Kenya’s Fight Against Money Laundering and Terrorist Financing Falls Short

A recent report by the National Risk Assessment (NRA) has highlighted several shortcomings in Kenya’s efforts to combat money laundering (ML) and terrorist financing (TF). The report found that while there is some degree of coordination among authorities, there are significant gaps in implementation.

Limited Awareness of ML Risks

The NRA report was shared with the private sector just days before an onsite visit, leaving limited awareness of its findings. This lack of awareness hinders efforts to address high-risk scenarios and implement effective measures to mitigate ML risks.

Financial Intelligence Gathering Falls Short

Kenya’s Financial Reporting Centre (FRC) produces and disseminates financial intelligence to law enforcement agencies (LEAs), but fails to adequately analyze cross-border currency reports and gather supplementary information. This limited analysis hinders the identification of suspicious transactions and the enrichment of intelligence packages.

ML Investigations and Prosecutions

Kenya does not prioritize ML investigations, with few cases being triggered by financial intelligence. Prosecution of ML offenses is also limited, with no successful convictions recorded in the period under review. The authorities’ failure to categorize ML cases makes it impossible to assess which type of ML is most prevalent and how to apply risk-based approach (RBA) mitigation measures.

Confiscation and Recovery of Proceeds

Kenya has pursued confiscation of criminal proceeds, but not property of equivalent value. While some successes have been recorded in pursuing domestic predicate offense proceeds, there are no records of recovering foreign predicate offense proceeds. The country’s reported risk profile, as portrayed in the NRA report, does not reflect its actual confiscation results.

Terrorist Financing

Kenya conducts TF investigations alongside terrorism-related investigations but lacks case studies and statistics to demonstrate a range of TF activity. The country has not demonstrated a broader range of investigations into different terrorist groups operating in Kenya or neighboring countries. TF investigations are not integrated into broader counter-terrorism strategies, and agencies do not share information effectively.

Conclusion

Kenya’s efforts to combat ML and TF fall short of international standards. To address these shortcomings, the country must:

• Improve awareness of ML risks among authorities and the private sector
• Enhance financial intelligence gathering and analysis
• Prioritize ML investigations and prosecute offenders more effectively
• Increase confiscation and recovery of criminal proceeds
• Integrate TF investigations into broader counter-terrorism strategies

Failure to do so will undermine the effectiveness of Kenya’s anti-money laundering and counter-terrorism efforts.