REGULATION | European Commission (EU) Officially Lists Kenya as High-Risk Country for Money Laundering and Terrorism Financing

According to the Directorate of Criminal Investigations (DCI) in Kenya: "Proceeds of crime are no longer hidden under mattresses, they are laundered through complex corporate structures, layered across global bank accounts, concelead within real estate or cryptocurrency. As the landscape of criminality transforms, so too must our response."

CryptoGuru··4 min read

The European Commission – the executive branch of the European Union (EU) – has officially designated Kenya as a high-risk jurisdiction for money laundering and terrorism financing.

In an official announcement, the Commission advised EU member states such as France, Germany, Spain, the Netherlands, Finland, and Denmark to apply heightened scrutiny to financial dealings involving Kenya.

Kenya joins a group of countries recently added to the EU’s updated list of jurisdictions with strategic deficiencies in their anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks.

Other nations listed alongside Kenya include:

  • Algeria
  • Angola
  • Côte d’Ivoire
  • Laos
  • Lebanon
  • Monaco
  • Namibia
  • Nepal, and
  • Venezuela

At the same time, the EU removed several countries from the list, including:

  • Barbados
  • Gibraltar
  • Jamaica
  • Panama
  • The Philippines
  • Senegal
  • Uganda, and
  • The United Arab Emirates

as a result of demonstrating improvement in their financial crime defenses.

According to the 2024 report by the Financial Reporting Center (FRC), the Financial Intelligence Unit of Kenya, there was over a 30% growth in transactions related to terrorism financing and over 18% rise in suspicious  transactions related to money laundering  in 2024.

According to the FRC, cryptocurrencies can be used for money laundering, terrorism financing, proliferation financing, and cyber-crime.


The report further notes that the number of suspicious transactions reported by the capital markets and securities operators more than tripled with the suspicious transactions being solely related to money laundering.

As a result, the EU identified significant gaps in the AML and CTF frameworks.


In a statement, the European Commission noted that the revised list aligns with the latest findings from the Financial Action Task Force (FATF) – the global AML/CTF watchdog – which grey-listed Kenya in 2023 due to shortcomings such as the absence of a comprehensive strategy to prosecute money laundering cases.

“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 jurisdiction in question.

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 FATF.”

 

“Identifying and listing high-risk jurisdictions remains a vital instrument in protecting the EU’s financial system,” said Maria Luís Albuquerque, the EU Commissioner for Financial Services and Savings and Investments.

“This update to our list underscores our commitment to upholding international standards, particularly those established by FATF. We hope co-legislators will swiftly endorse this important measure.”

 

Inclusion on the high-risk list can have significant implications, including limited access to global financial markets and increased scrutiny from international partners.

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 the absence of a robust risk-based approach toward anti-money laundering and countering terrorist financing.


In 2023, the United states also warned Kenya against money laundering and released a report in 2024 flagging fake land ownership documents as a key investment obstacle in Kenya for the first time.


To address FATF concerns, as reported by BitKE in 2024, Kenya has been urged to enhance its risk-based supervision of financial institutions, introduce a legal framework for licensing and overseeing virtual asset service providers (including crypto companies), and appoint an authority to regulate trusts and gather accurate information on beneficial ownership.

See also


According to the Director Investigations Bureau at Directorate of Criminal Investigations (DCI), Abdalla Komesha, speaking at Financial Investigations and Asset Recovery Workshop at the Kenya School of Government, reaffirmed the directorate’s commitment to investigating money laundering, terrorism financing, major predicate offenses, including organized crime:

“Proceeds of crime are no longer hidden under mattresses, they are laundered through complex corporate structures, layered across global bank accounts, concelead within real estate or cryptocurrency. As the landscape of criminality transforms, so too must our response.”


Additional reforms recommended by the FATF include:

  • Improving the quality and application of financial intelligence
  • Expanding investigations into money laundering and terrorism financing, and
  • Revising regulations governing non-profit organizations.

 

 

 

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