Financial Crime World

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ML/TF Risks in Central African Republic: A Brewing Storm

The Central African Republic (CAR) is facing a perfect storm of money laundering (ML) and terrorist financing (TF) risks, exacerbated by the country’s political instability, fragile security situation, and lack of expertise among investigative and prosecuting authorities.

Money Laundering and Terrorist Financing Risks on the Rise

According to a recent evaluation, ML/TF cases arising from predicate offenses are on the rise in CAR, largely due to the absence of an anti-money laundering and combating the financing of terrorism (AML/CFT) criminal policy. The investigative and prosecuting authorities have failed to identify or locate assets that may be seized and confiscated as part of their investigations into underlying money laundering offenses.

Lack of Expertise and Training

Moreover, no case of terrorist financing has been prosecuted in CAR, despite the presence of armed groups on Central African territory. The country’s security situation remains fragile, with periods of political instability interspersed with episodes of armed conflict.

Shortcomings in Control and Supervision System

The evaluation also highlighted shortcomings in the control and supervision system for financial institutions and designated non-financial businesses and professions (DNFBPs) in CAR. Supervisors of financial institutions carry out generally satisfactory due diligence, but the system for identifying beneficial owners is weak.

  • No competent authorities designated to monitor non-compliance with AML/CFT obligations in respect of DNFBPs as a whole.
  • Country’s control functions to prevent the exploitation of various entities subject to AML/CFT regulations for ML/TF purposes are inadequate.

Lack of Transparency

Furthermore, there is no transparency of legal entities and arrangements in CAR, which makes it difficult to track suspicious transactions and identify potential money laundering and terrorist financing activities.

International Cooperation Deficient

In addition, CAR has not requested or granted international cooperation in matters of mutual legal assistance and extradition in the field of AML/CFT. The country’s central authority and directorate in charge of mutual assistance and extradition have been set up, but there is no centralized system for archiving and managing files.

Recommendations

To address the ML/TF risks in CAR, it is recommended that:

  • The government of CAR develops a comprehensive AML/CFT policy and strategy
  • The investigative and prosecuting authorities are provided with training and resources to effectively investigate and prosecute ML/TF cases
  • The country’s control and supervision system for financial institutions and DNFBPs is strengthened
  • Transparency measures are put in place to ensure the authenticity of information on legal entities and arrangements
  • International cooperation is increased through mutual legal assistance and extradition agreements
  • The central authority and directorate in charge of mutual assistance and extradition are strengthened

By addressing these risks, CAR can reduce its vulnerability to ML/TF activities and promote a more stable and secure environment for economic development.