Central African Republic’s Anti-Money Laundering Efforts Face Challenges

The Central African Republic (CAR) is facing significant difficulties in combating money laundering and terrorist financing, according to a recent report. Despite efforts to categorize customers according to their profiles and transactions, the country’s understanding of risk does not always translate into effective, up-to-date risk maps.

Challenges Faced by Financial Institutions

• Banks and other financial institutions are fulfilling their duty of vigilance, but the modest number of Suspicious Transaction Reports (STRs) emanating from them seems out of proportion to the criticality of the risk inherent in this sector.
• Money transfer service providers, which are part of international groups, also face challenges in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures.

Non-Financial Businesses and Professions

• Non-bank financial institutions, including microfinance institutions and payment services firms, have a patchy understanding of AML/CFT risks and duties.
• The insurance sector, microfinance institutions, and specialized transactional firms also face challenges in this area.
• Some non-financial businesses and professions (DNFBPs), such as lawyers and notaries, are exposed to very high money laundering and terrorist financing risks. However, their understanding of these risks is diverse and still in its infancy overall.

Virtual Asset Service Providers

• The country’s efforts to regulate the activities of virtual asset service providers (VASPs) are lacking, despite the launch of a national digital currency.
• This has led to ML/TF risks remaining unaddressed, further evading the meshes of the Central African AML/CFT system.

Shortcomings in Control Functions and Supervision

• Supervisors carry out generally satisfactory due diligence, but there are no competent authorities designated to monitor non-compliance with AML/CFT obligations.
• The country’s mechanisms for ensuring transparency of legal entities and arrangements are inadequate, and checks on the authenticity of information are empirical and inadequate.
• Information on beneficial owners is lacking, and access to collected information is limited.

Conclusion

The Central African Republic faces significant challenges in combating money laundering and terrorist financing due to a range of factors, including political instability, armed conflicts, and inadequate regulatory frameworks. Addressing these challenges will require sustained efforts by the government, financial institutions, and other stakeholders to strengthen AML/CFT measures and improve transparency and supervision.