Following recent developments regarding Kenya's standing with the Financial Action Task Force (FATF), the country has been placed on the 'grey list'.

This necessitates enhanced monitoring to ensure adherence to international Anti-Money Laundering, Countering the Financing of Terrorism, and Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) obligations.

The Treasury CS Njuguna Ndung'u issued a statement addressing the latest development.

"We wish to address the recent development concerning Kenya's status with the Financial Action Task Force (FATF). Kenya has officially been placed on its 'grey list.," Ndung'u stated.

"This underscores the imperative for swift and comprehensive action to bolster our compliance efforts."

Kenya's response to this classification has been proactive, with a focus on comprehensive reforms to bolster compliance efforts.

Notably, the enactment of the AML/CFT (Amendment) Act in 2023 marked a significant milestone, reflecting a concerted effort to align the nation's legal framework with global standards.

"These amendments represent a crucial step towards aligning Kenya's legal framework with international standards," the statement read.

"With the enactment of the AML/CFT (Amendment) Act, 2023, the Government subsequently amended the Proceeds of Crime and Anti-Money Laundering Regulations, 2013 to align it with the AML/CFT Amendment Act."

Moreover, Ndung'u said regulatory agencies such as the Central Bank of Kenya and the Capital Markets Authority have intensified AML/CFT supervision through enhanced risk-based approaches and inspections.

Specific sectors he deemed high risk, such as real estate agencies and casinos, have undergone rigorous scrutiny, including on-site inspections, underscoring the commitment to targeted oversight.

"All the regulatory agencies, including the Central Bank of Kenya, Capital Markets Authority, Insurance Regulatory Authority, among others, enhanced their AML/CFT risk-based supervision following the new powers provided by the AML/CFT Amendment Act," the CS stated.

"They developed new AML/CFT supervision manuals and carried out numerous risk-based AML/CFT inspections to enforce compliance with the Act and their own regulations by reporting entities."

Other interventions the state has applied to address the matter include the designation of lawyers as reporting entities under the Proceeds of Crime and Anti-Money Laundering Act.

According to the report, an agreement with the Law Society of Kenya (LSK) provided the avenue for out-of-court consent that now set LSK as a self-regulatory body setting aside advocate-client privilege and mechanisms for sharing of information between itself and FRC.

"Pursuant to the consent, the relevant provisions for amendment were included in the Amendment Act. This paved way for lawyers to report money laundering suspicion through LSK which takes effect from 15th March 2023," the statement read.

Despite progress, there are lingering deficiencies that demand urgent attention.

However, Kenya remains steadfast in its commitment to implementing the FATF Action Plan comprehensively and swiftly.

The National Treasury assures minimal impact on financial stability and business operations in Kenya while emphasizing continued vigilance in managing domestic risks.

In reaffirming its dedication to combating money laundering, terrorism financing, and proliferation risks, Kenya pledges unwavering efforts to address identified deficiencies and expedite its exit from the grey list.

With a comprehensive strategy in place and allocated resources, Kenya is poised to strengthen its regulatory framework and uphold international standards, ensuring a secure and compliant financial environment for all stakeholders.