Financial Crime World

Effectiveness of Anti-Money Laundering and Combating Financing of Terrorism Efforts in the Democratic Republic of Congo Limited

KINSHASA, DEMOCRATIC REPUBLIC OF CONGO - The Democratic Republic of Congo’s (DRC) efforts to combat money laundering and financing of terrorism have been found to be limited in their effectiveness.

Supervisory Approach Flawed

A recent report has revealed that the country’s supervisory approach is not based on money laundering/financing of terrorism (ML/FT) risks, as no studies have been conducted to establish sectoral risks. Furthermore, sanctions imposed do not relate to the anti-money laundering and combating financing of terrorism (AML/CFT) component, despite financial institutions being weak in this area.

Key Findings

  • No studies have been conducted to establish sectoral ML/FT risks
  • Sanctions imposed are unrelated to AML/CFT component
  • Financial institutions are weak in AML/CFT measures

Challenges in Supervision

The report highlights that the DRC’s Anti-Corruption Authority (ARCA) lacks an appropriate methodology and tools for AML/CFT supervision in the insurance sector. Additionally, the diamond, gold, and banking sectors lack designated AML/CFT supervisory authorities, despite posing high ML/FT risks due to a strong informal economy and abundant cash flow.

Key Challenges

  • ARCA lacks methodology and tools for AML/CFT supervision in insurance sector
  • Diamond, gold, and banking sectors lack designated AML/CFT supervisory authorities
  • High ML/FT risks due to strong informal economy and abundant cash flow

The country’s legal framework for mutual legal assistance and extradition is satisfactory, but its implementation remains limited in the AML/CFT area. The cooperation of AML/CFT authorities is relatively active at the level of CENAREF, which shares information on a reactive basis with foreign counterparts. However, this cooperation is less visible at the level of regulatory and supervisory authorities of financial institutions, customs, and police.

Key Findings

  • Legal framework for mutual legal assistance and extradition satisfactory
  • Implementation limited in AML/CFT area
  • CENAREF shares information on a reactive basis with foreign counterparts

Factors Exposing DRC to Criminal Activities

The DRC faces various factors that expose it to criminal activities, including:

Factors Contributing to Money Laundering

  • Strong informal economy
  • Extensive use of cash
  • High dollarization
  • Lack of reliable identification system
  • Widespread corruption

Conclusion and Recommendations

The report concludes that the DRC has put in place an AML/CFT system that is still relatively ineffective, despite the commitment of political authorities to combat these scourges. The country’s legal framework has not been updated to keep pace with international standards, and there are notable weaknesses in coordination, resources, and implementation.

To effectively address money laundering and financing of terrorism threats, the DRC will need to make significant improvements in its AML/CFT efforts.