Kenya must urgently implement key financial sector reforms to address gaps in anti-money laundering and counter-terrorism financing, according to a new report released following the Inaugural Kenya Anti-Financial Crime Summit.
The report, published jointly by Flywheel Advisory and the Financial Reporting Centre (FRC), identifies immediate regulatory interventions—especially around virtual assets—as critical steps toward Kenya’s removal from the Financial Action Task Force (FATF) Grey List.
Kenya was added to the Grey List in February 2024 after a FATF review found shortcomings in its legal and institutional frameworks for combating financial crimes.
“We must fast-track virtual asset regulations because the lack of oversight is creating serious vulnerabilities in our financial system,” said Grace Mburu, Executive Director at Flywheel Advisory, during the launch of the report.
“The absence of guidelines makes it easier for illicit financial flows to go undetected and also hinders asset recovery.”
The report recommends harmonizing legislation and supervision of virtual asset service providers (VASPs), enhancing data-driven monitoring tools, and expanding the use of blockchain analytics.
It also highlights the potential of central bank digital currencies (CBDCs) as a secure and regulated alternative to unmonitored digital transactions.
A key theme emerging from the October 2024 summit was the need for stronger public-private partnerships in financial crime investigations and cross-border information sharing. These collaborations would help bridge enforcement gaps and build resilience across the financial ecosystem.
Over 150 participants from government agencies, the judiciary, law enforcement, the financial sector, and Designated Non-Financial Businesses and Professions (DNFBPs) contributed to the summit, which examined Kenya’s current vulnerabilities and discussed strategies for compliance with global AML/CFT standards.
The report warns that prolonged Grey Listing could dampen investor confidence, limit access to international financial systems, and slow foreign direct investment (FDI) inflows—adding pressure on Kenya to act swiftly.
With regulatory reforms pending, experts say the next 12 to 18 months will be critical for Kenya’s financial reputation and long-term economic health.
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