Dealers in precious metals and stones will be expected to report every cash transaction of Sh1.9 million ($15,000) as part of the proposed anti-money laundering rules Kenya hopes will help it get out of the grey list.
The Financial Action Task Force (FATF) placed Kenya in the grey list in February last year, meaning that the country needs to address weaknesses in combating money laundering, terrorist financing and weapons trade.
The planned amendment to the Proceeds of Crime and Anti-Money Laundering Act, tabled in the National Assembly by the Majority Leader Kimani Ichung’wa, is part of efforts to reverse the consequences of grey listing which include stricter monitoring of the country's banks in international transactions.
This means that dealers of precious metals such as gold, silver, and diamond, will join other reporting institutions such as banks, which file reports on cash transactions of above a certain amount.
Kenya’s assessment of its preparedness in the fight against dirty cash had revealed that there has been little intervention nor supervisory activity on anti-money laundering (AML) and countering the finance of terrorism (CFT) by this sector.
This deficiency contributed to Kenya's placement on a grey list or under heightened surveillance, which is likely to scare investors away from the country’s financial system.
The Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill, 2025 was received by the National Assembly on March 4, 2025.
Dealers in precious metals and stones such as gold and silver are listed as designated non-financial businesses and professions (DNFBPs), which means they are supposed to file reports of their transactions with their regulator, the Ministry of Petroleum and Mines.
In its second mutual evaluation report on Kenya’s preparedness on the fight against illicit financial flows, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) noted that the ministry, despite understanding that the sector is vulnerable to money laundering risks due to smuggling of high value minerals and precious stones from foreign countries, had done little to address the risk.
In February last year, Kenya was placed in the list of countries under heightened monitoring by FATF, a global anti-money laundering watchdog.
The damning verdict came from the mutual evaluation conducted in 2022 by the ESAAMLG, a subsidiary of FATF which monitors how the region is implementing global measures against the flow of dirty cash including proceeds from illicit gold trade and gold scam that has earned the moniker ‘wash-wash’ in Kenya.
With the country being put on the grey list it risks being ostracised by investors even as its borrowing costs skyrocket due to the country’s poor credit rating.
Kenya’s international trade is also likely to take a beating even as the country suffers reputational damage.
Kenya has earned infamy for being a hub for smuggled gold from the mineral-rich Eastern DRC which is currently embroiled in civil strife. The smuggled gold from DRC that finds its way in Kenya is destined for the United Arab Emirates (UAE) where it is processed and sold to the European market, studies show.
In the bill, dealers in precious stones and metals include those engaged in production or mining operations, brokers, those engaged in cutting, polishing and refining, manufacturers of jewelry and retailers.
The instability of Eastern DRC, which includes North Kivu, South Kivu and Maniema has spawned a flurry of illegal mining activities with the precious metals being siphoned into the neighboring countries of Rwanda, Uganda and even Kenya. DRC is a major mineral producer in Africa.
The illicit gold trade and gold scam has been enabled by an unholy alliance between the traders/scammers, lawyers and banks.
The Ministry of Petroleum and Mines is responsible for licensing dealers in precious metals and dealers in precious stones.
The licenses are issued to Kenyan nationals or to companies established in Kenya and expire in December. They are renewed yearly.
Applicants are required to apply through the Mining Candastar Portal using an account created for the individual or firm. The applicants are subjected to background checks for purposes of ensuring that only fit and proper individuals obtain licences.
Where the applicant is a company wishing to obtain a dealer’s licence, the fit and proper tests are extended to the directors and shareholders of the company.
