By Stephen Kioko
Understanding Grey Listing and the Role of Accountants in Helping Kenya Exit the FATF Grey List
In February 2024, Kenya found itself on the Financial Action Task Force (FATF) “grey list,” a status that indicates increased supervision due to noted strategic shortcomings in its frameworks for anti-money laundering, combating terrorism financing, and countering proliferation financing (AML/CFT/CPF). This classification resulted from a detailed evaluation process initiated in 2022 by the FATF alongside its regional partner, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG).
The assessment focused on Kenya’s alignment with international AML standards across two crucial areas:
• Technical Compliance – assessing whether appropriate legal and institutional structures are in place.
• Effectiveness- determining if these systems effectively operate to detect, investigate, and prosecute financial misconduct.
Among the deficiencies identified, one area that directly impacted the accounting profession was the insufficient Risk-Based Supervision and the designation of Designated Non-Financial Businesses and Professions (DNFBPs). This gap highlighted a broader issue: the financial system’s integrity is only as strong as the oversight applied across all reporting sectors, not just financial institutions.
Kenya’s grey-listing was not entirely unexpected; however, the consequences were nonetheless profound. The listing cut deep into the nation’s financial credibility, immediately triggering heightened scrutiny of cross-border transactions. This has resulted in extended processing timelines, interruptions to international trade, and concerns among foreign investors. Grey listing signals to global partners that Kenya’s controls against illicit financial flows require reinforcement. The ripple effect can slow down investment, complicate cross-border payments, and expose businesses to more scrutiny by correspondent banks and global regulators.
But beyond the economic implications lies a critical sectoral question: What does Kenya’s grey listing mean for accountants?
Accountants are often seen as number crunchers, but in fact, they are among the key “gatekeepers” of the financial system. Their work intersects directly with financial information, business structures, and client relations; therefore, they have an upper hand in terms of the information at their disposal compared to the financial systems. The services offered by accountants can be easily exploited by money launderers and financiers of terrorism and proliferation, and therefore fall squarely within the purview of reporting entities, which in turn aid in combating financial crime.
Under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) and the regulations, accountants are recognised as Designated Non-Financial Businesses and Professions (DNFBPs). This means they are obligated to identify and verify clients, assess and document risk, maintain client records, and report suspicious activity to the Financial Reporting Centre (FRC).
Over the past year, supervisory reviews, onsite and offsite inspections by the Financial Reporting Centre (FRC) and the Institute of Certified Public Accountants of Kenya (ICPAK), revealed mixed outcomes. While some firms have made considerable progress in building robust AML/CFT/CPF frameworks, including the appointment of Money Laundering Reporting Officers (MLROs), establishment of internal controls such as customer due diligence (CDD), enhanced due diligence (EDD), Politically Exposed Person (PEP) screening, beneficial ownership verification, Targeted Financial Sanctions (TFS) checks, and rollout of AML training programs, significant gaps remain.
The overarching goal is clear: to ensure that all accounting firms mature to the same level of compliance competence. Any weaknesses at the firm level not only expose individual practitioners to regulatory risk but also threaten Kenya’s collective case before the FATF as the country works toward delisting.
There is now a resounding call for every stakeholder, including accountants, to step forward. The government alone cannot bring Kenya off the grey list. Accountants, by virtue of their access to financial data, their fiduciary responsibilities, and the trust placed in them by the public, hold a critical role. Their vantage point uniquely positions them to detect irregularities, flag suspicious patterns, and promote financial transparency. When AML/CFT/CPF compliance is integrated into everyday practice, accountants become powerful agents in protecting Kenya’s financial integrity.
The profession must embrace compliance as a strategic advantage, not a regulatory burden. A strong AML program signals integrity, professionalism and alignment with international and domestic standards and regulations.
Charting the Way Forward
To support Kenya’s journey to exit the grey list, accountants can play several key roles: Enhance firm-level AML Programs, Invest in Continuous learning and capacity building, Strengthen Reporting Culture, Leverage Technology in risk assessments, customer due diligence, record keeping, PEP and sanction screening and lastly collaborate and advocate with the regulators and other professional bodies.
From Grey to Great
The Status of Kenya’s grey listing is not a sign of failure but rather an opportunity for renewal at a systemic level, thereby favouring action toward system-wide renewal. The Financial Action Task Force (FATF) provides countries with a clear path to strengthen their AML/CFT/CPF regimes, remediate deficiencies, and build resilient financial systems. Recent developments underscore that progress is achievable: during the Task Force plenary meeting held in Paris on October 24, 2025, it was noted that Mozambique, Burkina Faso, Nigeria, and South Africa had been removed from the grey list after demonstrating significant reforms and meeting their action plan commitments. Their success signals a clear message: exiting the grey list is attainable.
By embedding AML/CFT/CPF principles into every engagement, not just as a formality but as a professional standard, accountants can play a transformative role in restoring confidence, accelerating investment, and safeguarding Kenya’s global reputation.
As Kenya implements its corrective action plan, one fact stands firm: Accountants are indispensable to the nation’s successful exit from the grey list.
Steve Kioko is a Certified AML Specialist
