Financial Crime World

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Senegal’s Financial Crime Cases in the News

Country’s Efforts to Combat Financial Crime Marred by FATF Grey Listing

Senegal has been included on the Financial Action Task Force (FATF) grey list, a move that reflects the country’s failure to fully comply with international standards against money laundering, terrorism, and proliferation financing.

Money Laundering and Terrorist Financing Risks

According to the FATF, Senegal is currently ranked eighth in the world for money laundering and terrorist financing risks. The main driver of this problem is drug trafficking, which generates nearly US$360 million annually. Drug traffickers use various methods to launder their money, with real estate and construction being preferred industries due to their flexibility.

Lack of Central Registry and Fake Names

The lack of a central registry and the use of fake names by investors provides cover for those moving illicit funds into the legitimate economy. In 2013, it was estimated that about 96% of US$480 million invested in the real estate sector came from dubious origins.

Cash from Drug Trade Boosts Construction

Cash from the drug trade has also boosted construction across the country and in coastal cities such as Dakar, Saly, and Mbour. Some large building projects are suspected of being financed via the illicit trade, including Akon City, a mega-project bankrolled by American-Senegalese singer Akon.

Challenges to Combating Money Laundering

Despite Senegal’s pledge to collaborate with international organizations to tackle money laundering, progress has been slow. The country’s legal and institutional framework is in place, but some provisions have yet to be fully implemented.

  • Lack of technical expertise to train financial business employees
  • Widespread use of cash
  • Judicial system limitations, making it difficult to prosecute financial crimes

Need for Greater Cooperation and Reform

Senegal’s current financial public policy may even indirectly nurture these illicit money flows. The country’s lack of control over its local currency, the Communauté Financière Africaine (CFA), means that authorities are caught in a vicious cycle.

Experts say that delinking the CFA from the euro would give more flexibility and macro-economic options for Senegal, especially regarding fiscal and monetary policies. This could help shift the current pattern of dependence on ill-gotten gains.

Conclusion

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In conclusion, Senegal’s financial crime cases highlight the need for greater cooperation with international organizations to combat money laundering and terrorist financing. The country must also address its technical expertise gaps, judicial system limitations, and lack of control over its local currency to effectively tackle these issues.