Evaluation Report: Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) System in Central African Republic

The Central African Republic (CAR) faces significant challenges in its fight against money laundering (ML) and terrorist financing (TF). An evaluation report has highlighted several key risks and shortcomings in the country’s AML/CFT framework, which are discussed below.

Key Risks and Shortcomings:

Limited Understanding of ML/TF Risks

• Many Designated Non-Financial Businesses and Professions (DNFBPs) have a limited understanding of ML/TF risks, with some being exposed to high risks.
• This lack of awareness puts these entities at risk of being exploited for illicit activities.

Insufficient Implementation of AML/CFT Measures

• The implementation of AML/CFT measures is still in its infancy, particularly for notaries and other DNFBPs.
• This gap in regulation leaves these sectors vulnerable to ML/TF risks.

Regulation of Cryptocurrencies

• The introduction of a national digital currency (Sango coin) has not been accompanied by specific implementing measures to regulate the activities of Virtual Asset Service Providers (VASPs).
• This lack of regulation puts the country at risk of being exploited for cryptocurrency-related illicit activities.

Weak Control Functions

• The control functions for financial institutions and DNFBPs are inadequate, with supervisors carrying out insufficient due diligence.
• This weakness allows ML/TF risks to go undetected and unreported.

Lack of Transparency

• Mechanisms for ensuring transparency in legal entities and arrangements are weak, and checks on authenticity are inadequate.
• This lack of transparency makes it difficult to track illicit activities and identify potential ML/TF risks.

Limited Sanctions for Non-Compliance

• There is a lack of evidence of effective sanctions for non-compliance with information and transparency obligations.
• This leniency sends a message that ML/TF compliance is not a priority, encouraging non-compliant behavior.

General Situation:

Security and Political Challenges

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

ML/TF Risks

• The country is exposed to various ML/TF risks, including:
  • Misappropriation of public funds
  • Illicit trafficking in precious stones and metals
  • Drug trafficking
  • Corruption
  • Others

Conclusion:

The report highlights the need for CAR to strengthen its AML/CFT framework, improve understanding and implementation of AML/CFT measures, and enhance control functions to prevent the exploitation of entities subject to AML/CFT regulations. Addressing these risks and shortcomings is crucial to preventing ML/TF activities and promoting economic and social stability in the country.