Beneficial Ownership Transparency and Economic Security in Kenya : Bridging Regulatory Gaps to Counter Financial Crimes
Keywords:
Beneficial ownership transparency, economic security, illicit financial flows, corruption, terrorism financing, national securityAbstract
Transparency in beneficial ownership (BO) information has significant implications for economic security. In Kenya, BO opacity facilitates financial crimes such as corruption, tax evasion, illicit financial flows, and terrorism financing, undermining both national and economic stability. While previous studies have explored illicit financial flows in specific sectors, the broader link between BO transparency and economic security remains underexplored. With BO transparency as the independent variable and economic security as the dependent variable, this study, grounded in principal-agent and institutional theories, examines Kenya’s BO disclosure systems, the economic impacts of BO transparency, and the challenges to effective implementation. A qualitative, phenomenological research design was adopted, using purposive sampling to gather insights from practitioners. Data were collected through interviews, semi-structured questionnaires, and document analysis involving 38 participants. The study reveals that enforcement gaps in BO laws expose Kenya to financial crimes and weaken economic resilience. Key sectors with underdeveloped BO disclosure include the real estate, extractives, and energy. Lack of accurate and current BO registers, limited inter-agency collaboration, and weak enforcement mechanisms exacerbate illicit financial flows. Yet enhanced BO transparency presents economic benefits such as improved tax compliance, greater investor confidence, and reduced corruption. Challenges include high compliance costs and resistance from private sector actors. The study recommends strengthening legal frameworks, improving enforcement, leveraging technology, and promoting inter-agency cooperation. Ultimately, BO transparency is vital to Kenya’s economic security, and addressing current gaps is essential to combating financial crimes and promoting sustainable economic growth.
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