Financial Crime World

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Limited Effectiveness in Combating Money Laundering and Financing of Terrorism

The Democratic Republic of Congo (DRC) faces significant risks of money laundering and financing of terrorism due to its weak financial system, lack of a reliable identification system, and widespread corruption. Despite the government’s commitment to combating these scourges, the country’s efforts have been limited in their effectiveness.

Supervisory Approach

The supervisory approach in the DRC is not based on ML/FT risks, as no study has yet been conducted to establish sectoral risks. The sanctions imposed do not relate to the AML/CT component, despite financial institutions being weak in this area.

Lack of Designated Authorities

  • The DNFBP sector lacks designated AML/CT supervisory authorities, despite high ML/FT risks due to the country’s strong informal sector and abundant cash flow.
  • ARCA, created recently, does not yet have an appropriate methodology and tools for AML/CT supervision in the insurance sector.

Limited Cooperation

The DRC has a satisfactory legal framework for mutual legal assistance and extradition, but its implementation remains very limited due to a lack of requests received and issued. While cooperation is relatively active at the level of CENAREF, it is less visible at the level of regulatory and supervisory authorities of financial institutions, customs, and police.

Risk Factors

  • The DRC’s economy is characterized by a strong informal sector, extensive use of cash, high dollarization, and widespread corruption, creating an environment conducive to crime and money laundering activities.
  • The country is also exposed to terrorism financing due to the presence of armed groups and gangs that can exploit various illicit trafficking activities.

Limited Effectiveness

The DRC has put in place an AML/CT system that is still relatively ineffective, despite the commitment of political authorities to combat these scourges. There are notable shortcomings in the implementation of certain key mechanisms, including national coordination, definition of a supervision policy emphasizing the risk-based approach, and supervision of financial institutions and DNFBPs.

Technical Compliance

  • The legal framework developed in 2004 has mostly not been updated to keep pace with developments in international standards.
  • There is a lack of resources for the Committee to Combat Money Laundering and the Financing of Terrorism (COLUB).

Operational Issues

  • CENAREF, an administrative financial intelligence unit, analyzes information that may give rise to legal proceedings for money laundering and financing of terrorism.
  • However, criminal prosecuting authorities do not make optimal use of all available data, and most cases referred to judicial authorities have not been prosecuted.

In conclusion, while the DRC has made efforts to combat money laundering and financing of terrorism, its effectiveness is limited due to various factors, including a lack of designated authorities, limited cooperation, risk factors, and operational issues. The country’s financial system remains vulnerable to these threats, and significant reforms are needed to improve its AML/CT framework.