NAIROBI, Kenya – The government has published new regulations under the long-dormant Public Benefit Organisations (PBO) Act, ushering in stricter oversight of non-governmental organisations amid growing concerns over money laundering, terrorism financing, and accountability in the civil society sector.
The regulations empower the PBO Authority to supervise and enforce compliance with anti-money laundering and counter-terrorism laws across all organisations falling under its mandate.
The move operationalizes the PBO Act, which was enacted in 2013 but remained inactive until President William Ruto ordered its implementation in May last year.
Under the new rules, all PBOs are subject to stringent financial reporting requirements, including mandatory declarations of any cash transactions exceeding $15,000 (about Sh2 million), in line with the Proceeds of Crime and Anti-Money Laundering Act of 2009.
The Central Bank of Kenya (CBK) is also expected to play a key role. The regulations allow the CBK to vet significant shareholders, beneficial owners, directors, and senior officers of any institution under its oversight, using both onsite and offsite inspections.
CBK will have powers to compel production of documents and impose sanctions—ranging from administrative to civil and monetary penalties—for breaches related to money laundering or terrorism financing.
A newly established Counter Financing of Terrorism Inter-Ministerial Committee, comprised of top state security and financial agencies, will support enforcement.
The committee includes Cabinet Secretaries for Interior, Finance, and Foreign Affairs, the Attorney General, heads of immigration, intelligence, and the National Counter Terrorism Centre, along with the Director-General of the Financial Reporting Centre.
Regulatory Claws Extend to Limited Liability Partnerships
The regulations also place new demands on limited liability partnerships (LLPs), especially those inactive for five or more years or failing to file annual returns.
The Registrar is now mandated to strike off such entities after a formal notification process.
Once struck off, their administrators are legally obligated to preserve company records for a minimum of seven years.
Foreign LLPs are barred from operating in Kenya unless formally registered under the Act.
Non-compliance could attract a fine of up to Sh250,000 or imprisonment for a term not exceeding three years—or both.
Additionally, the rules provide for “controlled delivery” of information by law enforcement officers of Inspector rank and above in cases involving investigation of financial or terror-related offences.
Agencies like the Ethics and Anti-Corruption Commission (EACC) may also be granted access to sensitive data relevant to such probes.
A Call for Public Participation
Speaking at the launch of the draft regulations in Nairobi, Principal Secretary for Internal Security and National Administration Dr Raymond Omollo said the rules were a crucial step in tightening oversight and accountability in the non-profit sector.
He described the PBO Act as “progressive,” citing its role in safeguarding assets, streamlining registration, enhancing transparency, and setting up a judicial tribunal to resolve disputes within the civil society space.
“These regulations reflect the government’s commitment to its reform agenda and to strengthening the legal framework guiding operations of civil society organisations in the country,” Dr Omollo said.
He urged stakeholders and the public to take part in refining the regulations during the ongoing public participation process.
According to the latest Annual Sector Report, the civil society sector attracted over Sh196 billion in project support and directly employed about 80,000 people, highlighting its role in national development, job creation, and service delivery.
