Financial Crime World

Weak AML/CFT Supervision Exposes Sierra Leone to Money Laundering and Terrorist Financing Risks

Freetown, Sierra Leone - A New Report Highlights Significant Weaknesses in Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Framework

A recent report has highlighted significant weaknesses in Sierra Leone’s AML/CFT framework, leaving the country vulnerable to money laundering and terrorist financing risks. The report assessed the country’s efforts to combat financial crimes and found that non-bank financial institutions (NBFIs) and designated non-financial businesses and professions (DNFBPs) are particularly exposed to ML/TF risks.

Sectors at Risk

  • Non-Bank Financial Institutions (NBFIs): Dealers in precious minerals and stones, used car dealers, real estate agents, lawyers, accountants, and foreign exchange bureaus are among the sectors that are most vulnerable to money laundering and terrorist financing risks.
  • Banking Sector: The banking sector, which accounts for over 94% of the country’s total assets, is also at risk due to its significant presence of foreign-owned banks. The sector offers a wide range of products and services, making it a material player in the transfer of illicit proceeds in and out of Sierra Leone.

Gaps in Supervision

  • Financial Intelligence Unit (FIU): While the FIU played a pivotal role in understanding ML/TF risks across the country, other law enforcement agencies and supervisors lacked a comprehensive understanding of these risks.
  • Deficiencies in Implementation: NBFIs and DNFBPs failed to implement preventive measures effectively, and there was a lack of dedicated staff for international cooperation.

Recommendations

To address these weaknesses, the report made several recommendations:

  • Development of Comprehensive National AML/CFT Policy: The country needs to develop a comprehensive national AML/CFT policy to strengthen supervision and monitoring.
  • Strengthening Supervision and Monitoring: NBFIs and DNFBPs need to be supervised and monitored more effectively to ensure compliance with AML/CFT regulations.
  • Enhancing International Cooperation: Sierra Leone needs to enhance its international cooperation to combat ML/TF risks.

Conclusion

Despite some improvements since the last evaluation in 2007, the report found that fundamental changes are needed to strengthen supervision and monitoring of NBFIs and DNFBPs. The country also needs to enhance its collection and maintenance of comprehensive ML/TF-related statistics to better document its actions and results.