On February 23, 2024, the Financial Action Task Force (FATF) categorized Kenya and Namibia as high-risk countries for anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations, enlisting them on the “FATF Grey List” due to weaknesses in their AML/CFT laws and enforcement mechanisms. Following suit, HM Treasury, the United Kingdom government department responsible for formulating and implementing financial and economic policy, also categorized these countries as high risk under the UK’s money laundering regulations on February 26, 2024. From its side, the European Commission as well has proposed a regulation to amend Delegated Regulation (EU) 2016/1675 by adding Kenya and Namibia to the list of high-risk third countries with strategic deficiencies in their AML/CFT regimes.

The FATF has outlined targeted areas for improvement in both Kenya and Namibia’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regimes. Kenya, should establish a robust case management system, enabling better management of international cooperation requests, fostering smoother communication and coordination in AML/CFT efforts between Kenya and other jurisdictions. Additionally, Kenya is urged to update its national AML/CFT regulations to align with the new findings of its risk assessments and enhance its supervision of certain financial institutions, strengthening regulatory oversight mechanisms to ensure compliance with AML/CFT regulations and detect and mitigate risks effectively within the financial sector. In Namibia, the FATF has highlighted the need to enhance resource capabilities to conduct more thorough on-site and off-site inspections. By investing in additional resources and infrastructure, Namibia can strengthen its capacity to monitor and regulate financial institutions effectively. Moreover, Namibia should increase sanctions for breaches of AML/CFT obligations to deter illicit financial activities and promote greater compliance with regulations. Enhancing the transparency and accuracy of beneficial ownership data is essential for identifying and addressing potential risks associated with money laundering and terrorist financing activities.

a. What is money laundering and the importance of effective anti-money laundering regulations.

Money laundering is the process by which proceeds obtained from criminal activities are disguised as legitimate assets, serving mainly two purposes. The first one is to transform illicit gains into assets of ostensibly legal origin, while the second concerns the removal of traces that may lead back to the criminal activity. Efforts to combat money laundering have their roots in the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of December 1988. In Article 5, the Convention addresses the issue of confiscation of products derived from the offenses, requiring the States Parties to qualify money laundering as a crime in their domestic law. Subsequently, the United Nations Convention against Transnational Organized Crime, adopted in 2000, reiterated the importance of countering money laundering practices. Specifically, Article 6 of the UN Convention against Transnational Organized Crime demands States Parties to punish the laundering of the profits resulting from the crime, while Article 7 refers to active measures to combat the illicit activities. The Convention circumscribes acts of money laundering as follows:

  1. Each State Party:

          (a) Shall institute a comprehensive domestic regulatory and supervisory regime for banks and non-bank financial institutions and, where appropriate, other bodies particularly susceptible to money-laundering, within its competence, in order to deter and detect all forms of money-laundering, which regime shall emphasize requirements for customer identification, record-keeping and the reporting of suspicious transactions;

          (b) Shall, without prejudice to articles 18 and 27 of this Convention, ensure that administrative, regulatory, law enforcement and other authorities dedicated to combating money-laundering (including, where appropriate under domestic law, judicial authorities) have the ability to cooperate and exchange information at the national and international levels within the conditions prescribed by its domestic law and, to that end, shall consider the establishment of a financial intelligence unit to serve as a national centre for the collection, analysis and dissemination of information regarding potential money laundering.

  1. States Parties shall consider implementing feasible measures to detect and monitor the movement of cash and appropriate negotiable instruments across their borders, subject to safeguards to ensure proper use of information and without impeding in any way the movement of legitimate capital. Such measures may include a requirement that individuals and businesses report the cross-border transfer of substantial quantities of cash and appropriate negotiable instruments.
  2. In establishing a domestic regulatory and supervisory regime under the terms of this article, and without prejudice to any other article of this Convention, States Parties are called upon to use as a guideline the relevant initiatives of regional, interregional and multilateral organizations against money-laundering.
  3. States Parties shall endeavour to develop and promote global, regional, subregional and bilateral cooperation among judicial, law enforcement and financial regulatory authorities in order to combat money-laundering.

The money laundering process can be usually divided into three stages: placement, layering and integration, which can occur individually or simultaneously. The first phase involves the inclusion of the proceeds of crime into the financial system, often involving cash or other assets obtained by illicit means. Secondly, the layering phase involves the transfer of the proceeds of crime. To clean the money, illicit proceeds are moved through multiple transactions, quickly moving assets through numerous bank accounts and often through shell companies, aiming to moving illicit funds away from their source. The final step is integration, which encompasses the return of the now cleaned assets that now appear as legitimate funds to the perpetrators.

