Kenyan Treasury Cabinet Secretary Njuguna Ndung’u has said the International Monetary Fund (IMF), World Bank and various Western governments have pledged to support the East African country in addressing deficiencies in dealing with money laundering and terrorism financing.

Last week, the Paris-based international watchdog Financial Action Task Force (FATF) placed Kenya on its so-called “grey list” of countries that don't take full measures to combat the problem. The FATF said it has asked Kenya to supervise cryptoassets, improve the quality of financial intelligence, and increase prosecution of money laundering cases.

The FATF also flagged Kenya, a financial hub in the region, as a regional hub for the trade in illicit gold as well as a transit point for drug and wildlife traffickers, with law firms, casinos, and real estate agents among the enablers of money laundering.

“This morning, I had a meeting of bilateral and multilateral lenders who have expressed support to ensure our country is taken out of the grey list,” Ndung’u told the National Assembly’s Debt and Privatisation committee on Monday (February 27), as quoted by Business Daily.

“We have done the legal instruments that established four critical institutions that now need capacity building to effectively combat money laundering, terrorism financing and proliferation of weapons of mass destruction.”

The IMF, World Bank, European Union (EU), United Kingdom, and United States have promised to support Kenyan strengthen its institutions, including the Financial Reporting Centre (FRC), Ndung’u told lawmakers.

Kenya was last on the FATF grey list in 2014. The designation – which can deter potential investors – comes as President William Ruto is working to attract investment to his country amid rising foreign-funding costs.

Inclusion on the list subjects the 23 countries now on it to enhanced monitoring to ensure compliance with international anti-money laundering (AML), combating the financing of terrorism (CFT), and countering the proliferation of weapons of mass destruction (CPF).

An IMF report that studied 89 grey-listed countries between 2000 and 2017 found that capital inflows dipped by 7.6% of gross domestic product (GDP). Foreign direct investment dropped by 3%, while other investments in these countries dropped by 3.6%.

However, Ndung’u told MPs that the placement would not impact Kenya's credit ratings, Business Daily reports.

“We have got a lot of support from multinational lenders. The greylisting will not worsen our credit ratings. The only thing we need to do is to strengthen our institutions,” he said, adding that Kenya had already made amendments to its law towards strengthening the fight against dirty money.

Kenya also knows that it must regulate digital assets to get back on FATF’s good books. To achieve this, the Treasury has formed a working group to advise the government on digital assets and formulate draft regulations for the sector, in tandem with the Financial Reporting Centre (FRC), Kenya’s financial intelligence division.

Uganda was removed from the grey list following recommendations of FATF's fifth plenary meeting. Apart from Kenya, also added was Namibia. Other African countries on the list include its biggest economies, Nigeria, and South Africa, as well as Burkina Faso, Cameroon, Mali, Mozambique, Senegal, Tanzania and South Sudan.