Gold Trading in Kenya: A Legal Guide for Traders, Investors and Lawyers
- Muhoro & Gitonga Associates
- 2 days ago
- 6 min read
Updated: 1 day ago
Table of Contents
Why Regulation Matters in Gold Trading
Licenses, Permits and Compliance Steps
Export, Import and Cross-Border Rules
Anti-Money Laundering and Reporting Obligations
Recent Legal Developments and Cases
Contracts, Title and Due Diligence for Buyers and Sellers
Taxation and Customs Considerations
Security and How to Avoid Scams
Practical Checklist for New Gold Traders in Kenya
1. Introduction
Gold is an increasingly important commodity in Kenya’s natural resources and financial markets. This guide explains the legal framework that governs gold trading in Kenya, recent developments, and practical steps that traders, investors, and counsel should take to trade legally and safely.
The guide is written for lawyers, compliance officers, and business owners who need a clear, actionable roadmap.
2. Why Regulation Matters in Gold Trading
Gold trading touches mining law, export controls, anti-money laundering rules, and criminal law. Effective regulation promotes legitimate investment, protects buyers and sellers, prevents illicit flows, and ensures miners and communities get a lawful share of benefits.
Poor compliance risks civil liability, criminal prosecution, seizure of gold, and reputational damage.
3. Key Laws and Regulators
The Mining Act 2016 and its regulations provide the primary statutory framework for prospecting, mining, processing, refining, transport, and dealings in minerals including gold. The Ministry of Mining implements licensing and permitting under the Act.
The Proceeds of Crime and Anti-Money Laundering Act requires gold dealers to implement customer due diligence and reporting to counter illicit finance. Multiple agencies intersect with gold trading including the Financial Reporting Centre (FRC), the Office of the Director of Public Prosecutions (ODPP), the National Police Service, and Kenya Customs, which enforce export and anti-smuggling controls.
4. Licenses, Permits and Compliance Steps
Anyone handling gold commercially should confirm which licenses apply under the Mining Act and associated regulations. Prospecting licenses, mining licenses, dealer permits, or export permits may be required depending on the activity. Ensure Ministry of Mining permits are obtained before any mining, purchase, or export occurs.
In addition to mining permits, compliance commonly requires registration for tax purposes, Know Your Customer (KYC) systems for customers, record keeping of purchases and sales, chain of custody documentation, and local authority approvals where applicable. Dealers who export must also secure export permits and comply with customs declarations and valuation rules.
5. Export, Import and Cross-Border Rules
Export of unprocessed minerals or bullion is regulated. Export permits are required and customs will inspect and value consignments.
Smuggling of gold and illegal cross-border transfers are prosecuted; therefore, robust documentary proof of origin, ownership, and lawful permits must accompany all cross-border movements. Customs and the Ministry of Mining coordinate on export clearance and enforcement.
6. Anti-Money Laundering and Reporting Obligations
Gold dealers are subject to Anti-Money Laundering (AML) obligations under Kenya’s Proceeds of Crime and Anti-Money Laundering Act. Obligations include customer due diligence, verification of beneficial ownership, retention of transaction records, and filing suspicious transaction reports with the Financial Reporting Centre.
The national risk assessment for money laundering and terrorism financing has highlighted precious metals like gold as a high-risk area, prompting tighter scrutiny by regulators.
In 2025, the AML legislative and regulatory landscape continues to evolve with heightened focus on high-value goods and dealers. Compliance programmes must therefore be robust, backed by frequent internal audits and senior management oversight.
7. Recent Legal Developments and Cases
Recent judicial and enforcement developments are shaping how courts and regulators treat gold trading disputes, foreign claimants, and alleged fraud. Notably, the High Court in Bruton Gold Trading LLC v Amadi (t/a Amadi Associates Advocates) & 6 others (Civil Case E211 of 2023) [2025] KEHC 12657 (KLR) (Commercial and Tax) (24 July 2025) (Ruling), clarified aspects around foreign companies bringing proceedings in Kenyan courts, influencing how capacity and locus standi are determined for foreign traders in gold disputes.
Enforcement against gold fraud and fake-gold schemes has intensified, with several high-profile arrests and prosecutions in 2024 and 2025. Law enforcement has targeted sophisticated syndicates accused of running multimillion-shilling scams, including fake bullion and counterfeit verification devices. These cases highlight the criminal risks of gold trading and the need for rigorous due diligence.
