Financial Crime World

Ghana’s Battle Against Financial Crimes: AML/CFT National Risk Assessment Revealed

Background

The global war against Money Laundering (ML) and Terrorist Financing (TF) continues to pose threats to financial systems worldwide. Criminals disguise illicit proceeds by investing in legitimate businesses through various schemes. In Ghana, a country with an estimated 3-5% ML prevalence, equivalent to about $1.5 billion Gross Domestic Product (GDP), the Financial Action Task Force (FATF) recommends a comprehensive approach to assess ML/TF risks at the national level.

  • FATF Recommendation: The FATF’s 40 recommendations (Revised 2012) emphasize the importance of a comprehensive national risk assessment to evaluate the level of vulnerability to ML/TF.
  • GIABA’s Directive: In 2014, the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) directed all members to undergo National Risk Assessments (NRAs) before the second round of Mutual Evaluation (ME) commenced.

Objective and Scope

The primary objectives of Ghana’s NRA review were:

  1. To evaluate the level of vulnerability to ML/TF, considering new threats, actions taken, and measures put in place to address the economic and financial sectors.
  2. To determine the best allocation of resources for preventing, investigating, and prosecuting ML and TF.

Methodology

The NRA involved eight Working Groups utilizing the World Bank’s Risk Assessment tool. Relevant government agencies, regulatory bodies, and the private sector representatives were involved in the drafting process. The report encompassed an analysis of the current ML/TF risks, identifying and evaluating threats, vulnerabilities, and their impact on the country.

ML/TF Threat Assessment

Threats

The most prevalent ML/TF crimes in Ghana include:

  1. Fraud and bribery
  2. Drug trafficking
  3. Human trafficking and migrant smuggling
  4. Tax evasion
  5. Robbery

Specific Threats to Critical Sectors

  • Cocoa: Fraud and bribery pose significant threats to the cocoa sector.
  • Hotels: Fraud and bribery also affect the hotel sector.
  • Mining and Extractive Industry: Fraud and bribery can compromise these industries.

Vulnerability Assessment

The assessment focused on 24 areas of potential ML/TF vulnerability, including:

  1. Legislation
  2. Law enforcement
  3. Financial institutions

Capacity and Effectiveness of the Judiciary

  • Asset Forfeiture: The effectiveness of asset forfeiture mechanisms was evaluated.
  • International Cooperation: International cooperation was also considered.

Banking Sector

The assessment recognized the tremendous growth of Ghana’s cash-based economy, with the emergence of many microfinance institutions, mobile money services, and investment companies. This development made the financial system vulnerable to ML/TF risks.

Conclusion

Ghanaian authorities have taken proactive steps to address gaps identified in previous evaluations, such as the lack of sector-specific guidelines, the absence of an administrative sanctions regime, and the need for updated legislation. The current NRA report highlights the risks and vulnerabilities of newly assessed sectors, including cocoa, hotels, mining, and extractive industries. Continuous efforts are necessary to mitigate ML/TF risks and maintain a robust financial system in Ghana.

For detailed recommendations and conclusions, please refer to Ghana’s National Risk Assessment report.

References

  1. FATF, 40 Recommendations, Revised 2012, FATF, Paris, p. 11.
  2. “GIABA Directs Member States to Undertake National Risk Assessments (NRAs)”, 8th Plenary session, Niamey, Niger, May 2014.
  3. GIABA, “National Risk Assessment - Ghana, 2016”, National Security Council Secretariat, Accra, 2016, p. v.
  4. Ibid., p. vi.
  5. Ibid., p. 1.
  6. Chapter 1, Threat Assessment Analysis, p. 1-4.
  7. Chapter 1, Threat Assessment Analysis, Fraud, p. 2-3; Chapter 1, Threat Assessment Analysis, Bribery and Corruption, p. 3-4; Chapter 1, Threat Assessment Analysis, Cocoa Sector, p. 4-5; Chapter 1, Threat Assessment Analysis, Hotel Sector, p. 5-6; Chapter 1, Threat Assessment Analysis, Extractive and Petroleum Sectors, p. 6.
  8. Chapter 1, Threat Assessment Analysis, Drug Trafficking, p. 8-9; Chapter 1, Threat Assessment Analysis, Robbery, p. 9-10.
  9. Chapter 2, National Vulnerability Assessment, p. 12-19.
  10. Chapter 2, National Vulnerability Assessment, Asset Forfeiture, p. 16-17; Chapter 2, National Vulnerability Assessment, International Cooperation, p. 19.
  11. Chapter 2, National Vulnerability Assessment, pp. 12-19.
  12. Chapter 3, Banking Sector, p. 30-39.
  13. Chapter 3, Banking Sector, p. 39.
  14. Chapter 1, Introduction, p. 4.
  15. Chapter 1, Introduction, p. 4-5.