The evolving global framework on Anti-money Laundering no longer affords legal professionals the luxury of detachment. In Kenya, the call for reform is neither speculative nor optional, but it is grounded in empirical risk, international expectation and the imperative to restore public confidence in legal and financial institutions. The legal profession must now internalize its dual mandate, which is to protect the interests of the client while upholding the integrity of the legal system within which those interests are pursued.
For comprehensive AML/CFT/CPF compliance audits, transactional risk analysis, or legal advisory on compliance frameworks, contact Ivia Kitonga at mail@kitllp.com.
This article is intended for general informational purposes only and does not constitute legal advice. Readers are encouraged to seek independent legal counsel for guidance on specific matters.