Financial Crime World

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Mozambique’s Financial Sector Under Scrutiny: Assessment Reveals High Risk of Money Laundering and Terrorism Financing

A recent assessment by the Banco de Moçambique, Mozambique’s central bank, has identified significant vulnerabilities in the country’s financial sector, highlighting a high risk of money laundering (ML) and terrorism financing (TF).

Assessment Highlights

The assessment evaluated various sectors including banking, mobile money institutions, exchange offices, and microcredit operators. The report revealed that many financial institutions are not adequately equipped to prevent ML and TF. Factors contributing to this vulnerability include:

  • Inadequate employee training
  • Ineffective compliance functions
  • Insufficient monitoring of suspicious transactions

Sector-Specific Risks

Banking Sector: Medium-High Risk

The banking sector was found to be at medium-high risk, with a high threat level and medium vulnerability level. This is attributed to:

  • Large size of the sector
  • Significant value of operations
  • Presence of ML/FTP risks in standard customer profiles

Mobile Money Institutions: High Risk

Mobile money institutions were found to be at high risk due to their high threat level and medium-high vulnerability level. This is partly attributed to:

  • Ease with which these institutions can facilitate anonymous transactions

Exchange Offices: Low Risk

In contrast, exchange offices were found to have a low average vulnerability level, resulting in a low overall risk rating.

Microcredit Operators: Medium Risk

Microcredit operators, while considered at medium risk, still require attention from regulatory bodies due to their relatively high threat level and low average vulnerability level.

Recommendations

The assessment recommends several priorities for financial institutions:

  • Employee training
  • Ensuring the effectiveness of compliance functions
  • Monitoring suspicious transactions

Additionally, the Banco de Moçambique is advised to:

  • Increase inspections
  • Conduct awareness-raising activities with financial institutions to promote regulation compliance

Conclusion

This report serves as a wake-up call for Mozambique’s financial sector, emphasizing the need for strengthened controls and increased vigilance in preventing ML and TF.