Kenya’s efforts to curb money laundering face a tough challenge from designated non-financial businesses and professions (DNFBPs) — lawyers, real estate agents, and notaries — who operate in a regulatory grey zone.
- •A court ruling that protects lawyers from disclosing suspicious transactions under the guise of client privilege is a significant loophole, despite a deal between the LSK and the Financial Reporting Centre (FRC) in 2023—urging lawyers to report suspicious client transactions.
- •Real estate deals often see millions of shillings traded in cash, creating an ideal vehicle for laundering money from narcotics, wildlife trafficking, and corruption.
- •Kenya was grey listed by the Financial Action Task Force (FATF) in February last year, marking the country’s financial system as a viable ground for money laundering.
“Kenyan financial institutions likely serve as conduits for money laundering associated with the trafficking of illegal narcotics, humans, weapons, wildlife, timber, charcoal, and minerals,” the US Department of State said in a recent report said.
According to the report by the Department’s Bureau for International Narcotics and Law Enforcement Affairs, despite these professions being covered under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), many of these professionals remain largely unchecked.
Meanwhile, informal Somali financial networks thrive in the country, operating beyond the reach of regulators. These systems, built on trust and cultural ties, facilitate swift, anonymous cross-border transactions.
These networks link Kenya to Somalia, where weak governance and minimal oversight make it nearly impossible to track illicit financial flows. Trade-based money laundering compounds the issue, exploiting Kenya’s role as a trade hub with misinvoicing and fraudulent documentation.
Kenya has promised to implement an action plan aimed at tightening its anti-money laundering framework, but enforcement struggles persist. The Ethics and Anti-Corruption Commission (EACC) and the Assets Recovery Agency often face bureaucratic delays, overlapping mandates, and capacity issues. Criminals remain steps ahead, leveraging the same professionals meant to catch them and operating within a shadow financial system that resists regulation.
As Kenya tries to position itself as a regional financial center, its vulnerability to illicit finance threatens to undercut its ambitions.
