Financial Crime World

Banks in Central African Republic Struggle to Categorize Customers Accurately

Challenges in Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

A recent evaluation has revealed that banks in the Central African Republic (CAR) are having trouble accurately categorizing their customers based on risk profiles. Despite understanding the importance of AML/CFT, many financial institutions are failing to translate this knowledge into effective, up-TO-date risk maps.

  • Banks and money transfer service providers are fulfilling their AML/CFT duties, but the number of suspicious transaction reports (STRs) filed seems disproportionate to the criticality of the risks involved.
  • Non-bank financial institutions, such as microfinance institutions and insurance companies, have a patchy understanding of AML/CFT risks and duties.

Inadequate Measures to Regulate Foreign Exchange Bureaus and Cryptocurrency Sector

  • The Central African Republic has been criticized for its lack of effective measures to identify and sanction foreign exchange bureaus that continue to operate clandestinely.
  • Many designated non-financial businesses and professions (DNFBPs), such as notaries, are unaware of their AML/CFT obligations under the CEMAC Regulation.
  • The country’s efforts to regulate the cryptocurrency sector have been deemed insufficient. Law No. 22/001 of 2022 governing cryptocurrencies has yet to be accompanied by specific implementing measures.

Control Functions Lacking

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  • The evaluation highlighted shortcomings in the control and supervision system for financial institutions and DNFBPs in CAR.
  • Supervisors of financial institutions carry out satisfactory due diligence, but the weak system for identifying beneficial owners makes it difficult to ensure effective AML/CFT supervisory actions.
  • There are no competent authorities designated to monitor non-compliance with AML/CFT obligations among DNFBPs.

International Cooperation

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  • The country has a suitable general legal framework for mutual legal assistance and extradition, but the absence of a centralized system for archiving and managing files hinders effective cooperation with other countries.
  • CAR has not requested or granted international cooperation in matters of mutual legal assistance and extradition in the field of AML/CFT.

Security Challenges

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  • The Central African Republic is facing significant security and political challenges that are impacting economic and social development.
  • The country has experienced periods of political instability and armed conflict, leading to a fragile security situation.

ML/TF Risks

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  • The Central African Republic is exposed to a range of ML/TF risks, including misappropriation of public funds, illicit trafficking in precious stones and metals, drug trafficking, corruption, and human trafficking.
  • The country’s fragile security situation and lack of effective AML/CFT measures make it vulnerable to these threats.

Conclusion

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Overall, the evaluation highlights the need for improved understanding and implementation of AML/CFT measures among financial institutions and DNFBPs in CAR, as well as enhanced international cooperation and security measures to address the ML/TF risks facing the country.