Kenya’s proposed trust law tackles ownership secrecy at the heart of its FATF reforms

Kenya’s Trust Administration Bill 2026 is taking aim at one of the harder questions in financial crime investigations: who ultimately owns, controls or benefits from assets placed in a trust?

The Bill, now before the National Assembly, proposes a comprehensive legal framework for trusts, including stronger transparency requirements, beneficial-ownership records and oversight of trustees. Parliament lists it as National Assembly Bill No. 29 of 2026; it was first read on June 16 and referred to the Departmental Committee on Justice and Legal Affairs.

The reform comes against a much larger financial-crime backdrop. Kenya has been under increased monitoring by FATF since February 2024, after committing to address weaknesses in its anti-money laundering and counter-terrorist financing regime. One of the action points specifically requires Kenya to designate an authority to regulate trusts, obtain accurate and up-to-date beneficial-ownership information and apply remedies when transparency requirements are breached.

Why Kenya Is Tightening Trust Rules

A trust separates the person who puts assets into the arrangement from the trustee who manages them and the people who ultimately benefit. That separation serves legitimate purposes, including estate planning, wealth management, charitable activity and commercial transactions, but it can also make it harder for investigators to identify the natural person ultimately exercising control.

That is the regulatory problem Kenya is now trying to address.

The country’s existing trust framework has not provided the same level of transparency that FATF expects for legal arrangements. Kenya’s 2024 follow-up assessment still rated its compliance with Recommendation 25, which covers transparency and beneficial ownership of legal arrangements, as partially compliant.

FATF’s current standards require trustees of express trusts to obtain and hold adequate, accurate and up-to-date information on the settlor, trustees, protectors where applicable, beneficiaries and anyone else exercising ultimate effective control.

That makes the proposed Kenyan reforms part of a defined international compliance requirement rather than a standalone domestic policy choice.

The Ownership Gap Behind the Reform

For investigators, the difficulty with a trust is not necessarily identifying the trustee. The more important question can be who sits behind the arrangement.

A person may transfer property into a trust, appoint trustees to manage it, specify beneficiaries and retain some form of control over important decisions. If those relationships are not recorded accurately and kept current, financial institutions and enforcement agencies can struggle to establish the real ownership and control structure when a transaction raises suspicion.

The Financial Reporting Centre already operates within a financial-intelligence system that requires banks and other reporting institutions to provide information on suspicious activity. Its goAML platform is used to exchange information between the Centre, reporting institutions, law-enforcement agencies, supervisory bodies and financial-intelligence units. The FRC also lists trust and company service providers among the designated non-financial businesses and professions subject to AML obligations.

The proposed trust framework would add another source of structured ownership information to that system.

That distinction matters because financial crime rarely stays within one institution. A suspicious flow may involve a bank account, a company, a property transaction, a remittance provider or a digital-asset wallet. Establishing who controls a trust can provide another piece of the ownership trail.

What the Trust Administration Bill Would Change

The Bill would repeal and replace the Trustees (Perpetual Succession) Act and the Trustees Act, creating a more comprehensive framework for the creation, management and regulation of trusts. Parliament’s notice also specifically identifies provisions dealing with breaches of transparency requirements for legal persons and legal arrangements.

One of the central changes is the proposed creation of a centralised database for trusts. The important point, however, is that this should not automatically be described as a publicly searchable register. The material available on the proposal supports a centralised system through which relevant ownership information can be maintained and accessed by competent authorities and reporting institutions.

Trustees would also have to maintain accurate and current information about beneficial owners and retain those records for a defined period. The proposed framework includes information concerning the people connected to a trust and assets held or managed through relevant institutions.

The Bill also gives the transparency requirements teeth through penalties. Based on the provisions cited in the Financial Reporting Centre’s submission, individuals and corporate entities that fail to maintain beneficial-ownership records could face fines of up to Sh500,000 and Sh2 million respectively, while failure to provide records to enforcement agencies would attract higher penalties of up to Sh1 million for individuals and Sh3 million for corporates.

The purpose is straightforward: information that exists only on paper, or becomes outdated after a trust changes hands or control, is of limited use to an investigator.

Why the Register Matters to Financial Investigators

Kenya’s financial crime investigations are already dealing with structures that cross several parts of the financial system.

A recent Assets Recovery Agency case involving frozen assets worth about Sh115 million illustrates the complexity. Investigators alleged that funds moved through banks, international remittance services, intermediary accounts, shell companies and cryptocurrency wallets before being converted into Kenyan shillings and used to acquire assets.

A trust register would address a different part of that problem. It would help answer the ownership question when assets are held through a legal arrangement rather than directly in an individual’s name.

That distinction is becoming more important as Kenya’s financial system incorporates mobile money, fintech platforms, international remittances and virtual assets alongside conventional banking. The FRC already maintains an electronic reporting infrastructure for suspicious transactions, while its current resources also include guidance specifically covering suspicious transaction reporting for trusts and company service providers.

The value of beneficial-ownership information therefore depends on how well it connects with the rest of the financial-intelligence system. A name in a database is useful when investigators can compare it with bank records, company information, property records, suspicious transaction reports and other evidence.

Kenya’s Wider Fight to Leave the FATF Grey List

Trust regulation is only one part of Kenya’s FATF action plan.

When FATF placed Kenya under increased monitoring in February 2024, the action plan covered several areas, including supervision of financial institutions and designated non-financial businesses, virtual-asset regulation, suspicious transaction reporting, financial intelligence, money-laundering and terrorism-financing investigations, targeted financial sanctions and oversight of non-profit organisations. Trust regulation and beneficial ownership formed one specific component of that programme.

Kenya has since made progress on several technical compliance measures. FATF’s 2024 follow-up reports record upgrades across a number of recommendations, although Recommendation 25 remained partially compliant.

That is why the Trust Administration Bill matters to the country’s wider reform effort. It addresses an issue that remains explicitly identified in FATF’s assessment of Kenya.

But passing the Bill would not, by itself, take Kenya off the grey list. FATF’s process also considers whether reforms work in practice, including the production and use of financial intelligence, investigations, prosecutions and other forms of effective enforcement. The country therefore has to demonstrate that the rules produce results rather than simply adding another statute to the books.

A Stronger System Still Depends on Enforcement

That brings the trust debate back to the capacity of the institutions expected to use the information.

The Financial Reporting Centre has been at the centre of Kenya’s financial-intelligence architecture, receiving suspicious transaction and activity reports and making financial intelligence available to relevant authorities. Its own systems show how much of the AML framework now depends on electronic reporting and information exchange.

The wider enforcement chain also involves agencies such as the Assets Recovery Agency, the Directorate of Criminal Investigations and other supervisory and investigative bodies. The challenge is connecting information across those institutions quickly enough to identify suspicious ownership, trace assets and build cases that can withstand scrutiny.

That is where the proposed trust register could become more than a compliance database. If the information is accurate, current and accessible to the institutions that need it, it can give investigators another way to connect assets with the people who ultimately control them.

For legitimate trust users, the same transparency can provide greater certainty about how trusts are administered and regulated. FATF itself has framed Recommendation 25 around reducing the misuse of legal arrangements for money laundering and terrorism financing while improving the quality and availability of beneficial-ownership information.

Kenya is therefore trying to close a specific information gap while rebuilding confidence in a wider financial system under international scrutiny. The Trust Administration Bill does not solve the country’s money-laundering problem on its own, but it addresses a weakness that FATF has explicitly identified and gives authorities a clearer route to answer a basic question when suspicious money is uncovered: who is actually behind the structure holding the assets?

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