The non-local spin-valve is pivotal in spintronics, enabling separation of charge and spin currents, disruptive potential applications and the study of pressing problems in the physics of spin injection and relaxation. Primary among these problems is the perplexing non-monotonicity in the temperature-dependent spin accumulation in non-local ferromagnetic/non-magnetic metal structures, where the spin signal decreases at low temperatures. Here we show that this effect is strongly correlated with the ability of the ferromagnetic to form dilute local magnetic moments in the NM. This we achieve by studying a significantly expanded range of ferromagnetic/non-magnetic combinations. We argue that local moments, formed by ferromagnetic/non-magnetic interdiffusion, suppress the injected spin polarization and diffusion length via a manifestation of the Kondo effect, thus explaining all observations. We further show that this suppression can be completely quenched, even at interfaces that are highly susceptible to the effect, by insertion of a thin non-moment-supporting interlayer.