Financial Crime World

Title: Benin’s Progress in AML Compliance: Challenges and Opportunities

Benin’s AML Progress According to FATF Report (2023)

According to the latest Mutual Evaluation Report from the Financial Action Task Force (FATF), Benin has made noteworthy progress in implementing Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations.

  • Largely Compliant Ratings: Benin obtained Largely Compliant (LC) ratings for critical FATF Recommendations, including R.1 (Risk assessment and applying a risk-based approach), R.2 (National cooperation and coordination), and R.3 (Money laundering offenses).
  • Significant Legislation Improvements: Benin has improved its legislation regarding money laundering and terrorist financing, as well as its regulatory and supervisory framework.
  • Compliant Ratings: The country managed to achieve a Compliant (C) rating for R.9 (Financial institution secrecy laws), and has made important strides in implementing customer due diligence (R.10) and record-keeping (R.11).

Persisting Challenges

Despite the progress, Benin still faces several challenges in achieving full AML/CFT compliance.

  • Partially Compliant Ratings: The country received Partially Compliant (PC) ratings for areas like R.8 (Non-profit organizations), R.13 (Correspondent banking), R.14 (Money or value transfer services), and R.15 (New technologies).
  • Lack of Adequate Supervision: Benin struggles with the adequate supervision and implementation of regulatory frameworks.

Ongoing Improvements

Some notable improvements include Benin’s progress regarding R.26 (Regulation and supervision of financial institutions), which shifted from Non-Compliant (NC) to Partially Compliant (PC), and the country’s efforts in enhancing its regulatory and supervisory framework for Designated Non-Financial Businesses and Professions (DNFBPs).

Areas for Improvement

Benin still needs to address several shortcomings in specific areas:

  • Legislative Framework: The country must fortify its legislative framework to ensure the availability of accurate, adequate, and up-to-date information on the beneficial ownership of legal entities and arrangements (R.24 and R.25).
  • Resource Capacity: The financial regulator still lacks the necessary resources and capacity to effectively monitor and enforce AML/CFT laws in all financial institutions.
  • Adapting to New Regulatory Challenges: Benin must adapt to new regulatory challenges, particularly in the areas of virtual assets and digital currencies.

In conclusion, Benin’s strides in AML/CFT compliance are commendable, but there is still room for improvement. The country must continue addressing technical shortcomings, improving its regulatory and supervisory frameworks, and adapting to new regulatory challenges.