Trusts will now be required to reveal their ultimate beneficiaries under the newly passed law that seeks to curb money laundering and illicit financial flows as Kenya pushes to exit the global dirty-money grey list.
President William Ruto signed the Trust Administration Bill, 2026 into law on Tuesday.
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.
Information on beneficial owners will include the residence of the trustees and their equivalents and any assets held or managed by the financial institution or designated non-financial businesses and professions.
“All trusts incorporated before the commencement of this Act shall lodge with the Registrar a copy of the register of beneficial owners within twenty-four months of coming into force of this Act,” reads the Act.
The data on beneficial ownership will be accessible to authorities such as the Financial Reporting Centre (FRC) and reporting institutions, including financial institutions and designated non-financial businesses and professions.
The new law ushers in a race for compliance among trusts, with both newly established and existing ones required to meet registration, record-keeping and beneficial ownership disclosure requirements.
For existing trusts, the law provides a 24-month transition period from the date the Act comes into effect to comply with its requirements.
Trusts in Kenya were being governed mainly by the Trustees (Perpetual Succession) Act, which did not compel those registering and overseeing such entities to disclose beneficial owners. The gap had left room for use of such vehicles for money laundering and terrorism financing.
The FRC had flagged the repealed laws as part of the weak link in Kenya’s fight against money laundering and terrorism financing as the country races to exit the Financial Action Task Force (FATF) grey list.
Kenya was grey-listed in February 2024 following a 2021 mutual evaluation by the Eastern and Southern Africa Anti-Money Laundering Group , which found gaps in compliance with global standards, including on transparency and beneficial ownership of trusts.
The new law is intended to make it harder for individuals to hide assets or the ultimate beneficiaries of trusts behind layers of legal ownership.
Trustees will be required to maintain accurate and up-to-date records on beneficial owners and make the information available to relevant authorities when required. In addition, they will have to retain the information for at least seven years.
Improved access to beneficial ownership information will enhance the ability of regulators and law enforcement agencies to detect and investigate financial crimes, including money laundering and terrorism financing.
Kenya was rated as “partially compliant” with FATF recommendation 25, which relates to the transparency and beneficial ownership of trusts, pointing to gaps that needed to be addressed to fully meet international standards.
The global watchdog required Kenya to review its legal regime governing the operations of trusts, including designating a competent authority to regulate trusts, maintaining accurate and up-to-date beneficial ownership information on trusts and setting sanctions for non-compliance.
Under the new law, trusts will be required to be registered in a centralised database, marking a shift from the fragmented framework that had been criticised for enabling opacity in ownership structures.
The FRC had told Parliament that the Bill, which is now law, “largely addresses the international standards required of countries by ensuring transparency and beneficial ownership aimed at protecting against the abuse of corporate structures to perpetrate money laundering and terrorism financing.”
The law also introduces penalties for non-compliance. For instance, individuals who fail to maintain beneficial ownership records will be fined up to Sh500,000, while corporate entities will be penalised up to Sh2 million.
Failure to provide the information to enforcement agencies attracts higher penalties of up to Sh1 million for individuals and Sh3 million for corporate entities.
Kenya’s inclusion on the FATF grey list increased pressure on authorities to implement reforms within set timelines and exit the grey list, which exposes the country to reduced investor confidence and tighter scrutiny in international financial markets.
