Kenya’s Financial Reporting Centre (FRC) has identified the real estate and legal services sectors as the highest risk areas for money laundering, according to its 2025 risk assessment report.

The report evaluated 442 entities across four sectors, finding that 282 fall under medium- or high-risk categories for money laundering exposure. Notably, 153 real estate agencies were classified as medium or high risk, while only 40 were rated low risk. The legal profession followed closely, with 74 firms deemed medium to high risk compared to just 12 low-risk firms.

These findings come amid Kenya’s efforts to exit the Financial Action Task Force (FATF) grey list, where the country was placed due to deficiencies in combating money laundering and terrorism financing. Grey-listing subjects Kenya to increased scrutiny of its financial transactions and may restrict access to international capital if reforms do not progress.

Heightened Inspections Ahead

The FRC announced plans to intensify on-site inspections of real estate and law firms throughout 2026. Director-General Naphtaly Rono emphasized renewed focus on these sectors, which account for about 95% of entities assessed as medium to high risk.

The vulnerability of the property market is linked to several factors: extensive cash transactions, involvement of politically exposed persons (PEPs), and weak regulatory frameworks. Criminals exploit these weaknesses by using cash purchases, falsified documents, inflated valuations, and complex ownership structures such as shell companies to disguise illicit funds.

Legal professionals also face scrutiny for enabling transactions that obscure the origins of illegal assets, especially where customer due diligence is insufficient.

Other Sectors Show Lower Risks

  • Dealers in precious metals and stones: 42 medium/high risk vs. 71 low risk
  • Trust and company service providers: 13 medium/high risk vs. 17 low risk

The concentration of risks in real estate and legal services suggests that regulatory efforts and reforms will prioritize these sectors as Kenya pursues removal from the FATF grey list. The country is actively implementing an International Co-operation Review Group (ICRG) action plan focusing on legal reforms, risk-based supervision, and stronger prosecutions.