Kenya’s financial crime watchdog has launched a crackdown on anonymous home and land purchases in fresh efforts to close a loophole that has allowed corrupt businesspeople and other criminals to hide ill-gotten gains in real estate.
The Financial Reporting Centre (FRC) has unveiled a reporting template for real estate professionals to report property deals above $15,000 (Sh1.94 million) and flag suspicious transactions.
The information required via the template includes full names, identity card number, current physical or residential address of those purchasing property, their occupation or employment details and source of income.
Real estate professionals, such as agents, will also be required to report the identities of the beneficial owners of companies buying real estate in cash to the FRC, which tracks illicit cash flow.
Anti-corruption advocates reckon that criminals and corrupt officials and business people have for years anonymously hidden ill-gotten gains in real estate.
The more sophisticated ones dodge the law to hide the proceeds of illicit activity by buying homes through legal entities or trusts.
While real estate agents are required to understand the source of customer funds and report suspicious transactions, weaknesses in the previous system dimmed compliance.
An FRC report shows that out of 411 real estate agents that were under the agency’s view by 2021, only two filed reports on suspicious transactions in five years to 2021. The FRC has backed the new requirements with a circular asking other financial institutions, such as banks, to avoid transacting with real estate agents that are not registered with the government’s Estate Agents Registration Board (EARB).
The watchdog classifies real estate agents involved in selling and mortgaging, charging, letting or managing of immovable properties such as houses, shops or any other building.
The new rules, which require all real estate agents to register with the FRC, also compel those purchasing property on behalf of others to disclose the true ultimate owners.
This requirement targets individuals laundering money through property deals by using third parties or falsely claiming to be purchasing on behalf of others.
“You must take reasonable steps to determine if the person is acting on behalf of another person. In cases where a third party is involved, you must take reasonable steps to establish the true identity of the third party and their relationship to the person or entity on whose behalf the transaction is being conducted,” states the FRC.
“You must also confirm that the individual is authorised to act on behalf of the client and obtain documentation that confirms this.”
In a circular dated July 9, 2025, the FRC has cautioned financial institutions such as banks, insurers and saccos from dealing with agents that are not registered with the EARB and the FRC as part of enhanced due diligence on the sector that has been identified as one of the weak links in the country’s fight against dirty cash.
“Some of the inherent vulnerabilities that expose the sector to abuse include the large number of unregistered persons practising as estate agents, the relatively large size of the sector (characterised by high transaction volumes and its significant contribution to GDP) and the use of cash and intermediaries,” says the FRC in the July 9 memo.
The watchdog is alarmed that many unregistered individuals and firms are practising as real estate agents in breach of law, opening a loophole that the agency says eases the flow of illicit funds through Kenya’s real estate markets.
It has directed that the initial payment for the property deal must be wired through an account in their name in a financial institution that has obligations to flag suspicious deals.
“If you are unable to perform customer due diligence measures, you must...refuse to establish the business relationship or conduct the transaction,” says the FRC in the template.
All real estate agents will have to set up an internal anti-money laundering system and appoint a money laundering reporting officer (MLRO) to ensure compliance with the checks.
The agents will be required to keep the records related to property being sold, the seller and the beneficial owner of any legal entity receiving the property for at least seven years. The agents must report deals above Sh1.94 million to the FRC every Friday.
Politically exposed persons (PEPs) or people from countries ranking higher in corruption and money laundering and terrorism financing risks will be subject to enhanced due diligence measures. This will include deeper checks on their identity, source of funds, and transaction purpose to guard against corruption-related money laundering.
“You must keep the details of your suspicion confidential. It is very important not to notify the client of your suspicion and not to discuss the details of the transaction with anyone else except the MLRO. You are liable to an administrative or criminal sanction if you disclose that a suspicious transaction report has been submitted to FRC,” states the FRC.
Agents will be expected to monitor unusual transaction patterns, large cash deals, or transactions inconsistent with the customer’s profile. The FRC has issued the real estate sector-specific checklist of red flags that can help agents identify illicit cash.
It wants real estate agents to look out for customers who do not show particular interest in the characteristics of the property, including location, cost and when it will be handed over to them or do not seem particularly interested in bargaining for the price or payment terms.
In addition, the agents have been asked to be cautious of clients who show strong interest in completing the transaction quickly even without inspecting the property as well as those who do not want to put their names on any document that would connect them with the property or use different names for purchase, closing documents and deposit receipts.
Also to be on real estate’s radar will be clients buying back a property they recently sold or those known to have paid large remodelling or home improvement invoices with cash.
Clients paying a substantial down payment in cash, followed by transfers from offshore banks or buying multiple properties in a short period without concerns about the location, condition and anticipated repair costs will also be flagged.
The FRC has also asked real estate agents to look out for clients who want to build luxury houses in non-prime locations or have begun transactions in their names and have finally completed in another without a logical explanation.
Kenya was in February last year grey-listed by the Financial Action Task Force (FATF) —the global anti-money laundering watchdog— over persistent shortcomings in their financial oversight systems and is keen on tighter regulations to get itself out of this list.
