Back At It Again; Kenya on the Grey list

By Sheila Masinde and Robert Mwanyumba

Ten years after exiting the Financial Action Task Force (FATF) Grey List, Kenya makes a swift return in 2024. This follows the Mutual Evaluation by its peers that identified strategic deficiencies in combatting money laundering, terrorism financing and proliferation financing leading it to be designated as a jurisdiction under increased monitoring. Deficiencies in the anti-money laundering framework have made Kenya vulnerable to illicit financial flows, with illicit funds leaving as well as being laundered in the country. This comes at an awkward moment for the country which in 2023 took the helm of the Eastern and Southern Africa Anti-Money Laundering Group (EASAAMLG). This adverse listing also presents a reputational risk to Kenya and erodes our standing in the regional and global financial market. 

Kenya was listed because of numerous shortages including: deficiencies to implement preventive measures against money laundering with respect to collaboration of the private and public sector; inability to demonstrate successful investigation and prosecution of money laundering offences; deficiencies to strengthen supervision of designated non-financial businesses and professions (DNFBPs) including lawyers, dealers in precious metals and virtual assets service providers; shortcomings in collection of beneficial ownership information; ineffective utility of financial intelligence information including investigations, prosecution and sanctions; and revising provisions for not-for-profits or non-governmental organisations to ensure it is risk based.

These areas demonstrate strategic deficiencies in both regulation from emerging areas e.g. virtual assets, and poor execution of mandates by agencies such as the financial intelligence unit. It is noteworthy that some of the gaps point towards regulating enablers such as DNFBPs and in particular lawyers who play a pivotal role in facilitating transactions. On the other hand, virtual assets service providers pose a particular threat as they are largely unregulated. In addition, deficiencies marked in information collection and utilisation by mandated institutions to curb money laundering, terrorism financing and proliferation financing, including beneficial ownership transparency within trusts, should be strengthened by inter-agency cooperation including the capacity to tackle complex cases, in particular.

These deficits raise questions on political will and institutional capacity with respect to technical abilities, resourcing and ability to act. Sustained political will and momentum is essential so that Kenya can deliver long-term results and fully address the identified shortcomings that undermine resource mobilisation and development objectives.

Studies show that countries which are grey listed experience a myriad of effects including declines in foreign aid and investments that results in a drop in capital flows at a time Kenya needs to balance its trade deficit and reduce its debt burden. The listing is likely to elicit deeper scrutiny by international financial institutions and foreign banks leading to process delays and higher transaction costs. Stricter requirements for adherence to anti-money laundering and countering terrorist financing regulations, may lead to higher compliance costs for financial institutions, businesses, and individuals raising the cost of doing business. 

Kenya, however, has committed to address the strategic deficiencies and already passed a number of legislative reforms including the AML/CFT (Amendment) Act 2023 which provides for reduced reporting timelines, increased reporting obligations on the ultimate beneficial owner and recognition of lawyers as DNFBPs. These reforms should be fully implemented alongside enhanced measures to investigate, prosecute and deter money laundering and terrorism financing offences.

It is prudent that Kenya takes restorative steps to ensure that it exits the grey list resisting approaching the action plan as a “check box” exercise but also mitigate serious vulnerabilities to illicit financial flows. The failure by institutions to efficiently execute their mandate has a spillover effect on the broader country especially given Kenya’s status as being at risk of high debt distress, meaning further shocks to the economy will continue to hurt the most vulnerable. 

The government should also not use the opportunity to revise the regulation of NGOs to clamp down on the civic space and should instead move swiftly to operationalise the Public Benefit Organisations (PBO) Act.  It is important to safeguard and promote NGOs and other independent oversight institutions who hold the government to account.

Sheila Masinde is Executive Director of Transparency International Kenya; Robert Mwanyumba is the Transparency International Africa Regional Advocacy Coordinator and Regional Advisor – Southern Africa


Leave a Reply

Your email address will not be published. Required fields are marked *



Lucky Philomena Mbaye

Project Assistant, Citizen Demand and Oversight

Philomena is a lawyer, currently undertaking the Advocates Training Program at the Kenya School of Law, following her attainment of a Bachelor’s Degree in Law (LL. B) from the University of Nairobi. She is also a Certified Professional Mediator (CPM).

