CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
Hilton Hotel, Nairobi
Tuesday, 13th May 2014

Mr. Pawan Hegde, Managing Director - Governance Risk and
Compliance, Thomson Reuters;
Mr. Paul Muthaura, Acting Chief Executive Officer; Capital
Markets Authority;
Distinguished Participants;
Ladies and Gentlemen:
I am privileged to be with you this morning for this
landmark summit. Let me first convey the best wishes of the
Cabinet Secretary, The National Treasury, Mr. Henry Rotich
who was supposed to deliver the opening keynote speech
today. Due to emerging exigencies, the Cabinet Secretary, The
National Treasury has asked me to represent him this
morning.
Let me also thank the organisers of this conference Thompson
Reuters and the Capital Markets Authority (CMA). Indeed the
issues to be discussed at this conference on regional
regulatory trends, corporate governance, anti-money
laundering, combatting the financing of terrorism and fraud
are close to the hearts of governments across the East African
region. It is also very apt that the focus is East Africa. This
also coincides with the Regional Review Group for Africa

and Middle East of the Financial Action Task Force (FATF)
doing their On-Site Visit on Kenya.
Ladies and Gentlemen: The East African Community (EAC)
Heads of State in November 2013 signed the East African
Monetary Union (EAMU) protocol. EAMU will work for more
integration and convergence by 2014. EAMU’s success will, to
a large extent, be anchored on a seamless, efficient and
effective integrated financial services market. To build this
market, EAC member states must elevate their supervisory
and legal frameworks and embrace global supervisory and
regulatory standards that converge. However, global standards
must also be customised to cater for our unique East African
terrain.
The East African Central Banks are this week meeting here
in Nairobi under the auspices of the EAC Monetary Affairs
Committee to discuss some of the key building blocks essential
for integrated banking, payments and financial market
systems. The Central Banks will later this week launch the
East African Payments Systems (EAPS). EAPS initially
connecting the Real Time Gross Settlement Systems of the EAC
countries, this will facilitate cross border trade and
investment across the EAC countries. This summit comes at a

time when it can offer some insights to this process of
integration.
Ladies and Gentlemen: Anti-Money Laundering (AML) and
Combatting the Financing of Terrorism remains a challenge
to us uall. The heavy cash-based nature of the East African
economies, civil conflicts and porous borders make the region
particularly vulnerable to money laundering and financing
of terrorism. However significant progress has been made
across the region in strengthening AML/CFT regulatory
regimes particularly with the support of the Eastern Africa
Anti-Money Laundering Group (ESAAMLG). The growth of
mobile phone financial services across the region will also
significantly reduce the risk of AML/CFT with the
tractability of mobile phone financial transactions and
reduction of usage of informal financial services. Let us all
agree that it is the informality of financial markets that will
allow bad regimes of AML/CFT to thrive – we need then to
formalize markets.
Kenya and Tanzania have been incorporated in the
Financial Action Task Force (FATF) public list of countries
with deficiencies in their AML/CFT legal and regulatory
frameworks. Uganda has recently been added to this list.
Significant progress has been made in both Kenya and
Tanzania in enacting and implementing the requisite

AML/CFT regimes. Nairobi is also this week hosting the FATF
Regional Review Group Meeting for Middle East and Africa
that will review progress made in Kenya and Tanzania in
addressing AML/CFT deficiencies. I am sure that we will
continue to strengthen our AML/CFT regimes across the region
given the strong political commitment and support from
government, the private sector and the general public. I
expect that this summit will also generate practical
recommendations on how AML/CFT regimes across the region
can be strengthened.
Ladies and Gentlemen: As I draw to a close, I urge you to
draw from the varied experiences of the high calibre
facilitators and participants in this forum to come up with
recommendations that will enhance the East African
financial markets’ Governance, Risk and a Policy
Convergence Environment. This will in turn enable our
envisaged regional financial markets to attract the capital
that is required to finance the EAC’s ambitious development
agenda and also leave no room for informal financial
markets to thrive.
It is now my distinct honour to declare this summit officially
open.
Thank You