Financial Crime World

Kenya’s Money Laundering and Terrorist Financing Threat: A New National Report

Nairobi, Kenya: The First Money Laundering and Terrorist Financing National Risk Assessment (NRA) Report

  • Kenya’s government releases its first Money Laundering (ML) and Terrorism Financing (TF) National Risk Assessment (NRA) report.
  • Conducted using The World Bank’s NRA tool and methodology, this comprehensive study provides an in-depth analysis of Kenya’s unique ML/TF landscape.

Identifying Vulnerabilities and Developing Effective Strategies

  • Cabinet Secretary for National Treasury and Planning, Amb. Ukur Yatani, commissioned the report to improve financial security.
  • A whole-of-government approach involved numerous Ministries, Departments, and Agencies (MDAs) and the private sector.

Kenya’s Unique ML/TF Landscape

Vulnerabilities:

  • Kenya’s strategic positioning and sophisticated financial system make it particularly vulnerable to ML/TF risks.
  • The presence of innovative fintechs further exposes the country.

Overall Threat Summary:

  • The overall ML threat for Kenya is medium, with potential for future increase.
  • The national ML vulnerability is medium-high.

Sectors Contributing to ML/TF Risks

Most Significant Impact:

  • The financial sector, particularly banks, poses the most significant impact due to their role in the economy and compliance challenges.

Other Vulnerable Sectors:

  • Real estate
  • Money remittance providers
  • Motor vehicle dealers
  • Legal sector
  • Money network operators
  • Lawyers serve as intermediaries, making the legal sector highly vulnerable.

FATF’s Position on Motor Vehicle Dealers

  • The FATF does not require AML/CFT obligations for motor vehicle dealers, which was a surprise given the sector’s vulnerability in Kenya.

Counteracting ML/TF Risks

  • The report recommends designating motor vehicle dealers and lawyers as Designated Non-Financial Businesses and Persons (DNFBPs) to comply with AML/CFT reporting requirements.

Government’s Commitment to Combating ML/TF

  • The NRA report’s release signifies the government’s commitment to counteracting ML/TF risks.
  • Detailed findings will aid in:
    • Assigning responsibilities
    • Resource allocation
    • Implementing risk-based AML/CFT measures to address weaknesses