Kenya eyes exit from money laundering list as more regional banks deepen footprint

…plans to leave FATF grey list by May 2026

Kenya is positioning itself to exit the global financial crime watchdog’s “grey list” by May 2026 as it strengthens its legal and institutional tools to detect and curb illicit financial flows — a move that could improve investor confidence and attract more capital into the East African financial hub, officials say.

In a statement on Monday, Chris Kiptoo, principal secretary in the country’s National Treasury, said the government held a strategic review meeting in Nairobi with principals from Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) agencies to assess progress under the Financial Action Task Force (FATF) monitoring process and agree on next steps toward delisting.

“Kenya is accelerating reforms to strengthen its anti-money-laundering and counter-terrorism financing framework to address identified gaps and restore full international confidence in the country’s financial system,” the statement said.

Key milestones include the enactment of the Anti-Money Laundering and Combating of Terrorism Financing (Amendment) Act, 2025 and the Virtual Asset Service Providers Act, 2025, aimed at expanding regulatory oversight over emerging digital finance risks. Institutional coordination has been bolstered, risk-based customer due-diligence practices strengthened, suspicious transaction reporting improved, and inter-agency collaboration enhanced across critical sectors.

“We are taking decisive action to complete the remaining reforms and secure Kenya’s exit from the list,” the Treasury added.

Context of grey list status

Countries are placed on the FATF’s “grey list” — formally known as jurisdictions under increased monitoring — when they have strategic deficiencies in their AML/CFT regimes but commit to tackling them with specific action plans. Kenya has been on this list since February 2024, following FATF concerns over gaps in its capacity to investigate, prosecute and prevent illicit financial flows and terrorist financing.

The retention on the list starkly contrasts with the recent removal of several African peers from FATF’s monitoring list. In October 2025, four countries — Nigeria, South Africa, Mozambique and Burkina Faso — successfully completed their action plans and were taken off the grey list, underscoring investor and regulatory confidence in their AML/CFT reforms.

Regional backdrop and financial sector dynamics

Kenya’s push also comes at a time when more pan-African and regional banks including Zenith, Access and Nedbank are expanding into the East African market, drawn by its position as a financial hub. This increased activity has been partly catalysed by tighter regulatory capital requirements, which are encouraging mergers and acquisitions and reshaping competitive dynamics in the banking sector.

Delisting from the grey list could reduce perceived compliance risk, lowering transaction costs for correspondent banking relationships and making the market more attractive for cross-border capital flows.

As Kenya works toward its May 2026 target, markets and policymakers will be watching closely to see if sustained legislative and enforcement action will be enough to satisfy FATF’s criteria and unlock broader investor confidence.