Kenya fails to shake off EU money laundering grey list as Uganda is delisted

Zawya

17-06-2025

Kenya has been added to the list of high-risk jurisdictions for money laundering by the European Union, as Uganda got reprieve by being struck off the list.
The EU released the updated list on Tuesday, as the Financial Reporting Centre (FRC), Kenya's Financial Intelligence Unit, raised the red flag on a number of suspicious transactions linked to money laundering.
The FRC's latest annual report (2024) shows that the lenders and credit institutions in Kenya reported 94 transactions related to terrorism financing last year (2024), a 30.55 percent growth from 72 transactions reported a year earlier, while suspicious transactions related to money laundering increased by 18.73 percent to 7,193 from 6,058.
The report further says that those lenders' total suspicious transaction reports increased by 18.85 percent to 7,287 from 6,131 during the period.
According to the report, the number of suspicious transactions reported by capital markets and securities operators more than tripled to 93 from 26, with the suspicious transactions being solely related to money laundering.
It's not clear if the EU based its decision on this report to put Nairobi on the list of high-risk countries which exhibit significant gaps in their anti-money laundering and countering the financing of terrorism frameworks. Grey-listing means that Kenya will now face increased scrutiny from EU financial institutions.'The Commission has carefully considered the concerns expressed regarding its previous proposal and conducted a thorough technical assessment, based on specific criteria and a well defined methodology, incorporating information collected through the FATF (Financial Action Task Force), bilateral dialogues and on site visits to the jurisdictions in question,' the EU said in its statement.'As a founding member of FATF, the Commission is closely involved in monitoring the progress of the listed jurisdictions, helping them to fully implement their respective action plans agreed with FAFT.'Other grey-listed countries are Algeria, Angola, Cote d'Ivoire, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela.
Uganda, which was earlier on the list, has since been delisted, alongside Barbados, Gibraltar, Jamaica, Panama, Philippines, Senegal, and the United Arab Emirates. This means they had demonstrated improvement in their financial crime defences.
Kenya was grey-listed in 2024 for failure to prosecute money laundering and terrorism financing cases.
It was also cited for lack of regulations for cryptocurrencies, non-profits, and absence of a robust risk-based approach towards anti-money laundering and countering terrorist financing.
The United States in 2023 warned Kenya against money laundering.
In July 2023, Brian Nelson, US Department of Treasury's Undersecretary for Counterterrorism and Financial Intelligence, met and held talks with President William Ruto in which money laundering featured.
Nelson raised concerns about Kenya's relations with countries blacklisted by the US, including Iran and Belarus.'If Kenya considers itself a US ally, Americans have certain expectations from Kenya. The reality is that the US would expect Kenya to support it by aligning to its policies,' Nelson said.
In July 2023, Iranian President Ebrahim Raisi, who was killed in a helicopter crash in 2024, toured Kenya in a controversial state visit. Earlier, Kenya's then Trade minister Moses Kuria visited Belarus on a trade mission.
Kenya's actions did not go down well with the Joe Biden administration, who dispatched Trade Representative Catherine Tai and Nelson to Nairobi in a span of two weeks. The US was concerned that it would encourage money laundering whose proceeds are used to fund terrorism in neighbouring Somalia.
After Nelson's visit in 2023, President Ruto formed the Anti-Money Laundering and Combating Terrorism Financing Multi-Agency Team (AML/CFT MAT).
This task force brings together institutions such as the Financial ReportingCentre, Central Bank of Kenya, Kenya Revenue Authority (KRA), Directorate of Criminal Investigations (DCI), and the Ethics and Anti-Corruption Commission (EACC) to coordinate investigations into illicit financial flows, particularly in public procurement and the financial sector.
Parliament amended the Proceeds of Crime and Anti-Money Laundering Act to impose stiffer penalties for non-compliance, improve asset tracing mechanisms, and expand the range of businesses legally obligated to flag suspicious activity.
And last week, the Director Investigations Bureau at DCI Abdalla Komesha, speaking at the Financial Investigations and Asset Recovery workshop at the Kenya School of Government in Nairobi, reaffirmed the directorate's commitment to investigating money laundering, terrorism financing, and major predicate offences, including organised crime.'Proceeds of crime are no longer hidden under mattresses; they are laundered through complex corporate structures, layered across global bank accounts, and concealed within real estate or cryptocurrency. As the landscape of criminality transforms, so too must our response,' he said.
Despite the DCI's efforts, Kenya remains on the grey list, meaning they are yet to bear fruit.
Experts blame corruption, partly blamed for the delay in prosecution of cases.
The country is also witnessing politicians dishing out huge amounts money in public functions, whose source cannot be determined, given that President Ruto banned harambees as a measure to stem corruption.
A legislator, Njeri Maina, questioned how leaders gave out such huge amounts in donations while public sector services such as education were wallowing in a financial crisis.'So we can donate Ksh145 million ($1.12m) but we lack free education, investing in local manufacturing to create job employment opportunities for our young people is where we draw the line,' said Maina, who is the Kirinyaga Woman Representative.
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