Kenya has been urged to move swiftly in implementing urgent financial reforms to curb money laundering and terrorism financing, with a new report identifying regulatory gaps—especially in virtual asset oversight—as the most pressing concern.

The findings were released following the Inaugural Kenya Anti-Financial Crime Summit in a joint report by Flywheel Advisory and the Financial Reporting Centre (FRC), which stressed the need for decisive action to improve Kenya’s anti-financial crime architecture and secure its removal from the Financial Action Task Force (FATF) Grey List.

Grace Mburu, Executive Director at Flywheel Advisory, said Kenya’s financial system remains highly vulnerable due to regulatory inaction in the virtual asset space. S

he warned that the absence of oversight enables illicit activities and undermines asset recovery efforts.

“We must fast-track virtual asset regulations because the lack of oversight is creating serious vulnerabilities in our financial system,” she said.

Read More

  1. Nairobi to host Anti-Financial Crime Summit as grey listing dares economy
  2. Kenya lands on Financial Action Task Force 'grey list' over 'wash wash'
  3. Kenya considers crypto regulations to avoid risk of FATF greylist inclusion

“The absence of guidelines makes it easier for illicit financial flows to go undetected and also hinders asset recovery.”

The report proposes a coordinated approach to supervising virtual asset service providers (VASPs), calling for harmonised legislation and investment in blockchain analytics and real-time data tracking tools.

It also suggests exploring central bank digital currencies (CBDCs) as a more secure alternative to decentralised digital transactions.

According to the report, prolonged Grey Listing could restrict Kenya’s access to international financial systems and damage investor sentiment, with negative implications for foreign direct investment (FDI) and broader economic stability.

Discussions during the October 2024 summit also underscored the importance of stronger collaboration between government agencies, the financial sector, and other key players.

Over 150 participants—including representatives from law enforcement, the judiciary, and Designated Non-Financial Businesses and Professions (DNFBPs)—called for enhanced cross-border information sharing and public-private partnerships to close enforcement gaps.

Kenya was added to the FATF Grey List in February 2024 after a review found that existing legal and institutional structures were inadequate for combating money laundering and terrorism financing.

With critical reforms still pending, experts now say the coming 12 to 18 months will be decisive for restoring Kenya’s financial credibility and global standing.