Financial Crime World

Title: Liberia’s Ongoing Battle Against Money Laundering and Terrorist Financing: A Review of the Country’s AML/CFT Measures

Introduction

Liberia, a post-conflict nation located in West Africa, has been focusing on rebuilding its institutions and infrastructure since the end of its civil war in 2003. The country has made significant strides towards political stability but continues to face challenges in implementing effective Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures.

Assessing Liberia’s AML/CFT Regime

According to a Mutual Evaluation Report from the Gandhi Institute for Development Research, Africa Region (GIABA), adopted in May 2011, Liberia exhibited considerable deficiencies in its AML/CFT regime. The country lacked an approved comprehensive anti-money laundering legislation and did not have a Financial Intelligence Unit or legal frameworks to combat the financing of terrorism.

Identified Strategic Deficiencies

As a result, Liberia was placed on the Expedited Follow-Up process in November 2016 due to its failure to address some identified strategic deficiencies. At the time of the report, Liberia was Partially Compliant (PC) with 22 Recommendations and non-compliant (NC) with 27 Recommendations.

Liberia’s Commitment

Despite facing these challenges, Liberia demonstrated a high-level commitment to address the deficiencies. The country was returned to the Expedited Follow-Up process in November 2017 and exited it in December 2020 to prepare for its second round of mutual evaluation.

Vulnerabilities and Risks

Liberia remains vulnerable to money laundering (ML) and terrorist financing (TF), as detailed in the National Risk Assessment report. The main proceeds-generating ML predicate offenses include:

  • Corruption and bribery
  • Drug and psychotropic substance trafficking
  • Tax evasion
  • Counterfeiting
  • Human trafficking and migrant smuggling
  • Counterfeiting and piracy of products
  • Robbery/theft

The informal economy, the widespread use of cash, and Liberia’s financial sector’s interconnectivity with the international financial system pose significant risks. Among the Designated Non-Financial Businesses and Professions (DNFBPs), lawyers are seen as the most susceptible to misuse for ML purposes.

Remaining Deficiencies

Although Liberia’s overall ratings and effectiveness have shown some improvement since its last mutual evaluation in 2011, notable deficiencies still persist, particularly:

  • New technologies, DNFBPs-CDD and other measures
  • Transparency and beneficial ownership
  • Regulation and supervision of Financial Institutions (FIs)
  • Regulation and supervision of DNFBPs

Strengthening Liberia’s AML/CFT System

To effectively reduce its ML and TF risks, Liberia must focus on enhancing cooperation and coordination at the policy level and address the following deficiencies:

  • Guidance and training for financial institutions and DNFBPs
  • Better tools for identifying and reporting suspicious transactions
  • Improved access to information on public officials’ assets
  • A more effective and transparent framework for confiscating proceeds of crime