Financial Crime World

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Money Laundering in Senegal: A Growing Concern

Senegal was recently placed on the Financial Action Task Force’s (FATF) grey list of countries that do not fully comply with international standards for combating money laundering and terrorist financing. The country has been struggling to address deficiencies in its legal and institutional framework, leaving it vulnerable to illegal activities.

Money Laundering Risks

According to a recent report, Senegal is ranked eighth in the world for money laundering and terrorist financing risks. The country’s drug trafficking problem is a major contributor to this risk, with an estimated $360 million generated annually from illegal activities.

Real Estate Sector Vulnerabilities

The flexibility of Senegal’s real estate sector makes it an attractive option for money laundering, as it allows investors to conceal the financial origins of their investment and maintain anonymity. In 2011, the Observatoire français des drogues et des toxicomanies (OFDT) highlighted that drug traffickers based in Europe were using this sector to launder money by acquiring properties under fake names.

Construction Industry Implications

The construction industry is also heavily implicated in money laundering, with an estimated $120 million invested in real estate agencies by drug traffickers over the past decade. Large construction projects, such as Akon City, have raised concerns about their financing and potential links to illegal activities.

Public Policy and Banking Concerns

Senegal’s public policy has been criticized for indirectly nurturing illicit financial flows. The country’s lack of technical means to combat money laundering, including training for financial sector employees, has hindered efforts to tackle the problem. The widespread use of cash, importance of the informal sector, and inadequate judicial system also contribute to the country’s vulnerability.

Experts argue that Senegal’s banking policy is also a major enabler of illegal activities. The country’s currency, the Communauté Financière Africaine (CFA), is tied to the Euro, giving Senegal limited control over its own currency. This lack of control has led to a reliance on foreign currencies obtained and moved through informal or illegal channels.

Recommendations for Reform

To address these issues, experts recommend:

  • De-linking the CFA from the Euro, which would give Senegalese banks more flexibility to provide loans to individuals and companies.
  • Improving transparency in property ownership.
  • Reforms to prevent the perpetuation of illicit financial flows.

Conclusion

In conclusion, money laundering is a significant concern in Senegal, with drug trafficking being a major driver of illegal activities. The country must take urgent measures to address its legal and institutional deficiencies, improve transparency in property ownership, and reform its banking policy to prevent the perpetuation of illicit financial flows.