In 2024, the Financial Action Task Force (FATF)—the global body overseeing anti-money laundering (AML) and counter-terrorist financing (CTF)—flagged Kenya for the second time in a decade, placing it on its “grey list.” The move reflected persistent gaps in the country’s financial crime framework and raised concerns about the integrity of its financial system.
Why Kenya Was Grey-Listed
Kenya’s grey-listing in February 2024 stemmed from long-standing weaknesses in its enforcement regime. While the country had laws in place, it failed to demonstrate meaningful investigations and prosecutions of money laundering and terror financing. High-risk sectors such as real estate, law firms, casinos, and transport were poorly supervised. Non-profit organizations operated with limited transparency, creating risks of exploitation by terrorist networks. Weak oversight of beneficial ownership and the unregulated virtual asset industry added to the concerns.
The Legislative Counterstrike
In June 2025, Kenya responded with sweeping reforms when President William Ruto signed the Anti-Money Laundering and Combating of Terrorism Financing Amendment Act. This legislation was designed to close loopholes, strengthen oversight, and give regulators greater enforcement powers.
Key Features of the New Law
- Empowered Regulators: The Financial Reporting Centre (FRC) and other supervisory agencies were granted stronger authority to track suspicious transactions and enforce compliance.
- Enhanced Due Diligence: Institutions are now required to adopt stricter customer due diligence measures, especially for politically exposed persons and high-value transactions.
- Beneficial Ownership Transparency: New measures target hidden ownership structures, limiting the use of front companies for illicit finance.
- Virtual Asset Oversight: Cryptocurrency platforms and fintech companies were brought under regulatory supervision for the first time.
- Expanded Coverage: Non-profits, betting firms, and cooperatives are now included in the regulatory perimeter to address high-risk blind spots.
Progress and Remaining Challenges
Kenya has made progress in aligning with international AML/CFT standards, but FATF will be looking for more than new laws on paper. The critical test will be in enforcement—prosecutions, convictions, and a demonstrable reduction in financial crime risks. Without evidence of strong implementation, the reforms may be seen as cosmetic.
What More Is Needed
- Political Will: Authorities must show readiness to enforce laws, even against politically connected actors.
- Institutional Strength: Agencies must be adequately funded and staffed to carry out their expanded mandates.
- Collaboration: Engagement between regulators, private sector players, and civil society will be essential for effective compliance.
- Balanced Oversight of Non-Profits: Safeguards must be applied fairly to avoid silencing legitimate organizations under the pretext of counter-terrorism.
Conclusion
Kenya’s recent legislative reforms reflect determination to repair its reputation and restore trust in its financial system. However, success will depend on whether these laws translate into tangible enforcement and accountability. With decisive action, Kenya has a real chance of shedding its grey-list status and positioning itself as a regional leader in financial integrity.
