Kenya is one of Africa’s leading FinTech markets. The regulatory framework is centred on the Central Bank of Kenya Act, the National Payment System Act 2011 (NPSA), and the Banking Act, with additional provisions under the KICA for electronic transactions.
Licensing Under the NPSA
The NPSA gives the CBK oversight over payment systems and payment service providers. Mobile money operators, payment processors, card issuers, and remittance providers must obtain a CBK licence. Different tiers apply depending on the nature and scale of services. The licensing process involves assessment of the business model, financial position, AML/KYC controls, and technical infrastructure.
Digital Lending Regulation
The CBK (Amendment) Act 2021 brought digital credit providers under CBK regulation, requiring registration and compliance with consumer protection and responsible lending standards. Digital lenders must disclose all costs, obtain informed consent, and comply with data protection requirements for personal data used in credit scoring.
The CBK FinTech Regulatory Sandbox
The CBK operates a regulatory sandbox that allows innovators to test new products under CBK oversight without full regulatory compliance, subject to defined parameters. Sandbox participation provides a pathway to mainstream licensing once the business model is proven.
AML/KYC Requirements
Payment service providers are reporting institutions under POCAMLA and must implement a full AML compliance programme, including customer due diligence, transaction monitoring, suspicious transaction reporting, and record keeping.
Launching a FinTech product or applying for a CBK licence? Contact Clay & Associates Advocates. Book a Consultation
