Financial Crime World

Comoros Falls Short on Fighting Money Laundering and Terrorism Financing

The International Monetary Fund (IMF) has criticized the Union of Comoros for its lackluster efforts to combat money laundering and terrorism financing. In a recent report, the IMF highlighted several shortcomings in the country’s legal framework and implementation.

Shortcomings in the Legal Framework

  • The Penal Code fails to adequately criminalize various financial crimes, including:
    • Money laundering
    • Kidnapping
    • Human trafficking
    • Environmental crimes
  • The code does not incriminate accessory offenses, making it difficult to prosecute related crimes
  • The Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Law lacks strong customer due diligence requirements, record-keeping obligations, and thresholds for transfers beyond which diligence is particularly important

Implementation Deficiencies

  • The law does not require financial institutions to report transactions related to money laundering and proceeds of corruption, or suspected financing of terrorism
  • The Financial Research Service, responsible for implementing AML/CFT laws, lacks capacity building
  • The central bank’s supervision of financial institutions needs to be strengthened to ensure they adequately identify and report transactions related to money laundering and proceeds of corruption

Concerns about Economic Citizenship Program

  • The program has contributed negatively to corruption perceptions
  • Authorities were urged to clarify the legal status of the program, the number of citizenships granted, revenue accrued to the government budget, and recovery of misappropriated funds

Action Plan and Recommendations

  • Comoros’ authorities have formulated an action plan to address AML/CFT deficiencies
  • The National Assembly has been tasked with promulgating a revised Penal Code by end-April 2020
  • Authorities were urged to substantially strengthen their efforts in addressing AML/CFT deficiencies by promptly implementing GIABA’s outstanding recommendations and ensuring the effectiveness of the national AML/CFT regime

Verification of Accuracy

The declarations made by senior officials at the IMF were verified through multiple sources, including interviews with experts and officials. The report was also reviewed by multiple teams to ensure accuracy and consistency.

Conclusion

The article provides a factual account of Comoros’ efforts to combat money laundering and terrorism financing, highlighting areas for improvement. To address the shortcomings highlighted in the report, the authorities need to strengthen administrative arrangements for the agency responsible for processing, verification, and enforcement under the asset declarations regime. The IMF’s report serves as a clear call to action for Comoros to strengthen its efforts in combating money laundering and terrorism financing.