Shifting Patterns of Illicit Financial Flows in Kenya

Executive Summary

This brief examines the shifting dynamics of illicit financial flows in Kenya. It focuses on trade-based and faith-based money laundering (TBML & FBML) practices, obstacles to the Ultimate Beneficiary Registry (UBR), the impact of online merchant settlements (OMS), the advent of Central Bank’s Digital Currency (CBDC), crypto-currencies, and exposure of fintech firms to money laundering (ML). The brief advances the escalation of deceptive trade especially in the tea industry and ivory trafficking, and explores the growing exposure of religious entities to ML, in addition to the rise in OMS as a conduit for ML due to potential laxity in customer due diligence. It examines, the introduction of the CBDC and the proliferation of crypto-currencies furnish novel ML avenues as criminals leverage their decentralized nature and potential for anonymous transactions. The escalating presence of the less regulated fintech entities, compounds the complexity of mitigating illicit financial flows. This places Kenya as a strategic hub in the growing space that is global ML.