- He noted that Kenya underwent an assessment conducted by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in 2022.
- The CS added that the evaluation revealed a mixed picture.
Image: FILE
Kenya has been placed on the Financial Action Task Force ( FATF) 'grey list' while Uganda has been removed from the list.
A statement by Treasury CS Njuguna Ndung'u confirmed that Kenya is on the list.
"Kenya has officially been placed on its 'grey list,' indicating enhanced monitoring to ensure compliance with international Anti-Money Laundering, Countering the Financing of Terrorism, and Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) obligations."
When the FATF places a country under a 'grey list', it means the country is a Jurisdiction Under Increased Monitoring.
As such, Kenya is actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
FATF is a global body mandated to lead action to counter threats of abuse of the financial system by criminals and terrorists.
A statement by the Uganda Ministry of Finance said their removal follows a recent onsite assessment to verify the reforms for anti-money laundering and countering the financing of terrorism put in place by Uganda.
"Working with FATF, Uganda completed the reforms for combating money laundering, countering terrorism financing and proliferation financing in line with international standards," the statement read.
CS Ndung'u said the move underscores the need for swift and comprehensive action to bolster Kenya's compliance efforts.
He noted that Kenya underwent an assessment conducted by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in 2022.
The CS added that the evaluation revealed a mixed picture.
"The Kenya Kwanza Government came into office after the assessment and immediately embarked on several interventions and initiatives to speedily implement the recommended actions. This required both legal and regulatory reforms as well as several institutional actions," he said.
He added that Kenya has demonstrated compliance in certain areas while facing challenges in others.
The CS noted that one significant achievement was the enactment of the AML/CFT (Amendment) Act, 2023, which involved a comprehensive overhaul of existing legislation.
This legislative reform, he said, comprised 17 amendments aimed at addressing various legal and technical compliance deficiencies identified in the Mutual Evaluation Report (MER).
"Similarly, the government reviewed the Prevention of Terrorism (Implementation of the United Nations Security Council Resolutions on the Suppression of Terrorism) Regulations, 2022 to align these Regulations with the amended Act and published the Prevention of Terrorism (Implementation of the United Nations Security Council Resolutions on the suppression of Terrorism) Regulations, 2023 which were also gazetted on 6th October 2023."
He said that another strategic intervention was the designation of lawyers as reporting entities under the Proceeds of Crime and Anti-Money Laundering Act, an issue which has been outstanding as a result of litigation.
"Successful negotiations with LSK led to an out-of-court consent whose terms included designating the Law Society of Kenya (LSK) as a Self-Regulatory Body, ring-fencing advocate client privilege and mechanisms for sharing of information between LSK and FRC. Under the consent, the relevant provisions for the amendment were included in the Amendment Act," he said.
The CS said the move paved the way for lawyers to report money laundering suspicion through LSK which takes effect from 15th March 2023.
He added that other implementing agencies have undertaken significant efforts to bolster Kenya's AML/CFT/CPF regime.
"Kenya acknowledges the importance of multilateral cooperation in addressing AML/CFT/CPF challenges. We seek the support of our international partners, including the European Union (EU), United Kingdom (UK), and United States (US) for whom we have been discussing Technical Assistance Support, to facilitate support to develop capabilities for capacity diverse actions and instruments in this dynamic environment," he said.
"Collaboration and technical assistance from these partners will be crucial in our efforts to enhance our AML/CFT/CPF framework strengthen our regulatory institutions and expedite our exit from the grey list."
Ndung''u said that Kenya remains fully committed to implementing the FATF Action Plan comprehensively and expeditiously.
The CS said that the ministry will review the progress made to date and develop a comprehensive strategy to address remaining deficiencies.
He added that adequate resources will be allocated to ensure timely compliance and exit from the grey list.
"The National Treasury is actively engaged in this process and anticipates minimal effects on the country's financial stability and the costs of conducting business in Kenya. Nevertheless, we remain vigilant and committed to managing domestic ML/TF/PF risks effectively," he said.
"As a country that has witnessed the devastating effects of terrorism and money laundering, Kenya reaffirms its dedication to combating money laundering, terrorism financing, and proliferation risks."
He said the government will spare no effort in addressing identified deficiencies and working towards a swift exit from the grey list.