KENYA is still under watch by the Financial Action Task Force that blacklists countries that are prone to money laundering even after putting in place a law to guard against the vice.

Chairman of the Anti-money Laundering advisory board John Wanyela said that the country has to first prove that the framework and structures put in place are effective.He however noted that the close scrutiny did not mean that the country is in the blacklist.

Wanyela was speaking during a meeting hosted by Pricewaterhouse Coopers for stakeholders in the financial services industry.

The Proceeds of Crime and Anti-Money Laundering Act was passed in June 2010 but it is only recently that it has been made operational through setting up of relevant structures in particular, the Financial Reporting Centre.

"Before the AML Act was enacted, money laundering was not a criminal offence in Kenya. Dealing with proceeds from drugs was covered under the Narcotics Act, and the CBK had an AML guideline for the banking industry, but otherwise there was no comprehensive legal framework on AML," said PwC Kenya head of financial services Richard Njoroge.

"Now with the Act, many more players are affected beyond banks. Entities in the insurance and real estate sectors, dealers of precious stones, forex bureaus and casinos will now have to comply with stringent requirements, including reporting suspicious transactions and carrying out customer due diligence."