RESEARCH: Kenya AML

Executive Summary

• Virtual asset service providers in Kenya are not yet subject to a dedicated licensing or registration regime under the AML/CFT framework as of 2025–2026, though the country has initiated regulatory reforms following its FATF grey listing and EU high-risk designation. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• The Central Bank of Kenya (CBK) is the primary supervisor for AML/CFT compliance across financial institutions including banks, money remittance providers, foreign exchange bureaus, digital credit providers, and payments service providers, but it does not currently license or regulate virtual asset platforms. AML/CFT/CPF | CBK
• The Proceeds of Crime and Anti-Money Laundering Act, 2009 (POCAMLA) is Kenya's foundational AML legislation, and it was substantially amended in 2025 through the Anti-Money Laundering and Combating of Terrorism Financing and Proliferation Financing (Amendment) Act, 2025, which introduced changes across ten statutes. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• Kenya was placed on the FATF grey list and added to the EU's high-risk third-country list in June 2025, triggering accelerated legislative and supervisory reforms to address strategic deficiencies identified in its 2022 mutual evaluation. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• The practical reality is that no dedicated virtual asset licensing regime has been operationalized for crypto businesses, and such entities would need to seek classification under existing financial institution categories (such as money remittance or payments service provider) if they engage in regulated activities, leaving a significant compliance gap for the crypto sector. AML/CFT/CPF | CBK

Regulatory Framework

• The Central Bank of Kenya (CBK) is the designated authority responsible for supervising and enforcing compliance with the Proceeds of Crime and Anti-Money Laundering Act, 2009 and attendant regulations across all financial institutions under its purview, including commercial banks, microfinance banks, money remittance providers, foreign exchange bureaus, digital credit providers, and payments service providers. AML/CFT/CPF | CBK
• Kenya's primary AML/CFT legislative framework consists of four main instruments: the Proceeds of Crime and Anti Money Laundering Act, 2009 (POCAMLA); the Proceeds of Crime and Anti Money Laundering Regulations, 2013; the Prevention of Terrorism Act, 2012 (POTA); and the Prevention of Terrorism (Implementation of the United Nations Security Council Resolutions on Suppression of Terrorism) Regulations, 2013. AML/CFT/CPF | CBK
• Under section 33(4) of the Banking Act, the Central Bank of Kenya has issued a specific Guideline on Anti-Money Laundering and Combating the Financing of Terrorism, which applies to institutions under its supervisory mandate. AML/CFT/CPF | CBK
• Kenya is committed to implementing international standards set by the Financial Action Task Force (FATF), the global money laundering, terrorism, and proliferation financing watchdog. AML/CFT/CPF | CBK
• Kenya underwent a Mutual Evaluation by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which published the Mutual Evaluation Report of Kenya in September 2022 on November 9, 2022, assessing Kenya's compliance with global AML/CFT standards. AML/CFT/CPF | CBK
• The Money Laundering and Terrorism Financing National Risk Assessment (NRA) Report was launched on July 27, 2022, detailing Kenya's specific risk profile and a corresponding strategy and action plan to mitigate identified risks. AML/CFT/CPF | CBK
• On 14 June 2025, President William Ruto signed the Anti-Money Laundering and Combating of Terrorism Financing and Proliferation Financing (Amendment) Act, 2025 into law, introducing substantial changes across ten key statutes including POCAMLA, POTA, and sector-specific laws. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• On June 10, 2025, the European Commission formally added Kenya to its list of high-risk third countries for AML/CFT/CPF deficiencies, citing gaps that require remediation. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• Kenya's continued listing under the FATF grey list has prompted accelerated reforms, with the Amendment Act being a direct legislative response to exit the grey list and strengthen financial integrity. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• The FATF maintains a list of High-Risk Jurisdictions subject to a Call for Action, which identifies countries with significant strategic deficiencies in their AML/CFT regimes, and the CBK references this list directly on its website. AML/CFT/CPF | CBK
• The CBK also references the 1267 List (Al-Qaida Sanctions List), maintained by the 1267 Committee established by United Nations Security Council Resolution 1267, which contains information on individuals and groups involved with Al-Qaeda. AML/CFT/CPF | CBK

Licensing Requirements

• Under the existing framework, there is no dedicated licensing or registration regime for virtual asset service providers (VASPs) or cryptocurrency exchanges in Kenya; the AML framework currently applies to traditional financial institutions only. AML/CFT/CPF | CBK
• The CBK supervises specific categories of entities for AML/CFT compliance, which include: Commercial Banks, Mortgage Finance Companies, Microfinance Banks, Money Remittance Providers, Foreign Exchange Bureaus, Digital Credit Providers, Payments Service Providers, and Mortgage Refinance Companies. AML/CFT/CPF | CBK
• The Anti-Money Laundering and Combating of Terrorism Financing and Proliferation Financing (Amendment) Act, 2025, introduces changes across ten key statutes, which could extend regulatory reach to new categories of entities, but specific licensing requirements for crypto businesses have not been separately gazetted. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• No entities operating as virtual asset exchanges or crypto businesses have been reported as licensed under any dedicated virtual asset regime in Kenya, as no such regime exists in the current framework. AML/CFT/CPF | CBK
• The CBK's supervisory mandate is defined by the Proceeds of Crime and Anti-Money Laundering Act, 2009, and its attendant regulations, which specify which institution types fall under its jurisdiction. AML/CFT/CPF | CBK
• The Proceeds of Crime and Anti Money Laundering Regulations, 2013, set out the compliance obligations for reporting institutions, but these were drafted before the emergence of virtual assets and have not been specifically updated for crypto businesses under the current regulations. AML/CFT/CPF | CBK

