Financial Crime World

Title: Liberia’s Anti-Financial Crime Landscape: Progress and Challenges

Post-Conflict Recovery and Financial Institutions in Liberia

The West African nation of Liberia has been making strides towards financial recovery and combating financial crimes since the post-conflict period. In 2011, a Mutual Evaluation Report (MER) by the West Africa Monetary Institute (GIABA) highlighted significant shortcomings, primarily the absence of comprehensive anti-money laundering (AML) legislation and a Financial Intelligence Unit (FIU).

MER Evaluations and Liberia’s Progress

  • May 2011: Liberia was classified as Partially Compliant (PC) with 22 Recommendations and non-compliant (NC) with 27 Recommendations, placing them on the Expedited Regular follow-up process.
  • 2016: Despite some progress, Liberia failed to rectify certain strategic deficiencies and was stepped up to the Enhanced Follow Up process.
  • Late 2017: Under international pressure, Liberia regained GIABA’s trust and returned to the Expedited Follow Up process.
  • Upcoming late 2023: Preparations for a second MER evaluation have begun.

Heightened Money Laundering Risks in Liberia

With prevalent corruption, illicit drug trafficking, tax evasion, human trafficking, smuggling, counterfeit products, and a large cash-based economy, Liberia faces significant risks of money laundering. Banks and designated non-financial businesses and professions (DNFBPs) are particularly vulnerable sectors.

Areas of Concern Based on National Risk Assessment

  1. New technologies: Virtual assets and virtual asset service providers
  2. DNFBPs: Customer Due Diligence and other measures
  3. Transparency and beneficial ownership: Legal persons and arrangements
  4. Regulation and supervision: Financial Institutions and DNFBPs
  5. Sanctions: Non-compliance with national AML/CFCR requirements

Persisting Deficiencies in Liberia’s AML/CFT Regime

Despite improvements in Liberia’s technical compliance with FATF Recommendations, several deficiencies remain:

  • Low effectivity ratings: Confiscation, terrorism financing (TF) investigation and prosecution, ML investigation and prosecution, and prevention of NPO misuse for TF purposes
  • Regulatory gaps: Risk-assessment for DNFBPs supervision and financial intelligence unit support

Targeting Existing Gaps in Liberia’s Financial Crime Regime

To address these gaps, Liberia requires:

  • Improved dissemination: ML/TF risk assessments
  • Risk-based supervision: High- and medium-risk DNFBPs
  • Financial and technical resources: Financial Intelligence Agency
  • Measures for enforcing confiscation: Use of unexplained wealth orders
  • Improved TF investigation and prosecution: Coordination between law enforcement agencies

Key Challenges for Enhancing Liberia’s AML/CFT Regime

Liberia has made progress, but faces challenges in further strengthening its AML/CFT regime. Effective actions in targeted areas could lead to a favorable evaluation in June 2023.