Exploring the adoption and associated challenges of anti-money laundering measures in the Kenyan financial technology sector

Abstract

This study sought to investigate the adoption of Anti-Money Laundering (AML) Measures and the associated challenges within the Financial Technology (FinTech) sector in Kenya. The study was motivated by the grey-listing experience by Financial Action Task Force (FATF) in February 2024 which presents Money Laundering as a current social problem in Kenya. The researcher focused on the FinTech sector due to its accelerated growth specifically within the remittance space, which provides an avenue for placing money deposits and transfers, in the Money Laundering (ML) phases it would be considered to provide avenue for execution of Placement phase in the Money Laundering cycle. The study sought to (i) to explore how Kenyan Fintechs have adopted the Anti-Money Laundering measures, (ii) to examine the challenges in adoption of Anti-Money Laundering measures in the Kenyan FinTech sector (iii)to explore the perceived consequences of Anti Money Laundering compliance or non-compliance. Theories relevant to the study are Institutional Theory, Compliance Theory, and Deterrence Theory. The researcher adopted an Interpretivist approach and qualitative descriptive research design in this study with qualitative data collected at a single point in time in the period between October 2025 and November 2025. The objectives of the research were achieved by obtaining insights from 50 Fintech AML experts from a sampled population of 108 FinTechs. To complement the responses from the Fintech experts, further questionnaire was deployed to a group comprising of 4 diverse AML experts. The 4 groups consisted of AML regulators (Central Bank of Kenya &Financial Reporting Centre), financial crime experts, financial crime legal practitioners and AML academicians. Five (5) participants were used for each group, hence a target of 20 participants. A total of 60 responses were obtained comprising of 45 and 15 from the FinTechs and AML experts respectively. The study employed purposive sampling method to select participants, and data was collected structured questionnaires administered to the participants. The data was analyzed using thematic analysis to identify key themes and philosophies emanating from the study. The findings indicate that while anti-money laundering AML frameworks are in place, their adoption within the Kenyan FinTech sector remains uneven, constrained by limited regulatory enforcement, gaps in oversight of emerging areas such as cryptocurrency and informal digital finance, and inconsistent interpretation of regulatory requirements. Implementation is further hindered by high compliance costs, resource constraints, technological misalignment, operational complexity, and the prevalence of false positives. Despite these challenges, effective AML compliance is associated with significant institutional benefits, including enhanced reputation, improved regulatory relationships, increased access to cross-border markets, and reduced legal and financial risks. Conversely, non-compliance exposes firms to severe consequences, including financial penalties, license revocation, reputational damage, operational disruption, and heightened vulnerability to financial crime.