The Kenya Revenue Authority (KRA) has dismissed Kenya’s inclusion on the Financial Action Task Force (FATF) grey list, calling the decision unjustified and based on overstated concerns about illicit financial flows and trade misinvoicing.
KRA Board Chairman Ndiritu Muriithi said such claims do not significantly impact Kenya’s revenue collection efforts, despite reports suggesting that the exchequer loses billions through illicit financial activities.
Kenya was placed on the FATF grey list in February 2024 due to shortcomings in its anti-money laundering (AML) and counter-terrorism financing (CTF) systems. The task force cited limited prosecutions for money laundering, weak oversight of the non-profit and cryptocurrency sectors, and insufficient investigations into terror financing as key areas of concern.
“I believe part of that is that those assessing us have not fully understood how it is that we are able to move three times the GDP,” Muriithi said.
Speaking on Tuesday during the KRA Summit in Nairobi, Muriithi argued that the assessment was based on outdated benchmarks that fail to account for Africa’s financial innovation. “They are evaluating us based on a very Eurocentric view of what the financial system should be,” he noted.
He urged the FATF to take into account Kenya’s unique financial landscape, particularly the central role of mobile money in driving transactions across the country.
“It is not justified. It’s like credit rating. Kenya deserves an investment-grade rating. But the analysts coming from London and New York are still struggling on this,” Muriithi said.
He reiterated that Kenya’s financial systems are evolving rapidly and remain robust enough to support transparent, lawful trade and economic activity, despite external skepticism.
Even as the Kenya Revenue Authority (KRA) downplays the impact of illicit financial flows, data continues to show that the country loses billions in tax revenue each year through irregular transactions and falsified invoices.
According to the Tax Justice Network, Kenya forfeits an estimated $189.8 million (Ksh25 billion) annually to tax abuse. Out of this, about $134 million is lost through tax manipulation by multinational corporations, while $55.8 million slips away due to tax evasion by private individuals.
A 2024 Money Laundering and Terrorism Financing Trends and Typologies Report by the Financial Reporting Centre (FRC) revealed that between 2021 and 2023, the agency received more than 14,000 suspicious transaction reports valued at approximately Ksh7.016 trillion.
Similarly, a Transparency International Kenya report titled Illicit Financial Flows in Kenya cited findings by Global Financial Integrity, which estimated that in 2017 alone, Kenya lost Ksh95 billion through trade misinvoicing.
KRA Board Chair Ndiritu Muriithi emphasized that addressing illicit financial flows requires stronger regional cooperation to enhance tracking and enforcement across borders. He acknowledged that while KRA has recorded progress, more needs to be done to meet its revenue goals.
“To counter and reduce the incidences of illicit financial flows, there is need for regional cooperation so as to better track flows,” Muriithi said.
He added that despite falling short of its revenue target, the authority posted solid performance in the first quarter of the 2025/2026 financial year, driven mainly by customs revenue.
“It is a reasonable growth, but we are certainly not where we would have liked to be. What we have seen is very good performance in customs revenue, and slightly poorer performance on domestic tax,” Muriithi said.
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