Financial Crime World

Malagasy Financial System Fails to Combat Money Laundering and Terrorist Financing

A recent assessment by a mutual evaluation team has revealed that Madagascar’s financial system is woefully inadequate in combating money laundering and terrorist financing (ML/TF). Despite being aware of the risks, many financial and non-financial sector actors have failed to take necessary measures to prevent ML/TF activities.

Lack of Knowledge and Understanding

  • Most private sector actors lack knowledge and understanding of ML/TF risks.
  • This is perpetuated by a lack of awareness about the AML Law.
  • Many entities fail to implement adequate measures to prevent ML/TF activities due to this lack of understanding.

Weak Supervision

  • Supervisory authorities have been criticized for their inadequate supervision of financial institutions and designated non-financial businesses and professions (DNFBPs).
  • The report found that supervisors fail to verify the truthfulness of documents submitted by institutions.
  • There is a lack of obligation to conduct character background checks.

Limited Transparency

  • The Trade and Companies Registry has been found to be opaque, with limited information available on company managers and beneficial owners.
  • This makes it difficult for authorities to track ML/TF activities.

International Cooperation

  • International cooperation in AML/CFT is extremely limited in Madagascar, with only a few bilateral agreements signed with foreign countries.
  • The report highlights the need for a more effective legal framework and case management system to track international cases of ML/TF.

Priorities

  • Strengthening public administration
  • Fighting against informality in the private sector
  • Implementing a global strategy based on the mobilization of actors involved in AML/CFT

Conclusion

The report highlights the urgent need for Madagascar to strengthen its AML/CFT regime to meet international standards and prevent ML/TF activities. The implementation of these recommendations is crucial to better respond to the expectations of the international community and further integrate the domestic financial market into the international financial markets.