With a keen interest in Human Rights, Policy, Democracy, and Governance, she is deeply invested in promoting equitable legal practices and advocating for social justice. Her professional journey includes valuable experiences from (Coulson Harney LLP) Bowmans Law and ENS Africa, where she developed a solid understanding of legal intricacies and demonstrated proficiency in navigating complex legal landscapes. Beyond her legal pursuits, Philomena actively engages in community service through volunteer work with local CSOs, aiming to extend her impact beyond the legal sphere and contribute meaningfully to societal progress.

Thomas Juma

Project Assistant, North-Rift Region

Thomas is a dynamic professional with a wide range of experience and skills in community mobilization, capacity development in governance, media engagement, networking and partnership development. In his new role, he shall be responsible for offering support to the North Rift Regional Office to ensure successful implementation of the projects and assisting in logistical tasks, data collection and documentation. Thomas holds a diploma in public relations, marketing and advertising from ICS college, diploma in project planning and NGO management from Cambridge universal college and diploma in film and television production from Alphax college.

Emily Atieno

Procurement Officer

Emily is a dynamic professional with a diverse range of experience and skills in asset management, vendor relations, process improvement, event management, procurement process and procedures, admin management, communication and interpersonal skills. In her role, she is responsible for all the procurement processes and procedures towards achieving the TI-Kenya’s strategic plan. Emily holds a Bachelor of Commerce from Africa Nazarene University. She is also a holder of certificate in facilitation skills and Diploma in Business Management.

George Kiondo

Finance and Investments Manager

George is a dynamic professional with a diverse range of experience and skills in financial and project management, couching and mentoring, monitoring and evaluation, financial reporting and procurement amongst others.

In his new role, is responsible for overseeing the work of finance, investments and business development towards achieving the TI-Kenya’s strategic plan.

George holds a Bachelor of Science in International Business Administration from USIU, a Masters of Business Administration from the African Nazarene University, CPA-K and CPS-K qualifications from Strathmore Business School.

Linet Mukhula

Project Officer, Natural Resources and Climate Governance - Land, Extractives and Energy

Linet is a highly dynamic and versatile professional with extensive experience across various domains. She possesses a comprehensive skill set essential for effective project and organizational management. This includes expertise in Program Management and Reporting, ensuring strategic initiatives are designed and implemented to meet objectives with accurate reporting on outcomes. She excels in Coordination and Relationship Management, forging strong connections with stakeholders to drive collaboration and achieve shared goals.

She is responsible for implementing governance projects and working with communities and government with an emphasis on Land, Extractives and Energy towards achieving the TI-Kenya’s strategic plan.

Linet holds a Bachelor of Environmental Studies (Community Development from Kenyatta University with a Diploma in Public Relations Management and Advance Certificate in Business Management from the Kenya Institute of Management. She’s currently pursuing a Master of Arts in Development Studies (Economic Planning)- thesis level at the Management University of Africa.

Anno Annet Andisi

Intern, North-Rift Region

Annet is a dynamic professional with a diverse range of experience and skills in community engagement and advocacy, training, strategy and policy development as well as project management.

She is responsible for offering support to the North Rift Regional Office to ensure the successful implementation of the projects and documenting of legal aid cases for walk-in and call-in clients towards achieving the TI-Kenya’s strategic plan.

Annet holds a Bachelor of Bachelor of Political science and Public administration from Kisii University.

Jane Kingori

Grants Manager, USAID USAWA Program

Jane is a finance and grants specialist with a Master of Science in Organizational Development, Bachelor of Commerce in Finance and CPA (K). She has over 15 years’ of experience in strengthening organizations ‘capacities for sustainable program delivery through integration of best grants and financial management practices and compliance with different donor rules and regulations including USAID, UKAID, DANIDA, GCERF, SIDA and EU among others. She has served as the grants management technical lead at Faith To Action Network and Act Change Transform.