Government Intensifies Scrutiny of Public Benefit Organisations

Principal Secretary for Internal Security, Raymond Omollo, has called for heightened oversight and collaboration within Kenya's non-profit sector to safeguard it from exploitation for money laundering and terrorism financing. Speaking on Tuesday, October 7, 2025, after a visit to the Public Benefit Organisations Regulatory Authority (PBORA) headquarters in Nairobi, PS Omollo emphasised the government's commitment to strengthening regulation and ensuring accountability.

“Our discussions centred on strengthening collaboration between government agencies and PBOs to promote good governance, curb money laundering, and enhance civil society’s contribution to national development,” Omollo stated.

Context: Kenya's Fight Against Financial Crimes

Kenya has been actively working to combat money laundering and terrorism financing, a commitment underscored by its membership in international bodies like the Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). The country has also enacted domestic legal provisions, including the Proceeds of Crime and Anti-Money Laundering Act.

Earlier in 2024, Kenya was placed on the FATF grey list due to strategic deficiencies in its anti-money laundering and counter-terrorism financing (AML/CFT) framework. This listing highlighted the need for more robust measures to identify and address financial crimes. The government has since developed a National AML Strategy and a National CFT Strategy in 2023, accompanied by action plans.

Law and Policy: The Public Benefit Organisations Act, 2013

The operationalisation of the Public Benefit Organisations (PBO) Act, 2013, in May 2024, marked a significant shift in the regulation of Kenya's non-profit sector, replacing the Non-Governmental Organisations Co-ordination Act, 1990. The Act established PBORA as the primary regulator, tasked with registration, deregistration, oversight of compliance, and promoting self-regulation within the sector.

Under the PBO Act, organisations must register with PBORA to gain legal recognition and access benefits such as tax exemptions, government funding, and preferential treatment in public procurement. International PBOs are also required to register and have at least one-third of their directors as Kenyan citizens residing in Kenya.

Stakeholder Engagement and Implications

The move towards stricter oversight is expected to influence public debate and policy execution. Stakeholders are keen for clarity on the timelines, costs, and safeguards associated with these enhanced regulations. The PBO Act aims to introduce greater transparency and accountability, which is crucial in the fight against money laundering and ensuring donor funds are properly accounted for.

PS Omollo, who also serves as the Principal Secretary in the State Department for Internal Security and National Administration, has been actively involved in various security initiatives, including strengthening partnerships to address security concerns in higher learning institutions.

Evidence and Data

• Kenya was placed on the Financial Action Task Force (FATF) grey list in 2024 due to strategic deficiencies in its AML/CFT framework.
• The Public Benefit Organisations (PBO) Act, 2013, became operational on May 14, 2024.
• PBORA is responsible for the registration and oversight of PBOs, including compliance, inspections, and audits.
• The government developed a National AML Strategy and a National CFT Strategy in 2023.

Risks and Implications

While enhanced regulation is vital for national security and financial integrity, there are concerns about potential unintended consequences. Historically, stringent AML/CFT measures have sometimes disrupted legitimate non-profit activities, particularly when governments broadly apply burdensome measures without conducting specific risk assessments for different types of organisations. This could lead to operational barriers for some PBOs, including difficulties in cross-border transactions and opening bank accounts.

What to Watch

The implementation of the PBO Act and the intensified oversight by PBORA will be closely watched. Key areas of focus include how effectively the new regulations are enforced, the clarity provided to PBOs regarding compliance requirements, and the impact on the operational environment for civil society organisations in Kenya. The government's ability to balance robust regulation with fostering an enabling environment for public benefit work will be crucial.