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Kenya’s Central Bank Identifies Geographical Locations with Higher Risk for Money Laundering and Terrorism Financing

The Central Bank of Kenya (CBK) has issued a circular emphasizing the importance of identifying geographical locations that pose a higher risk to money laundering and terrorism financing (ML/TF). Institutions are advised to assess these risks individually, considering factors such as sanctions, lack of anti-money laundering and combating the financing of terrorism (AML/CFT) laws, and support for terrorist activities.

Geographical Locations with Higher Risk

The CBK has identified several geographical locations that pose a higher risk to ML/TF. These include:

• Countries subject to UN and FATF sanctions
• Countries lacking AML/CFT laws and regulations
• Countries providing funding or support for terrorist activities

Institutions are required to identify these risks, explain the risk scoring, and indicate the rationale for rating, mitigation controls, scores, weights used, and residual risk.

Risk Assessment Process

The CBK outlined a comprehensive risk assessment process that involves:

1. Identification of inherent risk
2. Evaluation of internal control environment
3. Calculation of residual risk
4. Reporting to management and the board

Institutions are required to present their results in a report to senior management, the board, and the CBK.

Report Requirements

The report should include:

• Results of ML/TF risk assessment
• Proposed action points for institution
• Clear indication of inherent and residual risk, as well as control effectiveness

Submission Deadline

Institutions are required to submit their reports to the CBK by December 31st annually.

Contact Information

For any queries or clarification, please contact:

• Director, Bank Supervision Department, Central Bank of Kenya
• P.O. Box 60000-00200, Nairobi
• Tel: 2860000
• Email: fin@centralbank.go.ke