In a move that is likely to pose questions on ethics of customer confidentiality, Kenyan banks have started sharing data of foreign account holders with the Kenya Revenue Authority (KRA), as part of a concerted effort by tax authorities to crack down on tax evasion and those benefiting from unlawful wealth accumulation.
Several banks informed their clientele
On Thursday, February 08, several banks informed their clientele about the commencement of the implementation of the Common Reporting Standards (CRS).
The CRS is an agreement among countries to exchange information on taxpayers seamlessly.
In January 2023, the Treasury Cabinet Secretary ratified the Tax Procedures (Common Reporting Standards) Regulations, 2023. These regulations mandate all financial institutions in Kenya, including banks and trusts, to furnish the KRA with information concerning foreign account holders.
Subsequently, the KRA will share this data with 106 signatory countries, encompassing well-known tax havens such as Switzerland, Panama, the Cayman Islands, Bermuda, the British Virgin Islands, Mauritius, Jersey, and Monaco.
Reciprocally, tax authorities in these signatory nations are obligated to furnish similar information to the KRA, thereby bolstering the tax authority’s capacity to track funds stashed away in offshore accounts.
Under this framework, the KRA anticipates receiving analogous information regarding Kenyan residents holding offshore accounts.
Individual account holders can expect their banks to disclose details such as their account balances, addresses, places and dates of birth, countries of tax residency, as well as identification numbers to the tax authorities.
Similarly, for corporate entities, banks are mandated to gather and transmit information including the place of registration, entity type, and details of the controlling person to the KRA.
In parallel with anti-money laundering protocols requiring financial institutions to report cash transactions exceeding Sh1 million to the Financial Reporting Centre, banks are instructed to scrutinize all existing accounts held by foreigners with balances surpassing $250,000 (Sh40 million).
