Financial Crime World

Ghana’s National Risk Assessment: Fortifying Financial Crimes Defenses

Ghana’s financial sector faces significant challenges from money laundering and terrorist financing (ML/TF), which can have detrimental effects on economies and global financial stability. Criminals often conceal illicit proceeds by investing in legitimate businesses through intricate schemes involving banks, non-bank financial institutions, and designated non-financial businesses and professions (DNFBPs).

Global Context

  • Around 3-5% of the global Gross Domestic Product (GDP) is laundered annually (IMF Report, 2008).
  • One-fifth of this occurs from illicit drug trade (UNODC).

Response: The FATF Recommendations

The Financial Action Task Force (FATF) has established a framework of measures to combat ML/TF, known as the FATF Recommendations. Countries must adapt these measures to their unique circumstances.

Ghana’s National Risk Assessment (NRA)

  • In 2014, the West African Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) mandated all member states to carry out NRAs before Mutual Evaluation in September 2016.
  • The NRA aims to:
    1. Identify and evaluate threats and vulnerabilities to ML/TF at the national level, focusing on Recommendation 1’s key requirements.
    2. Allocate resources effectively for countering ML/TF prevention, investigation, and prosecution.

Objectives of Ghana’s NRA Review

  1. Evaluate current vulnerability to ML/TF, considering new threats and actions since the initial assessment.
  2. Effectively allocate resources to counter ML/TF.

Methodology

  • Survey method using the World Bank’s Risk Assessment tool.
  • Led by the National Security Council Secretariat, with participation from financial regulatory bodies, law enforcement agencies, private sector, and stakeholders in eight Working Groups.
  • Employed quantitative and qualitative research methods.

Challenges

  • Limited access to data.
  • Institutional reluctance to provide information out of fear of repercussions.
  • Lack of understanding of ML/TF issues in certain sectors.
  • Inadequate Management Information Systems (MIS) to generate required data.

Threat Analysis

Common Criminal Activities

  • Fraud.
  • Bribery and corruption.
  • Drug trafficking.
  • Tax evasion.

Particularly Vulnerable Sectors

  • Extractive.
  • Petroleum.
  • Hotel.

Emerging Threat: Cybercrime

  • Medium-high overall threat rating.

Combating Threats

  • Implement comprehensive FATF Recommendations measures.
  • Strengthen regulatory and legal frameworks.
  • Improve cooperation between financial institutions and law enforcement agencies.
  • Raise awareness among private sector and general public.