Financial Crime World

Comoros Struggles to Combat Money Laundering and Corruption

MORONI, COMOROS - The Intergovernmental Action Group against Money Laundering in West Africa (GIABA) has identified significant shortcomings in Comoros’ efforts to combat money laundering and the financing of terrorism. A recent report by the International Monetary Fund (IMF) highlights several key areas that need attention.

Shortcomings in Comoros’ Efforts

The report identifies several areas where Comoros needs to improve, including:

  • The Penal Code needs to be amended to adequately criminalize money laundering, including kidnapping, human trafficking, environmental crimes, and insider trading.
  • The definition of financing of terrorism does not cover the intended use by an individual terrorist or terrorist organization.
  • The AML/ CFT Law needs to strengthen customer due diligence, record-keeping obligations, and thresholds for transfers.

Weak Financial Institutions

The report notes that Comoros’ financial institutions have weak Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) systems. This has resulted in correspondent banking relationships suffering as a consequence.

IMF Concerns

Senior officials from the IMF expressed concerns about the lack of progress in addressing these deficiencies. “While we welcome the authorities’ efforts to formulate an action plan, more needs to be done to strengthen Comoros’ AML/CFT regime,” said a senior official.

Recommendations for Improvement

The report emphasizes the need for improved implementation of the AML/CFT framework, including:

  • Enhancing the capacity of the Financial Research Service
  • Strengthening the central bank’s supervision of financial institutions
  • Clarifying the status of Comoros’ Economic Citizenship Program, which has contributed negatively to corruption perceptions

Sanctions and Failure to Report

The report highlights several instances of failure to report suspicious transactions, including:

  • The lack of reporting of transactions related to money laundering and proceeds of corruption.
  • The absence of reporting of suspected financing of terrorism.

These failures have resulted in no investigations or convictions for money laundering or terrorism financing, according to the report.

IMF Recommendations

The IMF has made several recommendations to Comoros to strengthen its anti-corruption and anti-money laundering measures, including:

  • Amending the Penal Code to adequately criminalize money laundering.
  • Strengthening customer due diligence and record-keeping obligations.
  • Enhancing the capacity of the Financial Research Service.
  • Improving the central bank’s supervision of financial institutions.

The authorities were also urged to clarify the status of Comoros’ Economic Citizenship Program and ensure that foreigners purchasing passports are fit and proper, with legitimate sources of funds.