8. Contracts, Title and Due Diligence for Buyers and Sellers
Clear, written contracts that set out price, quality, chain of custody, inspection, and dispute resolution terms are essential. Contracts should specify who bears the risk between sampling, assay, and delivery, and include warranties on title and compliance with law.
Always require original permits, sellers’ mining licenses or dealer permits, and independent assay reports from accredited laboratories. When buying gold, obtain provenance documents showing legal origin, export permits where relevant, tax clearance where applicable, and identity documents of beneficial owners.
For high-value deals, consider escrow arrangements with regulated financial institutions and use independent testing at recognized refineries or assay laboratories.
9. Taxation and Customs Considerations
Traders must register for VAT and other tax obligations where applicable. The income from trading is taxable and capital gains or withholding tax may apply depending on the structure of the enterprise.
Exports are subject to customs valuation and applicable duties or fees. Engage tax counsel early to ensure compliance and avoid penalties for misreporting or under valuation.
10. Security and How to Avoid Scams
The gold market attracts fraudsters who adopt sophisticated techniques. To reduce risk, follow these practical security steps:
Verify identity and licenses. Always verify that the seller or buyer holds the appropriate mining or dealer permit and that the entity is registered and in good standing. Confirm original permits with the Ministry of Mining and verify Know Your Customer (KYC) details against government IDs and corporate records.
Use independent assay and chain of custody. Never rely solely on the counterparty’s assay. Use independent, accredited assayers or refineries to confirm purity and weight. Maintain detailed chain of custody logs and, where possible, video documentation.
Avoid cash; use regulated escrow. Large transactions should move through regulated bank accounts or escrow arrangements. Draft escrow instructions carefully and involve legal counsel.
Inspect physical gold and documents. Always inspect the actual gold before final payment or confirm via authenticated photos and serial numbers. Confirm export permits and customs clearance for cross-border transactions.
Beware of pressure sales. Fraudsters often use urgency, secrecy, or unrealistically low prices to lure victims. Always verify and seek professional advice before committing funds.
Report suspicious activity. If you suspect fraud, report to the Financial Reporting Centre, the Directorate of Criminal Investigations, or the Ethics and Anti-Corruption Commission. Preserve all communications and transaction records for investigators.
11. Practical Checklist for New Gold Traders in Kenya
Register your business and obtain tax identification numbers.
Secure mining and dealer permits from the Ministry of Mining.
Implement an Anti-Money Laundering (AML) compliance programme with Know Your Customer (KYC) and transaction monitoring.
Use written contracts with warranties and clear dispute resolution terms.
Work with accredited assayers and insured logistics providers.
Use bank escrow accounts for high-value payments.
Keep thorough records of permits, invoices, and identification documents.
Engage legal and tax advisors for cross-border or high-value deals.
12. FAQs
Q1: What permits do I need to trade gold in Kenya?
A1: You may need prospecting or mining licences, dealer permits, and export permits depending on whether you are extracting, buying, refining, or exporting. Always confirm with the Ministry of Mining.
Q2: Are gold dealers regulated for AML compliance?
A2: Yes. Dealers must apply KYC, file suspicious transaction reports, and cooperate with the Financial Reporting Centre and other authorities.
Q3: What red flags indicate a gold trading scam?
A3: Pressure to pay quickly, unverifiable assay reports, unregistered dealers, refusal to allow independent assays, or insistence on cash payments. Seek legal advice immediately if these appear.
Q4: How do I verify the origin of mined gold?
A4: Request mining license numbers, local government approvals, export permits, chain of custody records, and independent assay certificates. Cross-check vendor details with the Registrar of Companies and the Ministry of Mining.
Q5: What should a contract for sale include?
A5: Include details on price, quality, assay standards, delivery terms, insurance, warranties, escrow instructions, and dispute resolution clauses.
Q6: Who enforces gold trading offences?
A6: The Directorate of Criminal Investigations, the Office of the Director of Public Prosecutions, and customs authorities work together to investigate and prosecute gold-related fraud, smuggling, and illegal mining.
Final Notes for Counsel and Compliance Officers
Gold Trading in Kenya: A Legal Guide for Traders, Investors and Lawyers sits at the crossroads of mining law, export control, anti-money laundering, and criminal law. Keep compliance programmes updated, monitor regulatory changes and case law, and treat security and provenance as non-negotiable.
The recent High Court decisions and intensified enforcement actions in 2025 show that regulators expect strict due diligence and documentation in every transaction.
