Peer Review of the Automatic Exchange of Financial Account Information 2025 Update

Kenya

Overall findings

Kenya’s legal framework implementing the AEOI Standard is in place but needs improvement in order to be fully consistent with the requirements of the AEOI Terms of Reference. While Kenya’s international legal framework to exchange the information with all of Kenya’s Interested Appropriate Partners (CR2) is consistent with the requirements, its domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) has deficiencies significant to the proper functioning of elements of the AEOI Standard. More specifically, the deficiencies relate to defining Controlling Persons, Participating Jurisdictions and the enforcement framework.

The methodology used for the peer reviews and that therefore underpins this report is outlined in Annex A.

Overall determination on the legal framework: In Place But Needs Improvement

Conclusions on the legal framework

General context

Kenya commenced exchanges under the AEOI Standard in 2024.

In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Kenya:

• Amended the Tax Procedures Act; and

• Introduced the Tax Procedures (Common Reporting Standards) Regulations 2023.

Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2023. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete due diligence procedures on High Value Individual Accounts by 31 December 2022 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2023.

With respect to the exchange of information under the AEOI Standard, Kenya is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2024.

Detailed findings

The detailed findings for Kenya are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (see Annex B).

CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.

Overall determination on the legal framework: In Place But Needs Improvement

Kenya’s domestic legislative framework is in place and contains many of the key aspects of CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the due diligence procedures that must be applied to Financial Accounts (SR 1.2) and the framework to enforce the requirements (SR 1.4). More specifically, Kenya’s domestic legislative framework does not define the term Controlling Persons in accordance with the requirements, its approach with respect to Participating Jurisdictions is not in line with the AEOI Standard and there is a deficiency in Kenya’s enforcement framework.

SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.

Kenya has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.

Recommendations:

No recommendations made.

SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.

Kenya has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and has incorporated the due diligence procedures that must be applied to identify them in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. More specifically, Kenya’s legislative framework does not define Controlling Persons in accordance with the requirements and its approach with respect to Participating Jurisdictions is not in line with the AEOI Standard.

Recommendation:

Kenya should amend its domestic legislative framework to ensure that “Controlling Person” is defined in accordance with the AEOI Standard, in particular to ensure that the controlling interest threshold for legal entities is not greater than the threshold provided under the AML framework.

Kenya should amend its domestic legislative framework to ensure that the approach taken with respect to the 22 jurisdictions defined as Participating Jurisdictions and with which Kenya does not have an agreement to exchange CRS information with (one of which has not implemented the AEOI Standard), is in accordance with the AEOI Standard

SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.

Kenya has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.

Recommendations:

No recommendations made.

SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.

Kenya has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Kenya’s legislative framework does not impose sanctions on Account Holders and Controlling Persons for the provision of a false self-certification. This is a key element of the required enforcement framework and is therefore material to the proper functioning of the AEOI Standard

Recommendations:

Kenya should amend its domestic legislative framework to include sanctions on Account Holders and Controlling Persons for the provision of a false self-certification.

CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.

Determination: In Place

Kenya’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Kenya’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Kenya and that meet the required standard in relation to confidentiality and data safeguards). (SRs 2.1 – 2.3)

SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.

Kenya has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.

Recommendations:

No recommendations made.

SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.

Kenya put in place its exchange agreements without undue delay.

Recommendations:

No recommendations made.

SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.

Kenya’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.

Recommendations:

No recommendations made.

Comments by the assessed jurisdiction

No comments made.