Financial Crime World

Burkina Faso’s Financial Institutions Face Due Diligence Requirements Challenges

Background

A recent report has highlighted the challenges faced by financial institutions in Burkina Faso when it comes to implementing due diligence requirements. The country’s rating, as per the Financial Action Task Force (FATF) Recommendations, remains unchanged at NC (Non-Compliant).

Challenges Faced by Financial Institutions

  • Assessing Risk and Applying a Risk-Based Approach: Despite efforts to improve national cooperation and coordination, Burkina Faso’s financial institutions are struggling to assess risk and apply a risk-based approach (R.1), with a rating of LC (Largely Compliant).
  • Implementing Requirements Related to Non-Profit Organizations: The country still faces challenges when it comes to implementing requirements related to non-profit organizations (R.8).
  • Transparency and Beneficial Ownership of Legal Persons: Burkina Faso’s financial institutions also need to improve their transparency and beneficial ownership of legal persons (R.24).

Areas of Progress

  • Customer Due Diligence Requirements: Financial institutions have largely implemented customer due diligence requirements (R.10).
  • Record-Keeping Measures: They have also implemented record-keeping measures (R.11).
  • Internal Controls for Foreign Branches and Subsidiaries: Internal controls for foreign branches and subsidiaries are in place (R.18).
  • Regulating and Supervising Financial Institutions: The country has made significant strides in regulating and supervising financial institutions (R.26).
  • Establishing a Functioning Financial Intelligence Unit: A functioning financial intelligence unit is established (R.29).

Recommendations for Improvement

To address the challenges faced by Burkina Faso’s financial institutions, they will need to:

  • Enhance Risk Assessment and Management Capabilities: This may involve investing in technology, training staff, and increasing collaboration with international partners.
  • Strengthen Internal Controls and Regulatory Frameworks: Financial institutions should focus on strengthening their internal controls and regulatory frameworks to ensure that they are adequately equipped to combat money laundering and terrorist financing.

Conclusion

The FATF has called on Burkina Faso’s government to take concrete steps to address these challenges and improve the country’s rating. The international community is watching closely to see how Burkina Faso will respond to these recommendations.