European Commission lists Kenya as a high-risk country for money laundering, terrorism financing

The European Commission, the primary executive arm of the European Union (EU), has classified Kenya as a high-risk country for money laundering and terrorism financing.

In a Tuesday announcement, the commission urged EU member states like Denmark, Finland, France, Germany, Netherlands, and Spain to apply enhanced vigilance in transactions involving Kenya.

Kenya is among the latest countries to join the EU’s list of jurisdictions with deficiencies in their national anti-money laundering and countering the financing of terrorism regimes.

Others are Algeria, Angola, Côte d'Ivoire, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela.

At the same time, other countries like Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates were delisted.

The commission said the updated list takes into account the work of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog which last year grey-listed Kenya for, among other reasons, the lack of a clear strategy for the prosecution of money laundering offences.

“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,” said Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments.

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

Being placed under scrutiny over money laundering and terrorism financing can leave a country exposed to restricted access to international financial markets.

To improve, FATF has previously urged the Kenyan government to scale up risk-based supervision of financial institutions and adopt a legal framework for the licensing and supervision of virtual assets service providers such as cryptocurrency companies. 

The watchdog also urged Kenya to designate an authority for regulating trusts and the collection of accurate beneficial ownership information.

Other requirements include improving the use and quality of financial intelligence products, increasing money laundering and terrorist financing investigations, and revising the framework for regulating non-profit organisations.