Panellists at the inaugural Kenya Anti-Financial Crime Summit say the increased flow of illicit funds within the country’s financial system contributed to Kenya being put on the Financial Action Task Force (FATF) grey list early this year.
The greylisting has increased Kenya’s risk profile, which has made foreign investors shy away from investing in the country, impacting job creation. Speaking at the event, Jubilee Holdings CEO Dr Julius Kipngetich emphasized the critical need for foreign direct investment (FDI) in Kenya.
He said the country’s low domestic savings rate necessitates FDI to fuel economic growth and create sufficient jobs for the one million young people entering the workforce each year.
“To create enough jobs for the growing Kenyan workforce, FDI inflows need to reach 40 per cent of the country’s gross domestic product (GDP). However, being placed on the grey list deters investors, as they may perceive increased risks and opt for alternative investment destinations. This could significantly hinder Kenya’s ability to attract the necessary foreign capital,” he noted.
Kenya was placed on the Financial Action Task Force (FATF) grey list in February this year after an evaluation of its adherence to global standards and recommendations for combatting money laundering and related financial crimes found weaknesses.
Flywheel Advisory founder and Executive Director Grace Mburu said the convening of industry experts, regulators, and global thought leaders to deliberate on the implications of Kenya’s recent greylisting will provide a forum for financial sector players to discuss both legacy and emerging challenges that are critical to safeguarding Kenya’s financial system.
“Financial crime is evolving and we need to develop appropriate strategies to counter money laundering, terrorism financing, and proliferation financing if we are to remove Kenya from the FATF grey list,” she said.
The summit was organised by Flywheel Advisory in collaboration with the Financial Reporting Centre.