The Central Bank of Kenya (CBK) has partnered with the United Kingdom’s finance ministry as part of its efforts to combat the flow of dirty money among non-bank institutions following Kenya's placement on a watch list known as the "grey list."
CBK Governor Kamau Thugge noted that the financial regulator had engaged the United Kingdom’s His Majesty’s Treasury (UKHMT) in the wake of the country being placed on the grey list by the Financial Action Task Force (FATF), the global anti-money laundering watchdog.
The two have set up a risk-based supervision framework to help the CBK stem the flow of dirty cash in non-bank institutions.
"This has entailed virtual and in-person technical assistance by HMT to CBK in developing and implementing the framework," Dr Thugge said.
"The framework is now fully operational and will address one of the action points that CBK is responsible for Kenya to exit the grey list," added Thugge, noting that the action point relates to the implementation of Anti-Money Laundering (AML)/Combating Financing of Terrorism (CFT)/ and Combating Proliferation Financing (CPF) risk based supervision for non-bank institutions.
Kenya was added to the grey list in February last year for weak safeguards against money laundering and terrorism financing, with one of the issues being the CBK's lack of a framework to supervise non-bank financial institutions, including deposit-taking microfinance institutions, forex bureaus, and money remittance providers on illicit financial flows.
The lack of risk based supervision for non-bank institutions was among the reasons Kenya was grey-listed, this meant the country is subjected to increased monitoring and typically triggers tighter scrutiny from correspondent banks and global investors, a blow to Nairobi’s ambition to become the region’s financial hub.
It also raises compliance costs for local institutions, slows cross-border flows, and can complicate fundraising for both public and private borrowers.
Countries often partner with the UK Treasury on Anti-Money Laundering, Countering the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) reforms, given the UK’s advanced, well-resourced systems to combat financial crime.
The CBK had not responded to our questions on the scope of the partnership with the UK. However, countries often partner with the UK Treasury on Anti-Money Laundering, Countering the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) reforms, given its advanced, well-resourced systems to combat financial crimes.
Dr Thugge said CBK has undertaken several measures to strengthen the financial system’s defences against illicit finance.
“This included strengthening its capacity in AML/CFT/CPF risk-based supervision. Towards this end, CBK partnered with the United Kingdom’s His Majesty’s Treasury (UKHMT),” he said in the Bank Supervision Annual Report 2024.
CBK’s collaboration mirrors another one that the UK has with the United Arab Emirates (UAE), which faced elevated money-laundering risks and was itself grey-listed by the FATF before being removed last year.
The two countries are implementing the UK–UAE Partnership to Tackle Illicit Financial Flows, a joint report by the Treasury and Home Office said.
“We have agreed to increase judicial co-operation and ensure continuous alignment in our approach to illicit finance. This includes the work of the Combined Anti-Money Laundering Operational Team (CAMLOT), a joint initiative designed to tackle money-laundering operations and identify hidden financial networks tied to illicit activities,” reads the report, National Risk assessment of Money Laundering & Terrorist Financing 2025.
The UK adds that it has struck similar arrangements with financial centres exposed to money-laundering and terrorism-financing risks, focusing on deepening policy and operational co-operation to tackle shared threats and build stronger collective defences.
The report does not, however, mention any agreement it might have signed with Kenya’s financial regulator.
“We have provided technical and operational assistance, capacity building, and programmatic activity across key jurisdictions, improving responses and international standards.”
Being on the grey list—which contains jurisdictions with deficiencies in handling money laundering and terrorist financing—has led to heightened scrutiny of Kenya’s financial sector.
FATF’s decision to place Kenya on the grey list was informed by a critical assessment conducted in 2022 by the Eastern Africa Anti-Money Laundering Group (ESAAMLG). The ESAAMLG has a membership of 21 countries including Kenya.
Kenya has made several policy and legal changes in a bid to show the FATF that it is prepared to stem the flow of dirty money within its territory.
