Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in the Central African Republic (CAR)

Introduction

The Central African Republic (CAR) faces significant challenges in its Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) framework. This report highlights various risks and shortcomings that need to be addressed to strengthen the country’s AML/CFT regime.

Key Risks and Shortcomings

Limited Understanding of ML/TF Risks

Many Designated Non-Financial Businesses and Professions (DNFBPs) in CAR are unaware of their AML/CFT duties and provisions of the CEMAC Regulation. This lack of understanding hinders effective implementation of AML/CFT measures.

• Unawareness of AML/CFT duties: DNFBPs are not aware of their responsibilities under the AML/CFT framework.
• Unclear provisions of the CEMAC Regulation: The CEMAC Regulation is not well understood by DNFBPs, leading to confusion and non-compliance.

Regulatory Gaps

The promulgation of Law No. 22/001 on crypto-currencies has not been accompanied by specific implementing measures to regulate the activities of Virtual Asset Service Providers (VASPs). This creates a regulatory gap that needs to be addressed.

• Lack of implementing measures: The law does not provide clear guidelines for VASPs, creating uncertainty and non-compliance.
• Regulatory vacuum: The absence of specific regulations for VASPs leaves a regulatory gap that needs to be filled.

Inadequate Control Functions

Supervisors of financial institutions in CAR carry out due diligence, but there are shortcomings in identifying beneficial owners and ensuring effective AML/CFT supervisory actions. This hinders the effectiveness of AML/CFT measures.

• Shortcomings in identifying beneficial owners: Supervisors struggle to identify the true owners of companies and individuals.
• Ineffective AML/CFT supervisory actions: Supervisors do not take adequate action to prevent ML/TF risks.

Lack of Transparency and Information Sharing

Mechanisms for ensuring the transparency of legal entities and arrangements are inadequate, and checks on authenticity are empirical. This creates a risk of non-compliance with AML/CFT regulations.

• Inadequate transparency mechanisms: The lack of clear guidelines and procedures hinders transparency.
• Empirical checks on authenticity: Checks on the authenticity of documents and information are not reliable.

Inadequate Mutual Legal Assistance and Extradition Framework

The country has a suitable general legal framework but lacks a centralized system for archiving and managing files. This creates difficulties in mutual legal assistance and extradition.

• Suitable general legal framework: The existing laws provide a solid foundation for ML/TF prevention.
• Lack of centralized system: The absence of a centralized system hinders the effective management of files and information.

Key Risks

The report highlights several key risks that need to be addressed:

Security and Political Challenges

CAR faces significant security and political challenges, which impact economic and social development. These challenges create an environment conducive to ML/TF activities.

• Security challenges: The country is plagued by armed groups, kidnapping, and other forms of violence.
• Political instability: CAR has a history of coups and unstable governments.

Money Laundering (ML) Threat

The ML threat manifests itself in various underlying offences that generate huge financial profits, such as misappropriation of public funds, drug trafficking, corruption, and human trafficking. These activities create significant financial risks.

• Misappropriation of public funds: Public officials embezzle funds, creating a significant financial risk.
• Drug trafficking: The country is a transit point for drugs, generating huge profits for traffickers.

Financing of Terrorism (TF) Threat

The TF threat is characterized by the existence of armed groups on Central African territory. These groups rely on external funding to sustain their activities.

• Armed groups: Several groups are active in CAR, including some linked to terrorist organizations.
• External funding: The groups receive funding from external sources, creating a risk of TF activities.

Conclusion

The report emphasizes the need for CAR to strengthen its AML/CFT framework, improve understanding and implementation of regulations, enhance control functions, increase transparency and information sharing, and develop a more effective mutual legal assistance and extradition framework. Addressing these risks is crucial to preventing ML/TF activities and ensuring the stability of the country’s financial system.