The Financial Action Task Force (FATF) is the pre-eminent global body setting standards for combating money laundering, terrorist financing and the proliferation of illicit financial flows. It does not enforce laws directly, but its recommendations shape national legislation and international cooperation. A central mechanism is mutual evaluation and monitoring, including the so-called “grey list” of countries requiring increased oversight due to strategic deficiencies in their anti-money-laundering and counter-terrorism financing (AML/CFT) regimes. Placement on this list can raise transaction costs for banks, erode correspondent banking relationships, and weaken investor confidence.
Kenya was added to the FATF grey list in February 2024 amid concerns over gaps in prosecuting money laundering and terrorism financing offences and weaknesses in oversight of high-risk sectors. The listing followed an assessment that identified inadequate compliance with key international standards, including low reporting of suspicious transactions in property and non-financial sectors, which were seen as vulnerable to misuse.
Since then, Kenya has adopted a suite of legislative and institutional reforms aimed at addressing FATF action items and strengthening financial integrity. In June 2025, President William Ruto assented to the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2025, which tightened oversight across multiple sectors, from real estate to precious metals, and strengthened regulatory frameworks to align with international expectations.
A key institution in this fight is the Financial Reporting Centre (FRC), Kenya’s financial intelligence unit established under the Proceeds of Crime and Anti-Money Laundering Act, 2009. Its mandate is to collect, analyze and disseminate intelligence on suspicious transactions from banks and other reporting entities, and to work with law enforcement to counter financial crime. Recent actions demonstrate some gains: in February 2026, the FRC froze assets of 13 individuals linked to suspected terrorism financing under targeted sanctions, reflecting the operationalisation of AML/CFT powers.
Institutional leadership is also evolving. In early 2026, the National Assembly’s Finance Committee approved the nomination of Naphtaly Kipchirchir Rono as the next Director-General of the FRC. With credentials spanning intelligence, law and AML policy, his anticipated leadership reflects a push to strengthen Kenya’s financial crime response infrastructure at a pivotal moment.
Despite legal reforms and operational improvements, challenges remain. Independent assessments point to funding constraints and limited investigative capacity at the FRC and related agencies, which have constrained enforcement efforts and delayed full compliance with FATF recommendations. Effective AML/CFT frameworks require not only strong laws on paper but sustained implementation, inter-agency cooperation, and capacity building across the financial sector.
The gains to date, legislative overhaul, institution building, and targeted enforcement, underscore progress, but FATF compliance is ultimately measured by results, not just reform. For Kenya to exit enhanced monitoring and restore full confidence among international partners, continued investment in enforcement, data systems, and coordinated action across government and private stakeholders will be critical. Addressing these implementation gaps will determine whether Kenya’s financial system evolves from one under scrutiny to one recognised as a credible partner in the global fight against illicit finance.
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