Court suspends Act requiring lawyers to report client transactions

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Milimani Law Courts

The High Court in Nairobi has suspended the implementation of a section of the Proceeds of Crime and Anti-Money Laundering (Amendment) Act, 2021 which requires lawyers to report their clients transactions.

Justice James Makau suspended the above pending the hearing of a suit filed by lawyer Mwaura Kabata challenging section 2 (c)(i) and section 14 (b) of the said Act.

While delivering the ruling, the judge said the petitioner had demonstrated a prima facie case with likelihood of success.

“It has also been demonstrated that if the interim orders are not granted, the advocates and their staff who are said to be targeted by the referred section shall be prejudiced,” ruled the Judge.

The Proceeds of Crime and Anti-Money Laundering (Amendment) Bill, 2021 which was passed by the President on January 3 requires lawyers to keep cash records of transactions, which are beyond Sh1 million.

Kabata argues that the law has made them unwilling state agents and turned law offices into archives for use by the police and prosecution

He contends that by operation of the provisions introduced into the Act, lawyers are impeded in their duties and their service delivery to their clients, as the provisions manifestly erode advocate-client privilege.

He contends that there are harsh penal sanctions for non-compliance as they authorise sweeping searches of law offices which inherently risks breaching advocate-client privilege.

“Advocate-client privilege has already been recognized as a constitutional norm and breach of this principle of fundamental justice is sufficient to establish the potential deprivation of liberty that violates article 24 and 31 of the Constitution,” argues the petitioner.

According to Kabata, the impugned provisions have a predominantly criminal law character rather than an administrative law character.

The Financial Reporting Centre and the Attorney General are the respondents in the suit.

The respondents opposed the application saying the prayers sought, intended to stop the implementation of the money laundering act and therefore should not be granted.

In addition, they claimed they were yet to interrogate the case and file their responses.

The judge directed them to file their responses within 14 days. He also allowed LSK Nairobi Branch and the National Assembly to be enjoined in the case.

The matter will be mentioned on 22nd January to confirm compliance and directions.