Kenya's government has "demonstrated increased political will" in its fight against terrorism but a lack of key laws makes it difficult to prosecute terror suspects and to choke off financing for Al-Shabaab, the US warned on Tuesday.
That assessment is included in the State Department's latest "Country Reports on Terrorism," a set of studies that gauge governments' performance in 2011.
The Kenyan military offensive against Shabaab that began last October is credited with having helped weaken the militants' grip on parts of Somalia.
But Shabaab was still able to kill more than 1000 people last year and to exercise "continued dominance of most of southern Somalia."
That resulted in "a permissive environment for a small number of al-Qa’ida operatives to conduct training and terrorist planning with other violent extremists," the State Department says.
The report also catalogs several terrorist attacks that took place on Kenyan territory last year.
"Kenya’s lack of counterterrorism legislation hindered its ability to detain terrorist suspects and prosecute them effectively," the report adds.
Similarly, "Kenya does not have in place sufficient laws, regulatory structures, or the institutional capacity to track, seize and confiscate the assets of Al-Shabaab and other terrorist groups," the State Department finds.
Some progress was made, however, with the appointment a year ago of an Anti-Money Laundering Advisory Board, the report acknowledges.
Kenya is also said to have made gains in securing its borders.
The country accepted an offer of assistance from the US to expand and upgrade a personal identification system that is now in place at additional ports of entry and can now capture biometric information.
Kenya likewise remained "a critical partner" of a State Department anti-terrorism programme focused on strengthening border controls and enhancing capability to carry out investigations and respond to incidents of terrorism, the report notes.