AML/KYC Requirements

• The CBK conducted a survey in 2025 to evaluate financial institutions' implementation of key AML/CFT/CPF preventive measures, focusing on six critical areas: Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), Politically Exposed Persons (PEPs), Suspicious Transaction Reports (STRs), AML/CFT/CPF Training, and Targeted Financial Sanctions (TFS). AML/CFT/CPF | CBK
• The survey report on Targeted Financial Sanctions specifically analyzed the effectiveness of TFS-related preventive measures across the banking sector, highlighting the current state of compliance and identifying key challenges. AML/CFT/CPF | CBK
• Financial institutions under CBK supervision are required to implement Customer Due Diligence measures as part of their AML/CFT obligations under POCAMLA and the 2013 Regulations, alongside Enhanced Due Diligence requirements for higher-risk customers and transactions. AML/CFT/CPF | CBK
• PEP screening is a mandatory component of the preventive measures framework, with financial institutions required to identify and apply enhanced scrutiny to transactions involving politically exposed persons. AML/CFT/CPF | CBK
• Suspicious Transaction Reporting (STR) obligations are embedded in the preventive measures framework assessed by the CBK's survey. AML/CFT/CPF | CBK
• The 2022 Mutual Evaluation Report noted that Kenyan authorities had not sufficiently addressed money laundering and terrorism financing risks related to cross-border movement of cash during the National Risk Assessment, leading to a CBK survey on this issue in April 2025. AML/CFT/CPF | CBK
• The CBK's April 2025 survey on cross-border movement of physical cash sought to understand cash transportation patterns, preventive measures, and related challenges within the banking sector, with banks and mortgage finance companies encouraged to review the findings. AML/CFT/CPF | CBK

Enforcement Actions

• Kenya's continued listing under the FATF grey list and inclusion in the EU's high-risk third-country list in June 2025 reflects enforcement pressure on Kenya's AML/CFT regime, in which the European Commission cited specific AML/CFT/CPF deficiencies. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• The ESAAMLG Mutual Evaluation Report of Kenya (September 2022), published November 9, 2022, analyzed Kenya's level of effectiveness in its AML/CFT system and provided recommendations on how the system could be strengthened, representing the primary formal assessment that highlighted deficiencies. AML/CFT/CPF | CBK
• The Mutual Evaluation Report specifically noted that Kenyan authorities had not sufficiently addressed ML/TF risks related to cross-border movement of cash, a deficiency that prompted the CBK to conduct a follow-up survey in April 2025. AML/CFT/CPF | CBK

Tax Treatment

• No tax guidance has been issued for virtual assets in the sources provided; the CBK AML/CFT framework does not address tax treatment of crypto transactions. AML/CFT/CPF | CBK
• The Anti-Money Laundering (Amendment) Act, 2025 focuses on strengthening AML/CFT compliance rather than tax treatment of digital assets, and no tax provisions for virtual assets are mentioned in the legislation as summarized. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• No specific capital gains, income tax, or VAT treatment for cryptocurrency transactions has been articulated in the regulatory materials published by CBK. AML/CFT/CPF | CBK

Key Gaps & Risks

• Kenya's AML/CFT framework does not currently include a dedicated regulatory category for virtual asset service providers, meaning crypto businesses operate outside the formal licensing and supervision framework administered by the CBK. AML/CFT/CPF | CBK
• The FATF grey listing and EU high-risk designation persist despite the 2025 Amendment Act, indicating that implementation gaps remain between paper law and practical enforcement effectiveness. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing
• The CBK's supervisory mandate extends only to named categories of financial institutions, with no explicit inclusion of virtual asset exchanges or crypto platforms. AML/CFT/CPF | CBK
• The cross-border movement of physical cash was identified as an unaddressed risk in the Mutual Evaluation Report, suggesting similar gaps likely exist for cross-border crypto flows. AML/CFT/CPF | CBK
• Businesses operating in the crypto space face risk of classification uncertainty, as they may be expected to register as money remittance providers or payments service providers without clear fit-for-purpose guidance, creating compliance ambiguity. AML/CFT/CPF | CBK
• The 2025 Amendment Act introduces changes across ten statues "including" POCAMLA and POTA, but the full scope of how these amendments affect non-traditional financial entities is still being analyzed. Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing

Sources

• AML/CFT/CPF | CBK
• CENTRAL BANK OF KENYA 2013 ANTI - MONEY LAUNDERING
• Kenya’s Anti-Money Laundering (AML) Amendment Act 2025 and EU’s high-risk listing