Kenya Shows Progress as Four African States Exit FATF Grey List

Kenya is making significant strides in strengthening its financial systems as four African countries have been removed from the global money laundering watchlist, signalling a positive shift for the continent’s financial reputation.

The Financial Action Task Force (FATF) on Friday announced the removal of South Africa, Nigeria, Mozambique and Burkina Faso from its grey list following successful on-site visits that confirmed positive progress in addressing compliance shortcomings within agreed timeframes  .

The Paris-based FATF, which monitors global efforts against money laundering and terrorist financing, made the announcement during its plenary meeting, marking what its president Elisa de Anda Madrazo called “a positive story for the continent of Africa” .

South Africa, Nigeria, Mozambique and Burkina Faso demonstrated improved capabilities, with Nigeria showing stronger inter-agency coordination, South Africa sharpening its tools to detect money laundering and terrorist financing, Mozambique improving financial intelligence sharing, and Burkina Faso enhancing oversight of financial institutions and gatekeepers .

Nigeria was placed on the grey list in February 2023 , while South Africa joined the list the same year, Mozambique in 2022, and Burkina Faso in 2021 .

Their removal comes after implementing comprehensive reforms to address strategic deficiencies in their anti-money laundering and counter-terrorism financing frameworks.

The development holds particular significance for Kenya, which was added to the FATF grey list in February 2024 after a decade off the list.

The grey listing subjected the country to increased monitoring and raised concerns about its investment attractiveness and credibility as a regional financial hub.

However, Kenya has been working intensively to address identified gaps.

By August 2024, Kenya had addressed 29 of the 40 recommendations made by the Eastern and Southern Africa Anti-Money Laundering Group  , the regional body that conducts mutual evaluation reviews for member states.

Kenya’s National Assembly passed the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill, 2025, on April 16, which President William Ruto signed into law on June 17.

The legislation represents Kenya’s most significant reform effort, amending ten existing Acts of Parliament to close longstanding gaps in the country’s legal infrastructure.

The new law enhances the Financial Reporting Centre’s oversight over banks, financial institutions and designated non-financial businesses and professions, requiring enhanced due diligence on high-risk customers, politically exposed persons and large cash transactions.

It also introduces stricter know-your-customer requirements, mandates more frequent reporting of suspicious transactions, and strengthens cross-border information sharing.

FATF initially found that Kenya could not demonstrate any successful investigations or prosecutions of money laundering despite its high-risk profile, and lacked a clear strategy to do so.

Terrorist financing investigations and prosecutions were also inadequate despite the country conducting several such investigations.

The grey listing has real economic consequences. The International Monetary Fund reported a 7.6 percent reduction in GDP capital inflows for grey-listed countries.

The decline in foreign direct investment and investment inflows threatens to exacerbate Kenya’s economic challenges, particularly its trade deficit and debt burden .

Kenya’s path to removal from the grey list involves addressing multiple priority areas.

The government identified eight potential features of non-profit organisations that may be at risk of terrorist financing, with authorities able to initiate investigations with other state agencies.

The country is also working to regulate virtual assets and cryptocurrency service providers, sectors that previously lacked oversight frameworks.

A report published jointly by Flywheel Advisory and the Financial Reporting Centre following the Inaugural Kenya Anti-Financial Crime Summit identifies immediate regulatory interventions around virtual assets as critical steps toward Kenya’s removal from the grey list .

Despite the reforms, challenges remain. Kenya Revenue Authority Board Chair Ndiritu Muriithi recently dismissed Kenya’s grey listing as unjustified, arguing that assessors have not fully understood Kenya’s unique financial landscape, particularly the central role of mobile money in driving transactions .

However, data continues to highlight vulnerabilities. According to the Tax Justice Network, Kenya forfeits an estimated $189.8 million (Sh25 billion) annually to tax abuse.

A Transparency International Kenya report cited findings by Global Financial Integrity estimating that in 2017 alone, Kenya lost Sh95 billion through trade misinvoicing .

Kenya sent a delegation to Tanzania in April to defend the country’s progress in addressing strategic deficiencies flagged by FATF.

Tanzania successfully completed its final on-site assessment and exited the grey list, leaving Kenya as the only East African country still under increased FATF monitoring following Uganda’s earlier exit.

The FATF’s latest update recognizes Kenya’s continued progress. Kenya was among countries whose progress was reviewed by the FATF, with the organization noting Kenya has made progress in resolving some of the technical compliance shortcomings identified in its 2022 Mutual Evaluation Report.

For the four countries removed from the grey list, the economic benefits are expected to be immediate.

Financial crime compliance expert Vincent Gaudel from LexisNexis Risk Solutions said corporates and individuals will face less friction in cross-border payments once key jurisdictions mirror the FATF decision, with banks expanding correspondent services and trade finance operations running more smoothly .

For Nigeria, which receives around $20 billion in annual remittance inflows, the FATF move could make it cheaper and easier for Nigerians abroad to send money home.

Nigerian Finance Minister Wale Edun said the delisting will ease cross-border transactions and improve capital flows, including foreign direct investment .

The successful exit of four African nations demonstrates that countries can overcome grey listing through sustained commitment to reform.

Kenya now faces the crucial task of implementing its legislative changes effectively and demonstrating tangible results in prosecutions and asset recovery to convince FATF evaluators of its progress when the next review occurs.

With regulatory reforms pending, experts say the next 12 to 18 months will be critical for Kenya’s financial reputation and long-term economic health .