Financial Crime World

Title: DR Congo’s Addition to the FATF “Grey List” - Implications for Business

The Democratic Republic of Congo (DRC) on FATF’s Grey List

The Democratic Republic of the Congo (DRC) has been added to the Financial Action Task Force’s (FATF) list of high-risk countries for money laundering and terrorist financing, known as the ‘grey list.’ [1] This designation follows criticism of the DRC’s insufficient measures to address these issues.

About the Financial Action Task Force (FATF)

  • The FATF is an international organization composed of 39 countries [2].
  • Established in 1989 to protect financial systems from criminal activity.
  • Implemented the ‘know-your-customer’ rule, a standard for ascertaining a client’s true identity.
  • Expanded its mandate after 9/11 to include combating terrorist financing.

DRC’s Pledge and Insufficient Efforts

  • The DRC, under President Tshisekedi, pledged to tackle money laundering, terrorist financing, and corruption three years ago [3].
  • The FATF’s recent assessment deemed these efforts insufficient [1].
  • Members of the FATF are encouraged to monitor the situation closely and reassess their risk analyses accordingly.

Consequences of Being on the Grey List

Capital Inflows Decrease

  • An average reduction of 7.6% of the listed country’s gross domestic product [4].
  • Foreign investors may become more cautious about doing business in the DRC.
  • Companies may need to increase their due diligence efforts.

Reputational Damage

  • Complicating relationships with foreign banks and investors [5].
  • Regulators from substantial markets could impose restrictions on dealing with Congolese banks.
  • Banks might decide to terminate relationships with clients based in high-risk jurisdictions to save on compliance costs.

Mitigating Risks for Businesses

As businesses interacting with the DRC may face increased scrutiny, it is vital that they reassess their risk analyses and ensure they fully understand the implications of working with Congolese banks:

  1. Enhance Know-Your-Customer (KYC) processes.
  2. Conduct thorough due diligence on counterparties.
  3. Implement risk assessments and continually monitor these risks.
  4. Stay updated on regulatory developments in the DRC and the FATF.

[1]: Angelika Hellweger, ‘DR Congo faces new financial challenges,’ Rahman Ravelli Solicitors, 25 February 2023, Available at: https://www.rahmanravelli.com/news/detail.aspx?g=9e73b3d5-2046-4da8-a1a9-343c319a4c8a

[2]: Financial Action Task Force, ‘About us,’ Available at: https://www.fatf-gafi.org/publications/fatfreports/docs/fatf_organisation.html

[3]: BBC News, ‘Congo: Tshisekedi ‘pledges to tackle graft,’’ 26 January 2020, Available at: https://www.bbc.com/news/world-africa-51119345

[4]: International Monetary Fund, ‘Financial sector assessments,’ Available at: https://www.imf.org/en/Publications/FP/Issues/2013/12/23/Financial-Sector-Assessments

[5]: Financial Action Task Force, ‘FATF Public Statement - Democratic Republic of Congo,’ 15 February 2023, Available at: https://www.fatf-gafi.org/en/news/pr/2023/df230215-dr-congo/

Disclaimer: This article is intended for informational purposes only and should not be considered as legal advice. It is always advisable to consult with a qualified professional for legal advice concerning specific matters.