The European Commission, the primary executive branch of the European Union (EU), has officially identified Kenya as a high-risk nation concerning money laundering and terrorism financing. This decision, announced on June 13, 2025, integrates the findings and input from the Financial Action Task Force (FATF), a prominent global organization dedicated to monitoring money laundering and terrorism financing activities. The FATF had previously 'greylisted' Kenya in 2024, citing several deficiencies, most notably the lack of a coherent strategy for prosecuting money laundering offenses.

As a result of this designation, the European Commission has advised its member states, including Denmark, Finland, France, Germany, the Netherlands, and Spain, to implement heightened vigilance in all financial transactions involving Kenya. This places Kenya among a group of countries with weak national anti-money laundering and counter-terrorism financing policies, a list that also includes nations like Monaco, Namibia, Nepal, Algeria, Angola, Côte d'Ivoire, Laos, Lebanon, and Venezuela. Maria Luís Albuquerque, the commissioner for financial services, savings, and investments, emphasized that the identification of high-risk nations is a critical tool for maintaining the integrity of the EU's financial system and reaffirms the EU's commitment to adhering to global standards established by bodies like the FATF.

The implications for Kenya are significant. Being under scrutiny for money laundering and terrorism financing can severely limit a nation's access to global financial markets. The FATF has previously urged the Kenyan government to establish a robust regulatory framework for the licensing and oversight of virtual asset service providers (VASPs), including cryptocurrency companies. Furthermore, the watchdog has called for enhanced risk-based supervision of financial institutions, the creation of an oversight body for trusts, and the meticulous collection of precise data on beneficial ownership. Other recommendations include improving the utility and quality of financial intelligence products, escalating investigations into money laundering and terrorism financing cases, and reforming the regulatory framework for non-profit organizations.

Kenyan banks, as indicated by the 2024 Innovation Survey conducted by the Central Bank of Kenya (CBK), recognize virtual assets as a potential avenue to boost accessibility and reduce transaction costs. However, they continue to approach these assets with caution due to inherent risks such as fraud, cyber threats, Anti-Money Laundering (AML) compliance challenges, and the extreme volatility characteristic of cryptocurrencies. With the finalization of the National Policy on Virtual Assets and Virtual Asset Service Providers (VASPs) in March 2025, the CBK noted that banks are preparing for the emergence of a regulated virtual asset ecosystem. The anticipated VASPs bill is expected to lay the groundwork for the secure operationalization of these technologies within Kenya's financial landscape, addressing some of the strategic deficiencies highlighted by international bodies.