Kenya races to strengthen anti-money laundering, anti-terrorism financing rules

Kenya is pushing to repair its financial credibility after being placed on the global “grey list” in February 2024, a designation that signalled weaknesses in how the country combats money laundering and terrorism financing.

The listing, issued by the Financial Action Task Force (FATF), placed Kenya under increased international monitoring and raised caution among global banks and investors dealing with the country.

The FATF is an international body that sets standards for combating money laundering and terrorist financing.

Speaking in Nairobi, Treasury Principal Secretary Chris Kiptoo said the government is accelerating reforms to address the gaps identified by FATF. 

He was representing Treasury Cabinet Secretary John Mbadi at a meeting of agencies tasked with implementing anti-money laundering and counter-terrorism financing reforms.

FATF placed Kenya under monitoring after a review found structural weaknesses in how the country detects, investigates and prosecutes financial crimes.

The assessment concluded that Kenya had limited successful prosecutions for money laundering offences, gaps in regulating high-risk sectors such as virtual assets and non-profit organisations, weak oversight of designated non-financial businesses like real estate firms, law practices and casinos and Insufficient enforcement of beneficial ownership disclosure rules

In simple terms, Kenya had laws, but enforcement and effectiveness fell short of global standards.

Grey-listing is not a declaration of guilt. It is a warning that a country’s financial safeguards need strengthening.

When a country is grey-listed, global banks treat transactions from that jurisdiction as higher risk. That can mean enhanced scrutiny, additional compliance requirements and slower cross-border payments.

For Kenya, a country that positions itself as a regional financial and fintech hub, perception matters.

International investors may delay decisions or demand stronger risk guarantees. Financial institutions may tighten due diligence. Over time, that caution can influence capital flows, investment appetite and even the cost of doing business.

In an economy already navigating debt pressure and fiscal consolidation, global confidence becomes even more critical.

Freelancers receiving payments from abroad, startups raising foreign capital, crypto users and import-dependent entrepreneurs can all feel the ripple effects of tighter global scrutiny.

If international banks increase compliance checks, cross-border payments may become slower or more documentation-heavy. If investors become cautious, startup funding cycles may lengthen.

According to PS Kiptoo, Parliament has enacted amendments to anti-money laundering and counter-terrorism financing laws in 2025, alongside the Virtual Asset Service Providers Act, 2025, which introduces clearer oversight of digital asset platforms, including cryptocurrency exchanges.

Authorities have also strengthened inter-agency coordination, improved suspicious transaction reporting systems and enhanced risk-based customer due diligence within financial institutions.

All eyes are on the government to demonstrate that these reforms are not just passed on paper, but implemented effectively.

Under FATF’s monitoring process, Kenya must show measurable progress before it can formally exit the grey list.

Kenya aspires to be East Africa’s financial gateway. Nairobi hosts multinational banks, international organisations and a rapidly expanding tech ecosystem.

Exiting the grey list would send a strong signal that Kenya’s financial system meets global integrity standards.

Remaining on it for too long, however, risks reinforcing doubts at a time when the country is seeking investment, strengthening its currency position and maintaining international lender confidence.