Financial Crime World

Title: Cameroon’s Grey Listing by FATF: A Call to Strengthen Financial Crime Prevention Measures

Overview

In a significant development on June 23, 2023, the Financial Action Task Force (FATF) placed Cameroon on its ‘grey list,’ acknowledging strategic gaps in the African nation’s defenses against money laundering and the financing of terrorism (ML/FT).

FATF’s Decision and GABAC’s Evaluation

The decision came after reviewing the Mutual Evaluation Report (MER) of the Inter-governmental Agency against Money Laundering in Central Africa (GABAC), which evaluated Cameroon’s anti-ML/FT measures based on the 40 FATF Recommendations.

GABAC’s Findings

The evaluation identified several areas requiring improvement in Cameroon’s response to the ML/FT threat, including:

  • High risk of money laundering and terrorism financing due to vulnerabilities in different sectors of the economy.
  • Ineffective AML/CFT supervisory controls in financial institutions.
  • Insufficient dissuasive sanctions.

Challenges Facing Cameroon

Being on the grey list poses numerous challenges, such as:

  • Reputational damage leading to loss of investor confidence.
  • Downgrade of the country’s rating.
  • Negative impacts on tourism and trade opportunities.

Banking Sector Vulnerabilities

The largest sub-sector in Cameroon’s financial sector is the banking sector, which contributes about 10% of the national GDP. The sector becoming more diverse, complex, and cross-border increase the risk of ML/TF inherent in the sector.

Addressing the Vulnerabilities

Cameroonian authorities are working on imminent regulatory and legal changes to address the identified vulnerabilities, including:

  • Establishment of an authority for coordinating national AML/CFT policies.
  • Application of exhaustive criminal sanctions for agents of reporting entities.
  • Operational capacity of the National Financial Analysis Institute (NAFI) and national cooperation.

There is a need for provisions requiring the identification of ultimate beneficial owners and a legal framework for confiscating proceeds of money laundering. A local mechanism for the confiscation and handling of frozen and confiscated funds is also necessary.

Operational Capacity

There is a need to function more efficiently in the area of requesting information and to enhance cooperation between NAFI and competent services responsible for taking final action on reported cases.

Way Forward

To combat the identified vulnerabilities, Cameroonian authorities are determined to strengthen their legal and institutional framework, develop a national coordination framework, step up the control and supervision system for prevention actors, and improve the efficiency of the investigation and prosecution authorities. The goal is to effectively address the strategic deficiencies highlighted by the FATF and meet international standards to avoid potential delisting from the grey list.