The European Commission (EU) has included Kenya in its updated list of high-risk countries with gaps in their national anti-money laundering and countering financing of terrorism regimes.
Kenya joins several third-world nations on the commission’s watch list including Algeria, Angola, Cote d'Ivoire, Laos, Lebanon, Monaco, Namibia, Nepal, and Venezuela.
Other African countries already on the list include Burkina Faso, Cameroon, the Democratic Republic of Congo, Mali, Mozambique, Nigeria, South Africa, South Sudan and Tanzania. Outside Africa, some of the jurisdictions on this list are Afghanistan, Myanmar, Vietnam, and Yemen.
The commission, however, delisted several jurisdictions from the watch list including Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates.
The listing means Kenya faces tough scrutiny of financial transactions involving its entities with the key 27-member European Union (EU) bloc.
The EU Commission stated that the decision follows its own review and the fact that Kenya has yet to address all the deficiencies observed in its financial system when it was placed on the grey list by the Financial Action Task Force (FATF)—a global anti-money laundering and counter-terrorist financing watchdog—in February last year.
“The commission has carefully considered the concerns expressed regarding its previous proposal and conducted a thorough technical assessment, based on specific criteria and a well-defined methodology, incorporating information collected through the FATF, bilateral dialogues, and on-site visits to the jurisdictions in question,” Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union said.
“Article 18a of Directive (EU) 2015/849 states that member states must require obliged entities to apply enhanced customer due diligence measures when establishing business relationships or carrying out transactions involving high-risk third countries identified by the commission,” the official added.
The EU is an economic and political union comprising 27 countries that operate as a single market, enabling free movement of goods, capital, services, and people among member states.
Kenya’s exports to the EU countries have been rising at a faster pace than imports, according to the Kenya National Bureau of Statistics data.
The country’s exports to EU countries hit Sh156.93 billion last year from Sh150.08 billion a year earlier, translating to a 58 percent rise from Sh99.29 billion in 2020.
Over the five years, Kenya’s imports from the EU have been sea-sawing, closing last year at Sh249.73 billion last year from Sh204.14 billion in 2020, marking a 22.3 percent growth.
The addition of Kenya to the EU watch list now piles more pressure on Kenya to address the weaknesses that led to its grey-listing.
Since the grey-listing, Kenya has made progress in strengthening its AML/CFT regime, including by completing a terrorism financing risk assessment and by bringing its Targeted Financial Sanctions framework related to proliferation financing into compliance.
The EU expects Kenya to continue working with FATF on other outstanding issues including improving risk-based AML/CFT supervision of financial institutions, adopting a legal framework for the licensing and supervision of virtual asset service providers, and designating an authority for the regulation of trusts and collection of accurate and up-to-date beneficial ownership information.
The country is also expected to improve the use and quality of financial intelligence reports and increase ML and TF investigations and prosecutions.
