The European Commission has placed Kenya on its latest list of high-risk countries for money laundering and the financing of terrorism.
The move, announced on Tuesday, is a blow to Kenya’s global financial standing and could lead to tougher scrutiny for businesses and banks operating internationally.
In a statement from Brussels, the Commission urged EU countries—including France, Germany, Spain and the Netherlands—to apply “enhanced due diligence” in all dealings involving Kenya.
That means stricter checks on bank transactions, tighter oversight of investments, and more caution in trade.
“This is about protecting the integrity of the EU’s financial system,” said Maria Luís Albuquerque, the EU Commissioner for Financial Services. “We are aligning with international standards, particularly those set by the FATF.”
Kenya joins a group of flagged countries including Algeria, Angola, Laos, Nepal, and Venezuela. Some nations previously on the list—like the Philippines, Panama and the United Arab Emirates—have been removed after making improvements.
Why Kenya Was Listed
This latest listing mirrors concerns raised earlier by the Financial Action Task Force (FATF), a global watchdog that grey-listed Kenya in 2023.
FATF said Kenya lacked clear legal tools for prosecuting money laundering. It also pointed to gaps in regulating digital assets and trusts, and the need for better tracking of who actually owns companies.
“Without these safeguards, money can move in and out of Kenya without a trace,” said a Nairobi-based financial crimes analyst who asked not to be named due to the sensitivity of the matter.
FATF called on Kenya to:
- Monitor virtual asset companies, like those dealing in cryptocurrency
- Establish a regulator for trusts
- Collect better data on who controls businesses
- Improve how financial intelligence is gathered and shared
- Investigate more cases of money laundering and terror funding
- Tighten the rules governing non-profit organisations
What This Means for Kenya
The EU’s list is not just symbolic. Being on it can make it harder and more expensive for Kenyan banks and firms to do business abroad.
International banks may hesitate to process payments or investments from Kenya, fearing regulatory trouble.
“This could increase transaction costs for Kenyan exporters and slow foreign investment,” warned Prof. Wanjiru Njoroge, an expert in financial regulation at the University of Nairobi. “It also damages our reputation at a time when we’re trying to attract global capital.”
Nairobi’s Next Steps
The Kenyan government has acknowledged FATF’s concerns before and promised to act. In early 2024, the Treasury said it would work with parliament to introduce stronger laws on financial crime and digital currencies.
However, progress has been slow.
The Central Bank of Kenya and the Financial Reporting Centre did not immediately comment on the EU’s announcement.
What’s Next?
The European Parliament and the Council now need to approve the Commission’s new list, but such approvals are typically a formality.
In the meantime, Kenya faces a choice: act quickly to fix its financial systems—or risk being shut out of parts of the global economy.
As Commissioner Albuquerque put it:
“This listing isn’t a punishment. It’s a call to action.”
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