Financial Crime World

Title: Djibouti’s Fight Against Money Laundering, Terrorism Financing, and Weapons of Mass Destruction Financing: Strengthened AML Regulations

Background

  • Djibouti, a nation in the Horn of Africa, is taking strides to address money laundering (ML), terrorism financing (TF), and financing of weapons mass destruction (WMD) within its jurisdiction.
  • The Gulf Cooperation Council Financial Action Task Force (MENAFATF) has recognized Djibouti’s progress in implementing and enhancing its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations.

Key Developments

New Anti-Money Laundering and Countering Terrorist Financing Law

  • Enacted in June 2020: aligns Djibouti’s measures with international standards.
  • Expands the definition of “predicate offenses” to include human trafficking, drug trafficking, and other serious crimes.

Operational Efficiency of Financial Intelligence Unit (FIU)

  • Improving efficiency to process, analyze, and disseminate suspicious transaction reports (STRs).
  • Djibouti has ratified the United Nations Convention against Transnational Organized Crime and its protocols to further strengthen its international commitments.

Awareness Levels among Financial and Non-Financial Institutions

  • A survey reveals noticeable growth in awareness regarding AML/CFT obligations.
  • Central Bank of Djibouti issues guidelines to regulated entities, emphasizing the need to report suspicious transactions.

MENAFATF Appreciation and Recommendations

  • Appreciates Djibouti’s efforts but requests the government to improve overall effectiveness:
    • Risk assessment
    • Customer due diligence
    • Beneficial ownership transparency

Conclusion

  • Djibouti is committed to strengthening its AML/CFT regime to maintain the stability of the financial system in the region and beyond.

Red flags for reporting regulated entities:

  • Large transactions or odd transactions with an apparent lack of economic or obvious lawful purpose.
  • Structure of transactions or business relationship that lack transparency.
  • Transactions where the customer identity is unknown or cannot be verified.
  • Unusual patterns of transactions that do not conform to the customer’s historical profile or business activities.
  • Transactions involving high-risk countries, products, or parties.
  • Dealing in cash or non-standard payment methods without a valid explanation.
  • Transactions with politically exposed persons (PEPs) or those connected to PEPs.
  • Transactions with shell banks, unlicensed financial institutions, or unregulated offshore financial centers.
  • Transactions potentially related to ML, TF, or WMD financing.