Regulatory Framework for Diaspora Remittance in Kenya

In 2023, remittances from Kenyans abroad surged to USD 4.19 billion, marking a 4.0% increase from the previous year and surpassing revenue from tourism as Kenya’s leading source of foreign exchange. Recognizing their potential to transform the economy, Kenya is keenly aware of the importance of utilizing remittances effectively. Despite being a relatively low-income country, the appropriate use of remittance funds has shown significant potential for growth, both domestically and internationally.

Join us in our 4-part series as we discuss legal aspects relating to diaspora remittance in Kenya. In this first article, we examine Kenya’s regulatory framework for diaspora remittance.

Diaspora Policy

Kenya Diaspora Policy 2024 aims to empower Kenyans abroad to contribute more effectively to the country’s development. Through a multi-faceted approach, the policy focuses on enhancing consular services, reducing remittance costs, developing incentives for diaspora participation, and promoting diaspora involvement in democratic processes. Aligned with global, regional, and national frameworks such as the UN Global Compact on Migration, the African Union Agenda 2063, and Kenya’s Vision 2030, the policy aims to safeguard the rights and prosperity of the Kenyan diaspora, addressing emerging issues and ensuring a comprehensive strategy.


Licensing under Money Remittance Regulations (2013) governs the establishment and operation of Money Remittance Operators (MROs). To provide money remittance services, a firm must be incorporated as a limited liability company and obtain an MRO license. The regulations also outline license application fees and core capital requirements. While banks and MFIs are exempt from obtaining an MRO license, MROs must ensure customer protection by making specified disclosures, including clarifying their non-deposit-taking status. Additionally, all Forex inflows and outflows must be conducted through bank accounts, eliminating wallet-to-wallet remittances.

Anti-Money Laundering Regulations

Remittance transactions are typically facilitated through Remittance Service Providers (RSPs), which include money transfer operators, mobile network operators, and banks. However, these transactions carry inherent money laundering risks due to the large volume of transactions and insufficient oversight by remittance providers.

To mitigate these risks, RSPs in Kenya are subject to the Anti-Money Laundering Act (AML) and the Proceeds of Crime and Anti-Money Laundering Act Kenya (POCAMLA). These regulations mandate RSPs to implement anti-money laundering policies and procedures, including Know Your Transaction (KYT) compliance, customer due diligence, and reporting suspicious transactions to the Financial Reporting Centre (FRC), Kenya’s financial intelligence unit.

Engaging in money laundering activities is a criminal offence under the Anti-Money Laundering Act Kenya, with severe penalties including imprisonment or fines. The act also authorizes the freezing of assets suspected to be linked to money laundering or terrorism financing activities.

Under POCAMLA, RSPs must further adhere to anti-money laundering and counter-terrorism financing policies and procedures. The Act establishes the Asset Recovery Agency (ARA), tasked with identifying, tracing, freezing, seizing, and recovering proceeds of crime. Violations of POCAMLA can result in imprisonment or fines, with penalties reaching a maximum of 14 years imprisonment or a fine of up to KShs. 5,000,000/-, or the value of the property involved in the offence, whichever amount is higher. Offenders may face both fines and imprisonment.

Data Protection Regulations

Remittance Service Providers (RSPs) play a crucial role in the remittance value chain, handling sensitive data such as identification and account information of both senders and receivers, as well as data on remittance volumes and values. As custodians of this personal data, RSPs are considered both data controllers and processors under the Data Protection Act 2019, and are thus obligated to adhere to its provisions.

To comply with the Data Protection Act 2019, RSPs must: a. Register as data controllers and processors, unless exempted based on turnover and employee count. b. Develop and implement a comprehensive data protection policy outlining their data handling practices. c. Appoint a data protection officer responsible for overseeing compliance. d. Conduct regular data protection impact assessments to evaluate and mitigate risks.

Regarding cross-border data transfers, Part VI of the Data Protection Act specifies requirements for ensuring the security and protection of personal data when transferred internationally. RSPs must demonstrate to the Data Commissioner that appropriate safeguards are in place, including compliance with data protection laws in recipient jurisdictions and necessity for the transfer.

Furthermore, regulatory guidelines issued by the Central Bank of Kenya (CBK) also govern data protection in the financial sector. The CBK’s Prudential Guidelines mandate financial institutions, including banks, to implement measures to safeguard customer data, in line with Consumer Protection Guidelines and Cybersecurity Guidelines.

Payment service providers, regulated under the National Payment System Act, must also adhere to data protection regulations. Failure to comply may result in penalties, including fines or suspension or revocation of licenses. Unauthorized disclosure of customer information may lead to fines or imprisonment, emphasizing the importance of robust data protection measures within the remittance ecosystem.

Foreign Exchange

Key regulations include Part VI A of the Central Bank of Kenya Act and the Foreign Exchange Guidelines issued by the CBK. These regulations stipulate that all foreign exchange transactions must be conducted through authorized forex dealers. Additionally, dealers must obtain and retain relevant documentation for transactions exceeding the equivalent of US$ 10,000, which must be reported to the CBK.

In summary, the surge in remittances from Kenyans abroad signals their crucial role in Kenya’s economy, surpassing tourism revenue and demonstrating their transformative potential. Kenya’s regulatory framework, outlined in the Kenya Diaspora Policy 2024, aims to harness this potential by empowering diaspora contributions while ensuring compliance with global standards. Licensing, Anti-Money Laundering measures, Data Protection provisions, and regulations governing foreign exchange transactions work together to ensure transparency, security, and accountability within the remittance ecosystem. These efforts contribute to a robust framework for diaspora remittance, facilitating economic growth and development.

For more on this topic, please reach out to Nelson Otiende at or


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