The International Monetary Fund (IMF) wants Kenya to compel cryptocurrency firms to share customer identification data such as names, addresses, and national ID numbers with the government to prevent money laundering.
The multilateral lender is pushing Kenya to enact laws that will create the Travel Rule, which is a set of guidelines that mandates virtual asset service providers to collect, verify, and share identifying information about the sender and receiver whenever a crypto transfer takes place
The firms would share the data among themselves and Kenya’s financial intelligence unit, the Financial Reporting Centre (FRC), to easily detect suspicious transactions and identify the details pertaining to the sender and recipient of a virtual asset transfer.
The Travel Rule is an international anti-money laundering standard developed by the Financial Action Task Force (FATF), an international financial crime watchdog.
Earlier regulations required virtual asset service providers to keep a record of cryptocurrency traders’ identities and full transaction records for Kenyan customers for tax payments.
The records include how much they paid, how much they sold their assets for, and any profits made, as well as those making payments for goods using cryptocurrencies.
Local traders are increasingly using crypto to pay for imports, and Kenyans in the diaspora use digital assets to wire cash to family.
The Kenya Revenue Authority (KRA) has sought to nail cheats exploiting the anonymity offered by crypto exchanges to evade the taxman’s net.
Now, the IMF wants this information and the one identifying crypto users shared with the anti-money laundering watchdog FRC.
Kenya has been in FATF’s ‘grey list’ of countries under special scrutiny since February 2024 due to loopholes in countering money laundering and terrorism financing.
“A significant gap exists regarding the FATF requirements for the exchange of information with crypto asset transfers (the ‘Travel Rule’),” the multilateral lender says in its latest recommendations on Kenya’s crypto law.
“There should be a legal obligation for crypto-asset service providers (CASPs) to take adequate measures to obtain, hold, and transmit required originator and beneficiary information immediately and securely when conducting digital asset transfers and submit this information to a beneficiary CASP or financial institution, if any.”
The Travel Rule requires that when a customer sends cryptocurrency from one exchange to another, the originating platform must transmit the sender’s identifying details to the receiving platform at the time of, or before, the transfer.
Such information includes customers’ full names, account references, physical addresses or national ID numbers, as well as the wallet addresses involved in virtual asset transfers.
The receiving platform must obtain the beneficiary’s name, account reference and wallet address.
This enables the receiving exchange to establish who initiated the transaction, screen the sender against sanctions lists and assess whether the funds may be linked to money laundering or terrorist financing.
“Proper implementation of the Travel Rule will enable CASPs to carry out effective sanctions screening and detect suspicious transactions which should be reported to the FRC,” the IMF says.
The IMF reckons that lack of a requirement for crypto firms to exchange customer information when processing transfers weakens crime prevention and leaves gaps in the identification of suspicious transactions.
The fund wants the requirements incorporated into the recently published Virtual Asset Service Providers (VASP) Regulations or another appropriate legal instrument without delay.
Analysis by Chainalysis, a New York-based blockchain data platform that tracks crypto use, found that Kenyans wired a record Sh740 billion ($5.7 billion) worth of cryptocurrencies in the year to June 2026.
This highlights the growing use of digital currencies for everyday finance like cross-border payments and investments.
With the surge, Kenya overtook Ethiopia as Africa’s third-largest crypto economy after South Africa and Nigeria, pointing to the increasing adoption of digital assets as the government moved to regulate the industry.
South Africa and Nigeria, which are now Africa’s leading crypto markets, were the first countries on the continent to regulate the sector.
According to Chainalysis, Kenyans use cryptocurrencies, particularly stablecoins, mainly to pay for goods and services, especially across borders, send remittances and hedge against depreciation of the shilling.
Stablecoins are digital currencies whose value is pegged to relatively stable assets, such as the US dollar, making them less susceptible to the price volatility associated with cryptocurrencies such as bitcoin.
Kenya’s crypto activity is dominated by stablecoins, with bitcoin— the world’s most popular cryptocurrency — accounting for just 2.0 percent of transactions, compared with 92 percent in Nigeria, 59 percent in Ghana and 22 percent in South Africa.
The country was initially reluctant to embrace trading in digital assets, with the Central Bank of Kenya (CBK) fearing that they would spawn money laundering schemes and compromise the integrity of the country’s financial system.
But as the reality of these virtual assets dawned and many countries accepted them, the government was forced to soften its hard stance and even introduced a digital asset tax, which is deducted by exchanges from traders at a rate of three percent and remitted to the KRA.
Now, these exchanges will additionally be expected to undertake customer identification, identify beneficial owners and track all transactions, ending the anonymity that has been the hallmark of crypto trading.
Anonymity has not only been attractive to tax cheats, but it has also made virtual assets such as bitcoin the preferred currency for criminals dealing in dirty money, including drug traffickers, terrorists, fraudsters and arms smugglers.
“There is a prevalence of peer-to-peer (p2p) transactions, which has contributed to scams. All market participants noted that p2p transactions are high in Kenya,” says the IMF.
