Financial Crime World

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Madagascar Financial Institutions Under Scrutiny: Risk Assessment Reveals Mixed Results

A recent risk assessment by financial authorities has revealed a mixed bag of compliance and non-compliance by Madagascan financial institutions with international anti-money laundering (AML) and combating the financing of terrorism (CFT) standards.

Areas Requiring Improvement

According to the report, several key areas require improvement:

  • Confiscation and Provisional Measures: There are concerns about the country’s ability to confiscate assets and apply provisional measures.
  • Terrorist Financing Offence: The report highlights the need for improvements in prosecuting terrorist financing offences.
  • Non-Profit Organisations: The country’s oversight of non-profit organisations’ activities requires greater scrutiny.

Compliance Ratings

The report found that Madagascan financial institutions were mostly partially compliant, with only a few areas demonstrating full compliance:

  • Financial Institution Secrecy Laws: The country’s laws are deemed fully compliant.
  • Customer Due Diligence and Record Keeping: These aspects are considered largely compliant.
  • Other Areas: Most other areas require improvement.

Recommendations for Improvement

The report highlights several areas where improvements are needed, including:

  • Regulation and Supervision of Financial Institutions: The country’s regulatory framework needs strengthening.
  • Powers of Supervisors: Supervisory bodies’ powers need to be enhanced.
  • Transparency and Beneficial Ownership of Legal Persons and Arrangements: The country must improve transparency in the ownership structure of legal entities and arrangements.
  • Handling of Suspicious Transactions: The report highlights concerns about the country’s ability to effectively handle suspicious transactions.

Way Forward

Despite these challenges, the Madagascan government has committed to implementing necessary reforms to improve the country’s AML/CFT framework. The report provides valuable insights into areas where improvement is needed. With continued efforts to address identified weaknesses, Madagascar can improve its reputation and reduce the risks associated with financial crime.

Overall, while there are areas for concern, the report suggests that Madagascan financial institutions have made progress in implementing AML/CFT standards. With sustained efforts, the country can achieve greater compliance and reduce the risks associated with financial crime.