Financial Crime World

Comoros Struggles to Improve Business Climate Amid Corruption Concerns

Ease of Doing Business Remains a Challenge

Djibouti City, Comoros - The Union of the Comoros has been criticized for its lackluster efforts to strengthen its business climate, protect minority investors, and resolve insolvency issues. According to a recent report by the International Monetary Fund (IMF), the country ranks 160th out of 190 countries in terms of ease of doing business.

Policy Recommendations

To improve the country’s business environment, the IMF recommends several policy actions, including:

  • Strengthening the effectiveness of the judiciary in protecting property rights and enforcing contracts
    • Conduct a judicial system diagnosis by a credible outside partner
    • Enhance funding for the judicial system
    • Strengthen staffing with laymen judges
  • Creating an enabling environment for private investment through regulatory reform

The government has set a target of ranking 150th in the Doing Business index by 2021 and may seek assistance from the World Bank to identify quick wins.

Corruption Concerns Plague Comoros

However, corruption remains a significant obstacle to good governance in Comoros. The country’s anti-corruption framework is weak, with no effective mechanism for preventing and fighting corruption. The National Commission for Preventing and Fighting Corruption was recently dismantled, leaving a gap in the architecture.

Recommendations to Strengthen Anti-Corruption Efforts

  • Enhance asset declaration rules
  • Broaden coverage and verify accuracy
  • Sanction failures or false reporting
  • Establish an institution to replace the former commission
  • Enhance transparency and capacity within the system

AML/CFT Efforts Falter

Comoros’ efforts to combat money laundering and terrorist financing (AML/CFT) have also been criticized. The country’s legal framework lacks adequate criminalization of money laundering and terrorism financing, and its implementation is weak.

Recommendations to Strengthen AML/CFT Regime

  • Adopt a time-bound action plan to strengthen the legal framework
    • Amend the Penal Code and AML/CFT Law to criminalize and identify sanctions for various offenses
  • Promptly implement GIABA’s outstanding recommendations
  • Ensure the effectiveness of the national AML/CFT regime

Implementation Remains Weak

While Comoros has formulated an action plan to address AML/CFT deficiencies, its implementation remains weak. The authorities are encouraged to strengthen their efforts by promptly implementing GIABA’s outstanding recommendations and ensuring the effectiveness of the national AML/CFT regime.

Economic Citizenship Program Raises Concerns

The country’s economic citizenship program has also raised concerns about corruption and the misuse of legal persons and arrangements for money laundering and corruption. The government is urged to clarify the legal status of the program, the number of citizenships granted, and the revenue that should have accrued to the government budget.