The European Commission, the primary executive arm of the European Union (EU), has classified Kenya as a high-risk country for money laundering and terrorism financing.
The commission urged EU members Denmark, Finland, France, Germany, the Netherlands, and Spain to exercise increased caution in transactions involving Kenya in an announcement on Tuesday. Kenya is one of the most recent nations to be added to the EU's list of jurisdictions whose national anti-money laundering and anti-terrorism financing regimes are lacking.Others are Algeria, Angola, Côte d'Ivoire, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela.
At the same time, other countries like Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates were delisted.
The commission said the updated list takes into account the work of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog which last year grey-listed Kenya for, among other reasons, the lack of a clear strategy for the prosecution of money laundering offences.
“Identifying and listing high-risk jurisdictions remains a crucial tool to safeguard the integrity of the EU’s financial system… an update to the EU list reiterates our strong commitment to aligning with international standards, particularly those set by the FATF,” said Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments.
“We trust that the co-legislators will move swiftly to endorse this important step.”
Being placed under scrutiny over money laundering and terrorism financing can leave a country exposed to restricted access to international financial markets.
The FATF has previously urged the Kenyan government to adopt a legal framework for the licensing and supervision of virtual assets service providers like cryptocurrency businesses and scale up risk-based supervision of financial institutions in order to improve. Additionally, the watchdog urged Kenya to appoint a regulator of trusts and the collection of accurate beneficial ownership data. Other requirements include improving the use and quality of financial intelligence products, increasing money laundering and terrorist financing investigations, and revising the framework for regulating non-profit organisations.
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