Kenya has been listed by the European Commission as a high-risk jurisdiction for money laundering and terrorism financing, joining a group of countries facing tighter scrutiny from European financial institutions.

The designation, announced on Tuesday in Brussels, directs EU member states such as France, Germany, the Netherlands, Finland, Denmark, and Spain to apply stricter due diligence measures when engaging in financial transactions involving Kenya.

This development follows a prior grey-listing by the Financial Action Task Force (FATF), the global body responsible for setting international standards against financial crime.

Kenya was cited for weaknesses in its approach to prosecuting money laundering, among other concerns.

Explaining the rationale behind the updated list, the European Commissioner for Financial Services and Investments Maria Luís Albuquerque and the Savings and Investments said the review is a vital mechanism in shielding the EU from illicit financial flows.

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“Identifying and listing high-risk jurisdictions remains a crucial tool to safeguard the integrity of the EU’s financial system… an update to the EU list reiterates our strong commitment to aligning with international standards, particularly those set by the FATF,” Albuquerque stated.

“We trust that the co-legislators will move swiftly to endorse this important step.”

The Commission’s updated blacklist features Kenya alongside ten other countries—Algeria, Angola, Côte d'Ivoire, Laos, Lebanon, Monaco, Namibia, Nepal, and Venezuela.

These jurisdictions were identified as having significant shortcomings in their national frameworks for combating money laundering and terrorism financing.

At the same time, eight nations were removed from the list, including Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates, after meeting the required benchmarks set by FATF.

For Kenya, the listing could complicate access to global financial markets, especially for cross-border transactions involving European banks and investors.

Such classifications often lead to increased compliance obligations, delays, and in some cases, financial exclusion.

FATF has previously advised the Kenyan government to take a number of remedial steps, including the implementation of risk-based supervision across its financial sector and the enactment of laws governing virtual asset service providers, such as cryptocurrency firms.

The global watchdog also emphasised the need to appoint a designated regulator for trusts and to develop robust systems for collecting and verifying information on beneficial ownership.

Further, FATF urged Kenyan authorities to enhance the quality of financial intelligence reports, expand investigations into financial crimes, and overhaul the regulatory regime for non-profit organisations, which are sometimes exploited as channels for illicit finance.

The European Commission’s move reinforces growing international pressure on Kenya to tighten its financial crime prevention systems, as scrutiny around dirty money continues to rise on the global stage.