Kenya’s financial intelligence unit received filings of Sh6.976 trillion flagged as suspicious financial transactions over a three-year period to 2023, a newly published report shows.
The Financial Reporting Centre (FRC) Money Laundering and Terrorism Financing Trends and Typologies Report 2025 outlines how massive amounts of suspicious money moved through the financial sector, with banks handling Sh6.38 trillion or 91.04 percent of the money.
The tactics employed by suspected criminals include the use of shell companies to hide the true ownership and source of funds and splitting large deals into smaller amounts to avoid reporting thresholds and detection.
The report details how financial crime in Kenya is evolving both in scale and sophistication, with the FRC investigation extending to at least 21 countries, including Somalia, Nigeria, Ethiopia, United Arab Emirates (UAE), Qatar, Iran, Saudi Arabia, India, Pakistan, Australia, Malta and Hong Kong.
While the FRC has withheld the names of suspects and the entities involved, the report highlights systemic vulnerabilities across both the public and private sectors in a country that was in February last year grey-listed by the Financial Action Task Force (FATF) —the global anti-money laundering watchdog.
The FRC says the amount relates to more than 14,000 reports received between 2021 and 2023, out of which over 11,000 were classified as suspicious transaction reports (STRs) valued at Sh6.976 trillion or 99.4 percent of all the Sh7.016 trillion reports it received.
Cash transactions of $15,000 (Sh1.93 million at current exchange rates) and above and cross-border transfers of $10,000 (Sh1.29 million) or more must be reported to the FRC, while any suspicious activity must be reported regardless of amount.
The watchdog defines STRs as reports filed by reporting institutions, including banks, when there is suspicion or reasonable grounds to suspect that the funds are proceeds of crime, or are related to money laundering or financing of terrorism.
Top money laundering cases reported in suspicious reports included 4,830 payments from government entities followed by immediate or rapid cash withdrawals and 3,846 cases where a customer’s transaction activity did not match known business profile.
Banks also flagged and reported to the FRC 1,658 transactions that appeared to have been split into smaller deals to avoid reporting requirements while 1,479 deals were backed by suspected fictitious documents.
“These indicators point to potential financial crimes including money laundering, corruption and fraud and are all aimed at distancing the perpetrators from the illicit funds, complicating the transactions audit trail and thus avoiding detection by authorities,” said the FRC in the report.
The FRC report offers a sneak peek into the web of corrupt dealings in county governments and national government, with deals bordering on conflict of interest, procurement fraud, embezzlement and payment of kickbacks.
For instance, in one county, the FRC uncovered that all 15 companies awarded contracts for fumigation, cleaning, landscaping, and construction services were linked to county employees --some of whom sat on the tender award committees or had their relatives listed as directors and shareholders.
Notably, all the 15 companies were registered on the same day. Between February 2021 and July 2022, the companies received Sh361.86 million from the county.
“The funds were utilised through cash withdrawals in structured amounts below the reporting threshold and transfers to proprietors’ accounts, to County X employees and to related companies’ accounts,” said the FRC.
The agency discloses that some of the tenders were awarded before the companies were even registered while in other cases, contract agreements were signed after the project had already been executed.
Instances of use of community-based organisations (CBOs) for corruption and money laundering purposes were also noted whereby corrupt public officials colluded with organisations to move proceeds of corruption. This was the case in a county identified as ‘Y’ where a CBO formed in November 2022 to promote the general welfare of its members received Sh185.69 million in June 2023 from county Z.
The Sh185.69 million was marked as payment for emergency aid and supported with a project funding proposal. However, the FRC found the proposal was done a month before the CBO was registered. The funds were utilised through cash withdrawals, and transfers to two hardware businesses dealing in supply of construction materials.
The schemes also involved acts of fraud and forgery whereby the corrupt officials used forged documents to legitimise the transactions as evidenced by discrepancies in the support documents provided.
The FRC report shows that two politically exposed persons working in county K, identified as a member of County Public Service Board and chief officer in Department of Public Construction and Public Works, colluded with directors of five related construction companies to embezzle public funds.
The five received Sh1.22 billion from counties K, H and Z as payments towards multiple construction works yet supporting local purchase orders (LPOs) presented were addressed to different companies and tender numbers differed.
The FRC notes that when the funds were credited to the bank accounts, they were utilised through cash withdrawals by the directors and transfers to two companies owned by the member of the County Public Service Board.
The report flagged an accountant in a public entity who opened an account with a particular bank. Four years after account opening and in a span of four months, the accountant, who was earning a salary of less than Sh100,000, received daily deposits of amounts ranging between Sh300,000 and Sh2.5 million, which totalled Sh200 million.
The accountant, only identified as Person 1 working in public entity 1, described the funds as rental income but failed to provide supporting documents to the bank. In a span of five years, the FRC notes, he was worth Sh1 billion despite his salary being below Sh150,000, with suspected evidence of kickbacks and siphoning of public funds.
In the end, the FRC says, the accountant was prosecuted and ordered to pay a fine of Sh282.65 million to the government and forfeit a residential house worth Sh35 million.
In a case of mis-invoicing, two men, through their related companies, imported assorted machinery from related companies in India and Dubai into local markets. However, they received Sh449.44 million from local companies and wired Sh303.95 million to related companies in India and Dubai without proper documentation.
In a case of trade-based money laundering through fake invoicing, a local company licensed as a tea exporter claims that it purchases tea from the regional auction and adds value before exporting to different jurisdictions, including Iran, United Arabs Emirates, Egypt and Pakistan.
However, the FRC notes that despite the company, nicknamed Majani Limited, being in export business, all its payments were local cash deposits, both in foreign and local currency cash as well as transfers from locally based companies.
The FRC notes that between January 2018 and December 2023, the tea exporting company received Sh2.87 billion from locally based companies dealing in lubricants and bitumen, raising questions about the legitimacy of its trade activities.
“Invoices generated by Majani Limited to these companies were vague, describing non-defined supplies. One of the major depositors was Mjengo Limited, a road construction company which has its headquarters in Tehran, Iran. Other depositors were wholesalers who dealt in lubricants from UAE,” said FRC.
The report also highlights a case of Sh3.57 billion moved in a tax fraud scheme using 15 fake supply companies, Sh149 million laundered in a crypto pyramid scheme targeting Kenyans via social media, $1.875 million (Sh242.2 million) sent by foreign nationals in a fake gold scam.
