Financial Crime World

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Madagascar’s Financial Institutions Under Scrutiny: Risk Management Concerns Emerge

As part of its ongoing efforts to combat financial crimes, Madagascar has been evaluated by international experts on its compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. The results are mixed, with some areas showing significant progress while others raise concerns.

Areas of Progress

According to the latest report, Madagascar’s follow-up evaluation in 2023 highlighted several areas where the country has made notable strides:

  • Assessing risk and applying a risk-based approach
  • National cooperation and coordination
  • Targeted financial sanctions related to terrorism and terrorist financing

These ratings earned the country “largely compliant” marks.

Areas Requiring Attention

However, other areas require attention, with Madagascar scoring “partially compliant” or “non-compliant” in several key categories:

  • Confiscation and provisional measures
  • Terrorist financing offence
  • Transparency and beneficial ownership of legal persons and arrangements

The report also highlights concerns around financial institution secrecy laws, customer due diligence, record keeping, and the regulation and supervision of financial institutions and designated non-financial businesses and professions (DNFBPs).

Specific Ratings

Madagascar received a “compliant” score for:

  • Financial intelligence units
  • Powers of supervisors
  • Responsibilities of law enforcement and investigative authorities

However, it was marked as “non-compliant” in several areas, including:

  • DNFBP customer due diligence
  • Transparency and beneficial ownership of legal persons and arrangements
  • Regulation and supervision of DNFBPs

Importance of Effective Risk Management Practices

The evaluation emphasizes the importance of effective risk management practices for financial institutions operating in Madagascar to prevent money laundering and terrorist financing. The country’s financial sector must prioritize implementing robust measures to identify and mitigate potential risks.

Conclusion

While Madagascar has made progress in some areas, there is still work to be done to ensure that its financial institutions are adequately protected against the threats of money laundering and terrorist financing.