Creating effective anti-money laundering regulations is crucial not only to prevent the practice itself, but because additional crimes, such as terrorist financing, criminal organizations, trafficking in drugs, weapons and human beings as well as fraud, etc., are linked to it. In addition, it is a practice that is not fading away, only reinventing. The United Nations Office on Drugs and Crime (UNODC) estimates that between 2 and 5% of global GDP is laundered each year. That’s between EUR 715 billion and 1.87 trillion each year.

b. Kenya and Namibia’s anti-money laundering policies

In February 2024, both Kenya and Namibia demonstrated their commitment to fortifying their Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) frameworks through high-level political pledges to collaborate with the Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). Following the adoption of their respective Mutual Evaluation Reports (MER) in September 2022, significant strides have been made in addressing the recommended actions outlined within these assessments. Firstly, Kenya’s efforts have focused primarily on legislative enhancements and the establishment of strong supervision systems. On the other side, Namibia has prioritized promoting a comprehensive understanding of Money Laundering (ML), Terrorist Financing (TF), and Proliferation Financing (PF) risks, alongside enhancing international collaboration mechanisms. Both nations are preparing to implement the comprehensive FATF action plans. Kenya will concentrate on completing a TF risk assessment, improving risk-based supervision, and revising Non-Profit Organization regulations. Meanwhile, Namibia’s agenda includes enhancing supervisory capacities, augmenting beneficial ownership disclosures, and ratifying an updated National Counter-Terrorism Strategy.

The greylisting underscores the crucial need for the two governments to enact reforms and strengthen their Anti-Money Laundering, Countering the Financing of Terrorism, and Combating Proliferation Financing framework. From the categorization of Kenya and Namibia in the gray list, several consequences can result. Firstly, there’s the risk of a loss of foreign aid and investments. The countries’ reputation as stable and transparent financial environment may be compromised, potentially dissuading foreign investment and deterring businesses from operating within their borders. Research indicates a reduction in foreign direct investment (FDI) to GDP ratio by up to 2% for countries with low FATF scores. Similarly, portfolio inflows and other investment inflows could decline by significant percentages, significantly impacting the economy.

Secondly, greylisting entails increased compliance costs, as stricter adherence to AML/CFT regulations becomes necessary. Financial institutions, businesses, and individuals face intensified compliance requirements, which can lead to augmented operational costs. This could particularly affect Kenyans and Namibians who engage in global financial transactions, as they may face stricter scrutiny and potentially higher transaction costs. Finally, obstacles in international trade and payments may arise due to increased inspection and enhanced due diligence from foreign banks and financial institutions. Delays, higher transaction costs, and possible restrictions on cross-border trade and payments could occur, potentially leading to a reduction in payments received from the rest of the world.

In light of Kenya and Namibia’s greylisting, Civil Society Organizations (CSOs) stress the importance of following the next several recommendations:

  1. Involvement of stakeholders, including enacting and adopting whistle-blower protection laws to enhance the fight against AML/CFT.
  2. Upholding the independence of the judiciary to combat corruption effectively, while continuously building the capacity of judicial officers in AML/CFT matters.
  3. Operationalizing the Public Benefit Organizations Act, 2013, to better regulate the non-profit sector.
  4. Strengthening prosecution efforts for high-profile money laundering and terrorism financing cases, in collaboration with relevant agencies.
  5. Promoting collaboration between the Law Society of Kenya and the Financial Reporting Centre to develop regulations and guidelines for reporting institutions, while raising awareness within the legal profession on AML/CFT.


In conclusion, the greylisting of Kenya and Namibia by the FATF underscores the critical need for both nations to strengthen their Anti-Money Laundering and Countering the Financing of Terrorism frameworks. This designation poses significant challenges, including potential loss of foreign aid and investments, increased compliance costs, and obstacles in international trade and payments. From it, the two Nations have to enact strong reforms and reinforce their collaborative efforts among government agencies, civil society organizations, and international partners. By ratifying regulations’ changes, enhancing supervision, and fostering international cooperation, Kenya and Namibia can mitigate financial crime risks, restore confidence in their financial systems, and demonstrate a firm duty to global AML/CFT standards.