In a decisive step to fortify Kenya’s financial integrity, the Central Bank of Kenya has forged a partnership with His Majesty’s Treasury of the United Kingdom to bolster efforts against money laundering, terrorism financing, and financial proliferation.
The collaboration aims to strengthen oversight of non‑bank financial institutions after Kenya’s inclusion on the Financial Action Task Force grey list raised international alarm over regulatory weaknesses.
The agreement establishes a risk‑based supervision framework tailored to monitor digital lenders, forex bureaus, money remittance firms, and microfinance institutions entities that had previously evaded robust scrutiny.
This initiative follows direct technical and operational support from the UK Treasury, delivered through a blend of virtual and in‑person assistance. According to CBK Governor Kamau Thugge, the framework is now fully operational, marking a critical milestone toward meeting conditions for Kenya’s removal from the grey list.
Kenya’s grey listing has wreaked tangible consequences for the national financial system. The heightened classification triggered intensified monitoring, elevated compliance costs, constrained correspondent banking relationships, and complicated access to international capital. These pressures pose a tangible threat to Kenya’s ambitions to establish itself as East Africa’s premier financial hub.
The partnership with the UK mirrors a similar arrangement the Treasury orchestrated with the United Arab Emirates another grey‑listed jurisdiction. Through operational initiatives such as the Combined Anti‑Money Laundering Operational Team, the two nations collaborated to dismantle illicit networks and align policy frameworks.
This move is part of a broader multi‑agency reform strategy. Domestically, legislative advances have empowered the CBK with supervisory oversight across reporting institutions, including vetting of beneficial owners, imposition of sanctions, and authority to demand compliance documentation.
The Financial Reporting Centre has also deepened its intelligence‑gathering functions to track suspicious flows, as more than Ksh 6.9 trillion in flagged transactions were recorded between 2021 and 2023.
Digital lenders have also come under heightened scrutiny. New regulations set to take effect by early next year will require these firms to disclose sources of funds, demonstrate AML/CFT systems, and provide shareholder transparency. The CBK has warned that digital lending platforms could otherwise become conduits for illicit cash laundering.
Kenya’s alignment with global anti‑money laundering benchmarks is decisive. Engagements with Bretton Woods institutions, the European Union, and the United States supplement this bilateral cooperation, providing multi‑dimensional technical and financial support.
In summary, the CBK’s partnership with the UK Treasury is a watershed moment in Kenya’s campaign to cleanse its financial sector. By deploying targeted risk‑based supervision over non‑bank entities, scaling up internal regulatory capacity and embracing international collaboration, Kenya is charting a path away from global watchlists toward a more resilient, transparent, and growth‑oriented financial future.
Written By Ian Maleve
