IMF urges Kenya to make crypto platforms share customer identities on transfers

The International Monetary Fund has urged Kenya to require crypto platforms to collect, verify and share identifying details about the sender and recipient of covered transfers, bringing the country in line with the Financial Action Task Force’s “travel rule”.

The proposal forms part of the IMF’s broader efforts to strengthen Kenya’s anti-money laundering and counter-terrorism financing framework. It would bring the country’s cryptocurrency oversight closer to international standards established by the Financial Action Task Force (FATF), particularly those governing virtual asset service providers.

Under the proposed requirements, platforms would need to share information identifying both the person initiating a cryptocurrency transfer and its intended recipient. The measures are intended to help financial institutions identify suspicious transactions, conduct sanctions screening and provide relevant information to authorities investigating financial crime.

The recommendation comes as Kenya expands its cryptocurrency regulatory framework while facing international pressure to address outstanding weaknesses in its financial crime prevention system.

IMF identifies gaps in Kenya’s cryptocurrency monitoring framework

The IMF’s assessment highlights a weakness in how cryptocurrency businesses currently handle information connected to digital asset transfers. While existing requirements cover customer identification and transaction recordkeeping, the lender says collecting information is not enough if institutions cannot reliably exchange it.

The proposed obligations would cover information about both parties involved in a transaction. Sending platforms would need to provide details such as the customer’s full name, account reference, physical address or national identification number, alongside relevant wallet information.

Receiving platforms would also be expected to obtain beneficiary details and use the information to establish the identity of the recipient. This would strengthen their ability to conduct sanctions checks and identify transactions that could involve illicit funds.

The IMF stated that a legal obligation should require crypto-asset service providers to obtain, retain and securely transmit originator and beneficiary information whenever they facilitate covered transfers.

The fund explained that effective implementation would allow service providers to conduct sanctions screening and identify suspicious transactions requiring reports to Kenya’s Financial Reporting Centre (FRC).

Importantly, the proposal does not mean every cryptocurrency transaction would automatically become traceable. Its requirements primarily concern transfers involving regulated intermediaries. Direct wallet-to-wallet transactions without a regulated service provider present additional monitoring and enforcement difficulties.

The IMF wants the proposed obligations incorporated into Kenya’s Virtual Asset Service Providers Regulations or another appropriate legal instrument without delay.

Kenya’s crypto regulatory framework faces another compliance test

Kenya has already taken significant steps towards establishing formal oversight of its digital asset industry.

The Virtual Asset Service Providers Act, 2025, which became effective on November 4, 2025, created a legal framework for licensing and supervising cryptocurrency businesses. It assigned regulatory responsibilities to the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).

The CBK oversees activities within its regulatory mandate, including payment-related services, while the CMA supervises relevant investment and capital markets activities. Implementing regulations subsequently came into force on July 22, 2026, according to Business Daily.

However, the IMF’s latest recommendations indicate that establishing a licensing framework is only one part of the regulatory challenge.

Introducing the additional requirements could force cryptocurrency businesses to upgrade their customer verification procedures, transaction monitoring systems and information-sharing infrastructure.

Smaller platforms could also face additional compliance costs as they establish secure channels for exchanging sensitive customer information with other service providers.

The issue extends beyond regulatory Travel rule paperwork. Effective information sharing requires accurate customer records, reliable identity verification and appropriate safeguards against unauthorised access or misuse of personal information.

Kenya’s Data Protection Act, 2019, provides an existing legal framework governing the processing and protection of personal information. Any additional data-sharing obligations would therefore need to operate alongside applicable privacy and security requirements.

The proposed measures also reflect concerns about peer-to-peer cryptocurrency activity. The IMF noted that P2P transactions are widespread in Kenya and that market participants had linked their prevalence to scams.

This creates a difficult regulatory question: how can authorities improve transaction transparency without unnecessarily restricting legitimate cryptocurrency payments and financial access?

FATF grey-list pressure intensifies as Kenya’s crypto market expands

The recommendations arrive at a sensitive moment for Kenya’s international financial standing.

The country has remained on the FATF grey list since February 2024, when it committed to addressing strategic weaknesses in its anti-money laundering and counter-terrorism financing framework.

In its October 30, 2026, update, FATF acknowledged improvements in Kenya’s financial supervision, beneficial ownership information and use of financial intelligence. However, it identified outstanding work involving transparency requirements and increased money laundering investigations and prosecutions.

Kenyan authorities are targeting April 2027 for removal from the list. That remains a national target rather than a confirmed FATF decision, which will depend on the country’s progress in addressing the outstanding requirements.

Meanwhile, the scale of Kenya’s cryptocurrency market makes stronger oversight increasingly significant.

According to Chainalysis figures reported by Business Daily on November 3, cryptocurrency transactions in Kenya reached approximately KSh740 billion ($5.7 billion) in the year ending June 2026. That represented a 38% increase from KSh505 billion recorded in the previous period.

Kenya has consequently become Africa’s third-largest cryptocurrency market after South Africa and Nigeria.

Stablecoins account for a substantial share of the country’s digital asset activity. Their use includes cross-border payments, international trade settlements and remittances from Kenyans living abroad.

Allan Kakai, founding director of the Virtual Assets Chamber of Commerce, previously highlighted the role regulation can play in building institutional confidence. “The biggest effect of regulation, in Kenya and globally, has been on institutional confidence,” Kakai told Business Daily.

He added that clearer oversight can help establish a more structured environment for businesses and consumers.

Nevertheless, the latest recommendations could generate further debate among cryptocurrency users, particularly those who value the speed, accessibility and relative privacy of peer-to-peer transactions.

The central challenge for Kenya will be balancing financial crime prevention with the practical benefits that digital assets provide to individuals and businesses.

For cryptocurrency exchanges and other covered service providers, the proposed Travel Rule requirements could introduce another layer of operational responsibility. For regulators, successful implementation would depend on ensuring that information-sharing arrangements are effective, secure and consistent with international standards.

Kenya’s next regulatory decisions will therefore play an important role in determining how its rapidly expanding digital asset industry develops.