Madagascar Financial Institutions Urged to Enhance Compliance Training Amid FATF Concerns
The Malagasy government has been advised to intensify compliance training for financial institutions in the country amid concerns raised by the Financial Action Task Force (FATF) in its recent Benin Follow-Up Report 2023.
FATF Report Highlights Areas of Concern
The report, which assesses countries’ progress in implementing anti-money laundering and combating financing of terrorism (AML/CFT) measures, identified several areas where Madagascar falls short. While the country scored largely compliant on most requirements, it was found to be partially or non-compliant in key areas such as:
- Confiscation and provisional measures
- Terrorist financing offence
- Transparency and beneficial ownership of legal persons
Specific Weaknesses Identified
The report highlighted specific weaknesses, including:
- Lack of a risk-based approach to assessing money laundering risks
- Failure to implement effective customer due diligence measures
- Inadequate regulation and supervision of financial institutions, particularly designated non-financial businesses and professions (DNFBPs)
Recommendations for Improvement
To address these concerns, Madagascar’s financial institutions have been urged to enhance their compliance training programs to ensure that employees are equipped with the necessary knowledge and skills to identify and report suspicious transactions. The government has also been advised to strengthen its regulatory framework and supervision of financial institutions to prevent money laundering and terrorist financing.
Importance of Compliance
The FATF recommendations are aimed at preventing the misuse of financial systems for illicit activities, such as money laundering, terrorist financing, and proliferation financing. Madagascar’s compliance with these standards is critical in maintaining the country’s economic stability and reputation globally.
Government Response
In response to the report, the Malagasy government has pledged to take immediate action to address the identified weaknesses and implement corrective measures to ensure full compliance with the FATF recommendations. Financial institutions have also been urged to prioritize compliance training and risk management to minimize the risk of non-compliance.
Future Developments
The country’s financial sector is expected to undergo significant changes in the coming months as it works to strengthen its AML/CFT framework and prevent illicit activities. The government has committed to providing regular updates on its progress and will work closely with international partners to ensure full compliance with global standards.
By enhancing compliance training and implementing effective risk management measures, Madagascar’s financial institutions can minimize the risk of non-compliance and maintain the country’s economic stability and reputation globally.