(NAIROBI, Kenya) – Kenya plans to create a public register of people who ultimately own or control trusts, a move designed to curb illicit money flows and help the country exit the global money laundering grey list. The Trust Administration Bill, 2026, now before Parliament, introduces mandatory disclosure of ultimate beneficiaries and tighter oversight of trustees.
A trust is a legal arrangement where a person transfers property or assets to a trustee who holds and manages them for the benefit of specific beneficiaries. Trusts in Kenya are currently governed mainly by the Trustees (Perpetual Succession) Act, which does not require disclosure of beneficial owners. That gap has left room for such vehicles to be used for money laundering and terrorism financing.
The Financial Reporting Centre (FRC) said the absence of mandatory disclosure is a weak link in Kenya’s defences. The proposed law will seal those loopholes and improve the country’s chances of exiting the Financial Action Task Force (FATF) grey list. Kenya was placed on that list in February 2024 after a 2021 mutual evaluation by the Eastern and Southern Africa Anti Money Laundering Group. That review found gaps in compliance with global standards, including on transparency and beneficial ownership of trusts.
“The Bill in its current form and content largely addresses the international standards required of countries by ensuring transparency and beneficial ownership aimed at protecting abuse of corporate structures to perpetrate money laundering and terrorism financing,” the FRC said in its submission to lawmakers.
The FRC noted that beyond compliance, the proposed law will improve the credibility and utility of trusts in legitimate activities such as wealth management, commercial transactions and charitable work by improving transparency and accountability. The Bill will strengthen Kenya’s anti money laundering regime and address deficiencies identified under FATF recommendation 25, which covers the transparency and beneficial ownership of trusts. Improved access to beneficial ownership information will increase the ability of regulators and law enforcement agencies to detect and investigate financial crimes.
Kenya was rated as “partially compliant” with this recommendation, pointing to gaps that needed to be filled to fully meet international standards. The global watchdog asked the country to review its legal regime governing trust operations, including designating a competent authority to regulate trusts, maintaining accurate and up to date beneficial ownership information and setting sanctions for non compliance.
Under the proposed law, trusts will be required to register in a centralised database as a condition for legal recognition. That marks a shift from the current fragmented framework criticised for enabling opacity in ownership structures. Trustees will also be required to maintain accurate and up to date records of beneficial owners and retain the information for at least seven years, in line with international standards. Information on beneficial owners will include the residence of the trustees and their equivalents and any assets held or managed by financial institutions or designated non financial businesses and professions. The data will be accessible to authorities such as the FRC and reporting institutions, including financial institutions and designated non financial businesses and professions.
The Bill introduces strict enforcement measures, including administrative and criminal penalties for non compliance. Fines and possible imprisonment are aimed at deterring abuse of trust structures. Individuals face penalties of up to KES 500,000 ($3,900, £3,060) for failing to maintain records of beneficial owners. Corporate entities face fines of up to KES 2 million ($15,580, £12,240). Failure to share such records with enforcement agencies attracts higher fines of up to KES 1 million ($7,790, £6,120) for individuals and KES 3 million ($23,380, £18,370) for corporates.
The push for beneficial owners of trusts adds to a similar measure concerning firms that trade with the government. Those rules were introduced to fight corruption and conflict of interest, including situations where politically exposed persons or public officials secretly benefit from State contracts.
Kenya’s inclusion on the FATF grey list increased pressure on authorities to implement reforms within set timelines. Failure to comply could expose the country to higher transaction costs, reduced investor confidence and tighter scrutiny in international financial markets. Many jurisdictions now legally require trustees to disclose the beneficial owners of trusts such as settlors, trustees, protectors, beneficiaries and controllers.
The trend is driven largely by anti money laundering directives and international standards. Countries with active trust registries or mandatory disclosure rules include the United Kingdom and European Union member states such as France, Germany, Italy and Luxembourg. In Africa, South Africa also has similar laws. FATF has said the level of misuse of corporate bodies such as trusts could be significantly reduced if information regarding the ultimate beneficial owner, knowledge of the source of assets and the business objective were readily available to the authorities.