Financial Crime World

Senegal Grapples with Financial Crime Definition

Cooperating with FATF to Strengthen Economy

Senegal was added to the Financial Action Task Force (FATF) grey list in February 2021 due to its failure to fully comply with international standards against money laundering and terrorism financing. Despite this, Senegal is committed to working with the task force to address deficiencies within agreed time frames and subject to extra checks.

Money Laundering and Terrorist Financing Risks

Senegal ranks eighth in the world for money laundering and terrorist financing risks. According to a National Risk Assessment, one of the major drivers in the country is drug trafficking, which generates nearly $360 million annually.

The flexibility of real estate allows financial origins of investment and owner identity to be concealed, making it attractive for those moving illicit funds into the legitimate economy. In 2011, the Observatoire français des drogues et des toxicomanies (OFDT) reported that easy property acquisition in Senegal was being exploited by Europe-based drug traffickers to launder money.

Construction Industry: Suspected of Being Financed via Illicit Trade

Cash from drug trade has reportedly boosted construction across the country, with some large building projects suspected of being financed via illicit trade. Senegal has strengthened its legal and institutional framework to fight money laundering in recent years but progress is slow.

Challenges in Combating Financial Crime

The state’s response is limited by lack of technical expertise to train financial business employees to identify money laundering. As a result, the number of people prosecuted for financial crimes remains low compared to the number of infractions committed. Senegal’s current financial public policy may even indirectly nurture these illicit money flows.

Recommendations for Improvement

Experts advocate for delinking the CFA from the euro to give Senegal greater flexibility and macro-economic options. Fiscal independence would allow banks to provide loans, shifting dependence on ill-gotten gains. However, this is not a complete solution to the money laundering problem.

Key Takeaways

  • Senegal’s presence on the FATF grey list indicates slow progress in combating financial crime.
  • Lack of technical expertise and limited judicial system hinder efforts to combat financial crime.
  • Widespread use of cash, informal sector, and tied local currency (CFA) to the euro enable money laundering.
  • Delinking CFA from the euro could provide greater flexibility and macro-economic options.