Financial Crime World

MADAGASCAR: Financial Institution Customer Due Diligence Needs Improvement

A recent report by the Financial Action Task Force (FATF) has highlighted concerns over Madagascar’s implementation of customer due diligence requirements for financial institutions.

Partial Compliance with Technical Requirements

According to the report, Madagascar is partially compliant with technical requirements related to customer due diligence. The FATF recommendations aim to ensure that countries implement effective measures to prevent money laundering and terrorist financing.

Areas of Concern

Madagascar scored partially compliant in several areas, including:

  • R.10 Customer Due Diligence: Financial institutions are required to assess the risk of their customers and apply a risk-based approach.
  • R.12 Politically Exposed Persons: Financial institutions must collect and verify accurate information about their customers, including politically exposed persons.
  • R.26 Regulation and Supervision of Financial Institutions: The country’s financial authorities must ensure effective regulation and supervision of financial institutions.

However, Madagascar was found non-compliant in certain areas, such as:

  • R.8 Non-Profit Organisations: Financial institutions are required to collect and verify accurate information about their customers, including non-profit organizations.
  • R.24 Transparency and Beneficial Ownership of Legal Arrangements: The country’s financial authorities must ensure transparency and beneficial ownership of legal arrangements.

Importance of Customer Due Diligence

The report emphasizes the importance of financial institution customer due diligence in preventing money laundering and terrorist financing. Effective due diligence requires financial institutions to:

  • Assess the risk of their customers
  • Apply a risk-based approach
  • Collect and verify accurate information about their customers

Urgent Action Required

Madagascar’s financial authorities have been urged to address the deficiencies identified in the report and implement effective measures to prevent money laundering and terrorist financing. The country has until the next FATF review to demonstrate significant progress in addressing these concerns.

Accessing the Report

The full report can be accessed on the FATF website, providing a detailed assessment of Madagascar’s compliance with the FATF recommendations.