Kenyan lawmakers have backed a proposal to increase funding for the country’s anti-money laundering watchdog warning that underfunding the agency could delay efforts to remove the East African nation from the global financial crime ‘grey list.’
A parliamentary finance committee endorsed calls for additional allocations to the Financial Reporting Centre (FRC) after officials said the agency lacks operational funding needed to meet reforms demanded by the Financial Action Task Force.
REGULATION | Kenya Retained on FATF Grey List – Crypto, Fintech Firms Face Rising Compliance Demands
Kenya was added to the FATF grey list in February 2024 over
poor oversight of virtual assets and cryptocurrencies,
inadequate monitoring of non-profit organisations and beneficial ownership structures, and
weaknesses in combating money laundering and terrorism financing,
a designation that has since increased scrutiny from international lenders and investors.
The European Commission later classified Kenya among high-risk jurisdictions with strategic AML deficiencies.
REGULATION | European Commission (EU) Officially Lists Kenya as High-Risk Country for Money Laundering and Terrorism Financing
During a meeting, FRC Director General Rono told lawmakers the agency had requested KES 2.5 billion ($19.3 million) for the 2026/27 fiscal year but received an indicative allocation ceiling of KES 765.5 million ($5.9 million) leaving a funding gap of more than KES 1.7 billion ($13.1 million). Even after scaling down its request, the agency still needs an additional KES 564.9 million ($4.36 million) to maintain minimum operations, he said.
According to the FRC, the current allocation would be fully consumed by salaries, rent, insurance, and other fixed costs leaving no funds for investigations, inspections, or financial intelligence operations tied to Kenya’s FATF action plan.
“Our operational funds remaining stand at zero,” Rono told the committee, warning that the country cannot exit the grey list without a properly financed implementation plan.
Kenya Crypto Regulations to Cost ~$14 Million, Says Kenya Ministry of Finance
The funding strain comes as suspicious transaction reporting volumes surge. The FRC said it now receives more than 10,000 suspicious transaction and activity reports annually compared with just 34 when the agency was established in 2012. The regulator also oversees more than 3,000 reporting entities, including banks, real estate firms, lawyers, and motor vehicle dealers.
Kenya’s grey-listing status has raised concerns over foreign direct investment flows and access to international capital with multilateral institutions including the International Monetary Fund (IMF) and the World Bank increasing oversight of the country’s financial governance reforms.
REALITY CHECK | How FATF Grey Listing Affects a Country’s Financial and Economic Environment
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