Kenya looking to IMF, World Bank in efforts to exit FATF Grey list

Kenya is seeking support from the International Monetary Fund (IMF), World Bank, European Union, United Kingdom, and the United States to exit the Financial Action Task Force (FATF) grey listing. According to Treasury CS, Professor Njuguna Ndungu, who appeared before the Parliamentary Committee on Public Debt and Privatisation, the country is making strides to address its challenges. Steve Biko, CEO of Soko Directory Investments LTD, joined CNBC Africa to discuss the implications of Kenya's grey listing in the past and the actions needed to combat money laundering and terrorist financing. The grey listing has significant economic consequences for Kenya, a frontier market with a history of grappling with such issues. Kenya first faced grey listing in 2010, which lasted until 2014. The government then passed crucial laws to address the concerns. However, the recent re-listing reflects ongoing challenges, such as political instability, imbalanced government policies, and debt issues. This situation not only harms Kenya's reputation but also impacts the region as Kenya serves as an economic hub. The country now faces heightened scrutiny, making international transactions and borrowing more challenging, ultimately affecting its economic activities. Notably, the involvement of elected officials in illicit financial schemes has contributed to the grey listing. To enhance its anti-money laundering and counter-terrorist financing efforts, Kenya must strengthen its legal framework and enforcement capacity. This involves amending laws, enhancing beneficial ownership transparency, regulating emerging sectors, and improving investigative and prosecutorial capabilities. The government also needs to focus on case management, targeted sanctions against implicated individuals, risk-based supervision, customer due diligence, and international cooperation and information sharing. Building the capacity of institutions dealing with money laundering cases is crucial for effectively combating financial crimes. It is imperative for Kenya to collaborate with global partners like the US and Interpol to address these challenges. These actions are essential to safeguard the country's financial integrity and pave the way for exiting the FATF grey list. Steve Biko highlighted the significance of these steps in improving Kenya's investment landscape and preventing future grey-listing scenarios in African countries.