Financial Crime World

Senegal’s Battle Against Financial Crime: Drugs, Real Estate, and Money Laundering

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Senegal, a West African country known for its rich cultural heritage and tourism industry, has found itself on the Financial Action Task Force (FATF) gray list. The FATF is an inter-governmental organization that sets global standards for combatting money laundering, terrorist financing and other related threats to the integrity of the international financial system. This designation has raised concerns about Senegal’s vulnerability to financial crimes and the potential implications for its economy. In this article, we delve into the country’s struggle against illicit financial activities.

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Senegal’s Financial Crimes Concerns

Senegal, a country that has long been praised for its stability in a region often plagued by conflict, has seen a surge in financial crimes. According to a report by the global risk consulting firm, Risk Advisory, Senegal faces significant risks in the areas of money laundering, particularly due to its proximity to major drug-producing countries in Latin America and its position as a transit point for illegal drugs destined for Europe.

Drugs and financing connections

The illegal drug trade in Senegal has been a significant concern for several years. In 2018, the United Nations Office on Drugs and Crime (UNODC) reported that Senegal seized almost 5 tons of cocaine and heroin that year. While this figure may seem impressive, it is a mere fraction of the estimated 35 tons of drugs that enter the continent annually. This illicit trade not only poses health risks to the local population but also fuels the country’s financial crimes.

  • In 2019, UNODC reported that West and Central Africa had become a major hub for cocaine trafficking from South America to Europe.
  • According to the United States Department of State, Senegal is used as a transshipment point for narcotics produced in South America.

Real estate and money laundering

Real estate has proven to be an attractive vehicle for money laundering in Senegal. The high demand for real estate, especially in Dakar, the capital city, has led to the proliferation of underreported and untaxed transactions in the real estate sector.

  • According to the Global Financial Integrity (GFI) report, Senegal lost around $1.3 billion through illicit financial flows between 2005 and 2014.
  • Real estate transactions were identified as one of the primary channels for such outflows.

Joining FATF’s grey list

Being placed on the FATF grey list does not imply that a country is a “bad actor,” but it does signal that there are lingering concerns about its AML/CTF regime.

  • In January 2021, Senegal signed a memorandum of understanding (MOU) with FATF.
  • The MOU outlines numerous recommendations for Senegal to strengthen its AML/CTF framework.

Moving forward

The future of Senegal’s economy is closely linked to its ability to effectively address financial crimes. As Senegal works to implement the FATF’s recommendations, it will face challenges in enforcing stricter regulations on its financial sector, addressing corruption, and improving transparency.

Conclusion

While Senegal is known for its rich cultural heritage and tourism industry, its vulnerability to financial crimes, particularly in the areas of drugs, real estate, and money laundering, presents a significant challenge to its economy. By taking bold steps to address these issues and fulfilling the recommendations of the Financial Action Task Force, Senegal can build a more secure and prosperous future for its people.