- Anti-Money Laundering watchdog removed Uganda from its grey list
- Treasury said Kenya underwent an assessment conducted by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in 2022.
- CS Ndung’u said the move underscores the need for swift action to bolster Kenya’s compliance efforts.
Finance Action Task Force (FATF), the global anti-money laundering watchdog, has placed Kenya on a list of 23 countries that are ‘not doing enough’ to fight money laundering.
FATF placed Kenya on its ‘grey list’ while Uganda has been removed from the list. The decision to put Kenya on the grey list might diminish Nairobi’s position as the financial enike air max 90 futura kansas city chiefs crocs sac à dos eastpak air max 270 women sit top kayak smith and soul nike air max 90 futura dallas cowboys slippers mens latex hood borsa prima classe custom kings jersey custom kings jersey jordan proto max 720 johnny manziel jersey kansas city chiefs crocs picentre of the region. The grey list indicates nations that are lacking in addressing money laundering and terrorist financing.
Despite Kenya’s recent push to enact legislation to combat the vice, it will now be put under high watch for not having solid safeguards against the flow of dirty cash, joining 23 other countries in a list of shame known as the ‘grey list.’
A statement released Friday evening by National Treasury CS Njuguna Ndung’u confirmed that Kenya is on the list.
“Kenya has officially been placed on its ‘grey list,’ indicating enhanced monitoring to ensure compliance with international Anti-Money Laundering, Countering the Financing of Terrorism, and Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) obligations.”
East Africa’s largest economy will now face increased scrutiny from the FATF, requiring significant adjustments to its financial framework to reduce the risk of becoming a haven for illegal funds.
Kenya is recognized as a financial hub in the region, but it has also been identified as a critical conduit for illicit gold trade and a transit point for drug and wildlife trafficking. Specific sectors, such as law firms, casinos, and real estate agencies, have been identified as facilitators of money laundering.
A statement by the Uganda Ministry of Finance said their removal follows a recent onsite assessment to verify the reforms for anti-money laundering and countering the financing of terrorism put in place by Uganda.
“Working with FATF, Uganda completed the reforms for combating money laundering, countering terrorism financing and proliferation financing in line with international standards,” the statement read.
CS Ndung’u said the move underscores the need for swift and comprehensive action to bolster Kenya’s compliance efforts. He noted that Kenya underwent an assessment conducted by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in 2022.
Anti-Money Laundering Progress
The announcement comes at a time when lawyers are expected to start reporting suspicious transactions by their clients to the Financial Reporting Centre (FRC) from March 2024, marking a significant stride in combating money laundering in Kenya.
Effective March 15, 2024, the Anti-Money Laundering and Combating of Terrorism Financing (Amendment) Bill of 2023 will come into force, expanding the scope of reporting entities to include law firms.
“The Kenya Kwanza Government came into office after the assessment and immediately embarked on several interventions and initiatives to implement the recommended actions speedily. This required legal and regulatory reforms and several institutional actions,” added the treasury CS.
He added that Kenya has demonstrated compliance in certain areas while facing challenges in others.
The CS noted that one significant achievement was the enactment of the AML/CFT (Amendment) Act, 2023, which involved a comprehensive overhaul of existing legislation.
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This legislative reform, he said, comprised 17 amendments aimed at addressing various legal and technical compliance deficiencies identified in the Mutual Evaluation Report (MER).
“Similarly, the government reviewed the Prevention of Terrorism (Implementation of the United Nations Security Council Resolutions on the Suppression of Terrorism) Regulations, 2022 to align these Regulations with the amended Act and published the Prevention of Terrorism (Implementation of the United Nations Security Council Resolutions on the suppression of Terrorism) Regulations, 2023 which were also gazetted on 6th October 2023.”
Finance Action Task Force says that in February 2024, Kenya pledged a significant political commitment to collaborate with the FATF and Eastern and Southern Africa Anti-Money Laundering Group to bolster the effectiveness of its AML/CFT regime.
“Since the evaluation of its Mutual Evaluation Report (MER) in September 2022, Kenya has made strides in addressing some of the MER’s suggested actions. These efforts include amending its AML/CFT legislation to align more closely with FATF recommendations and instituting a case management system to streamline international cooperation requests,” FATF said
From now on, Kenya will now conduct a thorough Terrorist Financing (TF) risk assessment and present the findings of this National Risk Assessment (NRA) alongside other risk evaluations consistently to relevant authorities and the private sector. Additionally, updating national AML/CFT strategies.
What Grey Listing Means for Kenya
This will also see Kenya enhance risk-based supervision of Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs), while establishing a legal framework for the licensing and supervision of Virtual Asset Service Providers (VASPs).
It will also be required to improve comprehension of preventive measures among FIs and DNFBPs to boost Suspicious Transaction Report (STR) filings and promptly implement Targeted Financial Sanctions (TFS).
Alongside appointing authority for trust regulation and collecting precise and current beneficial ownership information, along with implementing corrective measures for compliance breaches concerning transparency requirements for legal entities and arrangements.
FATF will also require Kenya to overhaul the regulatory and oversight framework for Non-Profit Organizations (NPOs) to ensure risk-based mitigation measures that do not obstruct or discourage legitimate NPO activities.
“Successful negotiations with LSK led to an out-of-court consent whose terms included designating the Law Society of Kenya (LSK) as a Self-Regulatory Body, ring-fencing advocate client privilege and mechanisms for sharing of information between LSK and FRC. Under the consent, the relevant provisions for the amendment were included in the Amendment Act,” added National Treasury Cabinet Secretary.
Ndung”u said that Kenya remains fully committed to implementing the FATF Action Plan comprehensively and expeditiously.
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The CS said that the ministry will review the progress and develop a comprehensive strategy to address remaining deficiencies.
He added that adequate resources will be allocated to ensure timely compliance and exit from the grey list. The National Treasury will now be actively engaged in this process and anticipates minimal effects on the country’s financial stability and business costs in Kenya.
“As a country that has witnessed the devastating effects of terrorism and money laundering, Kenya reaffirms its dedication to combating money laundering, terrorism financing, and proliferation risks.”
He said the government will spare no effort in addressing identified deficiencies and working towards a swift exit from the grey list.
