Financial Crime World

ML Cases Arise from Predicate Offences in Central African Republic

A recent evaluation has revealed significant weaknesses in the fight against money laundering (ML) and terrorist financing (TF) in the Central African Republic (CAR). The country’s lack of an AML/CFT criminal policy, combined with a lack of expertise among investigative and prosecuting authorities, has led to a failure to identify or seize assets linked to predicate offences.

Inadequate Investigations and Prosecutions

According to the report, CAR has not prioritized investigations and prosecutions into TF cases, despite its high risk profile. In fact, no convictions have been secured in any TF case investigated. This lack of action allows ML/TF threats to persist and undermine the country’s stability.

Regulatory Framework Shortcomings

The country’s regulatory framework is incomplete, with no competent authority designated to implement UN Security Council resolutions on sanctions. Additionally, the control and supervision system for financial institutions and non-financial businesses and professions (DNFBPs) is inadequate. Supervisors of financial institutions conduct due diligence but are unable to effectively monitor compliance with AML/CFT obligations.

Transparency and Beneficial Ownership

There is a lack of transparency in legal entities and arrangements, making it difficult to track beneficial ownership. This makes it challenging for authorities to identify and prevent ML/TF activities.

CAR’s general legal framework for mutual legal assistance and extradition is suitable, but there is no centralized system for archiving and managing files, which hinders international cooperation on AML/CFT matters.

Security and Political Challenges

The country faces significant security and political challenges, including periods of political instability and armed conflict. The economy is underdeveloped, and the government has been working to establish lasting peace and stability through a national recovery and peacebuilding plan.

Underlying Predicate Offences

CAR’s exposure to ML/TF risks is heightened by its recurring underlying predicate offences, including:

  • Public fund misappropriation
  • Drug trafficking
  • Corruption
  • Illegal transactions

The TF threat is characterized by the presence of armed groups on Central African territory.

Recommendations

In light of these findings, it is clear that CAR must take urgent action to strengthen its AML/CFT framework, enhance transparency and beneficial ownership information, and improve international cooperation to combat ML/TF threats effectively.