Democratic Republic of Congo:Progress in AML Regulation but Remains on FATF Watchlist

FATF Commendations and Strategic Deficiencies

The Democratic Republic of Congo (DRC) has been under the scrutiny of the Financial Action Task Force (FATF) for its inadequate anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. In its most recent statement on February 23, 2024, FATF recognized the DRC’s progress in improving its AML/CFT regime since its high-level political commitment in October 2022.

Nonetheless, as demonstrated in the latest FATF statement, there are still areas where the country needs to make significant improvements:

1. Disseminating the National Risk Assessment on Money Laundering and Terrorist Financing to all the stakeholders
2. Developing and implementing a risk-based supervision plan
3. Building the capacity of the Financial Intelligence Unit (FIU)
4. Strengthening authorities involved in the investigation and prosecution of ML and TF

FATF Evaluations and Progress

The last Mutual Evaluation Report on the implementation of AML/CFT standards in the DRC was conducted in 2021. According to the evaluation, the DRC was not fully compliant with any of the FATF 40 Recommendations and had an insufficient level of effectiveness in all the 11 areas of its AML/CFT regime.

US Department of State Assessment

Back in 2016, the US Department of State classified the DRC as a ‘Monitored’ jurisdiction in its International Narcotics Control Strategy Report (INCSR). Some of the reasons given were:

• Porous borders
• Weak law enforcement and inadequate judicial system
• Dominant informal sector
• Prevalent gold, diamond, and gemstone mining

Additionally, there are issues with:

• A large parallel foreign exchange market
• Customs and tax policies that encourage bribery and clandestine transactions
• Customs and tax fraud
• Misappropriation of public funds
• Endemic corruption

There are currently no free ports or designated free trade zones in the DRC.

Conflict and Sanctions

The ongoing conflict in the DRC further exacerbates the risks of illegal activities, especially with armed groups and individuals subject to United Nations (UN), United States (US), and European Union (EU) sanctions. Despite these challenges, the FATF remains optimistic about the DRC’s progress and encourages continued efforts to address its strategic deficiencies in prevention of money laundering and terrorist financing.

Subheadings

• FATF Commendations and Strategic Deficiencies
• FATF Evaluations and Progress
• US Department of State Assessment
• Conflict and Sanctions

List

• Porous borders
• Weak law enforcement and judiciary
• Dominant informal sector
• Prevalent gold, diamond, and gemstone mining
• Large parallel foreign exchange market
• Customs and tax policies that encourage bribery and clandestine transactions
• Customs and tax fraud
• Misappropriation of public funds
• Endemic corruption
• Ongoing conflict and sanctions

Bullet points

• DRC is on FATF watchlist for strategic deficiencies in AML/CFT regulations
• FATF recognized the country’s progress in AML/CFT regulation since 2022 commitment
• DRC needs to improve several areas according to FATF
• Last evaluation in 2021 deemed DRC not fully compliant with any FATF Recommendations
• US Department of State classified DRC as a ‘Monitored’ jurisdiction
• Weak regulatory environment and corruption persist in the DRC
• Porous borders and conflict increase risks of illicit activities
• FATF remains optimistic about the DRC’s progress in improving AML/CFT regime