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Compliance Risk Management in Central African Republic: A Review of Mutual Evaluation 2023

The Central African Republic’s Mutual Evaluation report for 2023 provides a comprehensive overview of the country’s compliance risk management framework. The report assesses the effectiveness of various measures aimed at preventing and combating money laundering, terrorist financing, proliferation financing, and other related threats.

Risk Assessment and Risk-Based Approach

The Central African Republic has implemented a risk assessment framework to identify high-risk areas and apply a risk-based approach to its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. This approach enables the country to focus resources on the most critical areas, enhancing its overall effectiveness.

National Cooperation and Coordination

The report highlights the importance of national cooperation and coordination in ensuring the effective implementation of AML/CFT measures. The Central African Republic has established a robust framework for interagency coordination, fostering collaboration among relevant authorities.

Money Laundering Offence

The country’s laws criminalize money laundering, with penalties ranging from fines to imprisonment.
While these provisions are in place, there is room for improvement in terms of effective prosecution and conviction rates.

Confiscation and Provisional Measures

The Central African Republic has established a confiscation regime aimed at freezing and seizing assets related to criminal activities.
While the framework is sound, more needs to be done to ensure its effective implementation.

Terrorist Financing Offence

The country’s laws also criminalize terrorist financing, with penalties ranging from fines to imprisonment.
There is a need for greater awareness and understanding among financial institutions and law enforcement agencies about the risks associated with terrorist financing.

The Central African Republic has implemented targeted financial sanctions related to terrorism and terrorist financing.
While these measures are in place, there is a need for greater coordination between relevant authorities to ensure their effective implementation.

Non-Profit Organisations

The country’s laws require non-profit organizations to comply with AML/CFT regulations.
More needs to be done to educate and engage these organizations about their obligations under the regime.

Financial Institution Secrecy Laws

The Central African Republic has secrecy laws in place, which limit the sharing of financial information between institutions.
While these laws are intended to protect customer confidentiality, they can also hinder efforts to combat money laundering and terrorist financing.

Customer Due Diligence

The report notes that while financial institutions in the country conduct some level of customer due diligence, there is a need for greater consistency and rigour in this area.

Record Keeping

The country’s laws require financial institutions to maintain accurate records.
More needs to be done to ensure these records are properly maintained and made available to relevant authorities.

Politically Exposed Persons

The Central African Republic has measures in place to prevent the misuse of politically exposed persons (PEPs) for money laundering and terrorist financing purposes.
However, more needs to be done to educate financial institutions about the risks associated with PEPs.

Correspondent Banking

The country’s laws require correspondent banks to conduct due diligence on their clients.
More needs to be done to ensure these banks are adequately implementing these measures.

Money or Value Transfer Services

The Central African Republic has regulations in place for money or value transfer services, including requirements for customer due diligence and reporting of suspicious transactions.

Higher-Risk Countries

The Central African Republic has identified higher-risk countries with regard to money laundering and terrorist financing.
More needs to be done to educate financial institutions about the risks associated with these countries and to implement appropriate measures to mitigate those risks.

Reporting of Suspicious Transactions

The country’s laws require financial institutions to report suspicious transactions.
While some progress has been made in this area, more needs to be done to ensure timely and effective reporting of suspicious transactions.

Tipping-Off and Confidentiality

The Central African Republic has measures in place to prevent tipping-off and to maintain confidentiality in AML/CFT investigations.
However, more needs to be done to educate financial institutions about their obligations in this area.

Other Recommendations

In addition to these specific recommendations, the report highlights the need for greater awareness and understanding among relevant authorities about the risks associated with money laundering and terrorist financing.
The development of a national risk assessment framework and the implementation of targeted sanctions against individuals and entities involved in these activities are also recommended.

Overall, while the Central African Republic has made progress in implementing its AML/CFT regime, there is still much work to be done to ensure its effectiveness. The country’s authorities must continue to prioritize the implementation of these measures and engage with relevant stakeholders to address any remaining gaps or weaknesses.