The Insurance Regulatory Authority (IRA) of Kenya is now making sure that life insurers do not become a way for people to launder dirty money. The move comes after growing worries that fraudsters may be using life policies to clean their illegal cash and fund terrorism.
On 14 March 2025, the IRA teamed up with the Financial Reporting Centre (FRC) to organise a big workshop at Nairobi’s College of Insurance. The workshop was meant to teach insurers how to spot suspicious transactions and block them from entering the financial system. More than 100 workers from different life insurance companies were present at the training.
During the workshop, Mary Nkoimu from the IRA’s Prudential Supervision department explained that this step shows how serious the regulator is in protecting the industry from fraud and dirty money. She said the main aim is to make sure insurers follow the proper procedures to avoid policyholders from using life cover to move illegal funds.
Bernard Ogendo from FRC also addressed the participants. He explained that even legal money can be used to fund crime and terrorism if it is routed through financial products in a clever way. He called on insurers to put in place strong controls that follow guidelines from the United Nations and the Financial Action Task Force. Ogendo said this approach will help insurers spot strange transactions quickly.
As part of these new measures, the IRA has demanded that all insurers should carry out proper “Know Your Customer” (KYC) checks. That means companies must check where policyholders’ funds come from and make sure their details are genuine. The insurers must also appoint a money laundering reporting officer. It is the job of this person to send reports of suspicious transactions to the regulator every 3 months.
Some transactions raise suspicion when a policyholder suddenly buying large amounts of life cover with huge sums of money. Sometimes fraudsters use these policies to borrow against their policy or withdraw large amounts quickly. The regulators say this is a trick used by people trying to launder their dirty money through the financial system.
Also, the IRA is worried about fake re-insurance companies and middlemen who may be involved in this process. To tackle this, regulators want insurers to put in place clear policies and guides to help their workers spot and report suspicious transactions.
Kenya was recently put on the Financial Action Task Force’s grey list. The country fell into this group because of weak controls against terrorism financing and money laundering. The IRA’s Director of Supervision, Kalai Musee, explained that insurers must do more to follow the rules. He added that Kenya’s rate of insurance penetration is very low — at 2.39%. The world average is about 7.2%. So the industry must become more trustworthy and reliable.
Some financial experts say the IRA should do more to make sure ownership structures of insurers are made public. That, they say, will help regulators plug gaps where shady companies may sneak into the industry. The IRA is now preparing detailed guidance notes to help insurers follow the new rules.
The regulators want to make sure these measures will bring back confidence in Kenya’s financial sector. They hope this will allow the country to move back into the FATF white list. That would be a big boost for the industry and for Kenya’s ability to attract more investment.
Life insurers, brokers, and their agents now need to be careful about their transactions and policyholders’ details. The IRA has made it clear that companies who do not follow these new measures may face penalties. They may be fined, lose their license, or suffer other enforcement actions.
Because many fraudsters use life cover to move their dirty funds, the IRA is focusing its controls on this area. Kenya is now aligning its regulations with international best practices. The aim is to make sure the financial sector is not used to fund terrorism or launder money.
As the regulator tightens its supervision, it plans to continue training insurers and investigating transactions. The IRA wants a strong financial industry that is free from fraud and can grow safely. All these steps will help insurers serve policyholders honestly and safely.
