Financial Crime World

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

The Central African Republic (CAR) faces significant challenges in combating money laundering and terrorist financing. A recent report highlights several key issues affecting the country’s financial system, including limited understanding of risks, regulatory challenges, weak control functions, limited transparency, and difficulties with mutual legal assistance and extradition.

Key Findings

  • Limited understanding of ML/TF risks: Many entities subject to AML/CFT regulations in CAR lack an understanding of the risks associated with money laundering and terrorist financing.
  • Regulatory challenges: The country has not implemented specific measures to regulate the activities of Virtual Asset Service Providers (VASPs), despite the introduction of a national digital currency, Sango coin.
  • Weak control functions: Supervisors of financial institutions in CAR carry out satisfactory due diligence, but there are weaknesses in identifying beneficial owners and enforcing AML/CFT obligations.
  • Limited transparency: The country has not implemented effective mechanisms to ensure the transparency of legal entities and arrangements, making it difficult to prevent their misuse for ML/TF purposes.
  • Mutual legal assistance and extradition: CAR has a suitable general legal framework for mutual legal assistance and extradition, but there are challenges in implementing these measures effectively.

Recommendations

In light of these findings, the report suggests that CAR should strengthen its AML/CFT regime by:

  1. Improving understanding of ML/TF risks among entities subject to AML/CFT regulations.
  2. Enhancing regulatory oversight and implementing specific measures to regulate VASPs.
  3. Increasing transparency by establishing effective mechanisms to ensure the transparency of legal entities and arrangements.
  4. Improving control functions, including identifying beneficial owners and enforcing AML/CFT obligations.
  5. Developing a comprehensive strategy for mutual legal assistance and extradition.

By addressing these challenges, CAR can improve its ability to combat money laundering and terrorist financing, ultimately enhancing the stability and integrity of its financial system.