Financial Crime World

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

Subtitle: An in-depth look at how Senegal’s economy is being affected by illicit financial flows and what the country is doing to get off the grey list

[Dateline, Dakar]

Senegal, a member of the Financial Action Task Force (FATF) grey list since 2010, is grappling with rising economic challenges caused, in part, by illicit financial flows. The country’s vulnerability to money laundering and terrorist financing remains a major concern and continues to hinder economic development.

Illicit Drug Trade and West Africa as a Hub for Drug Trafficking and Money Laundering

  1. Senegal as a Transit Country: Senegal is a significant transit country for illicit drugs, including cocaine, heroin, and cannabis.
  2. Losses due to Illicit Financial Flows: An estimated $67 billion is lost annually in the West African region due to illicit financial flows.
  3. UNODC’s Report: According to the United Nations Office on Drugs and Crime (UNODC), West Africa is a major hub for drug trafficking and money laundering.

Real Estate as an Attractive Target for Money Laundering

  1. Rapid Growth: Senegal’s real estate market, particularly in the capital city of Dakar, has seen rapid growth in recent years.
  2. Lack of Transparency and Regulation: The lack of transparency and regulation in the real estate sector presents a significant challenge.
  3. Cash Transactions: Many properties are reportedly being bought using cash, which makes it difficult to trace the origin of the funds.

Money Laundering and Criminal Activities

  1. Strategic Deficiencies: The FATF has identified significant challenges in Senegal’s anti-money laundering and counter-terrorism financing (AML/CFT) framework.
  2. Illicit Proceeds: The illicit proceeds of drugs and real estate have been used to fund other criminal activities and organized crime.

Steps to Combat Financial Crimes in Senegal

  1. New Regulations: Senegal has implemented new regulations aimed at strengthening the real estate sector.
  2. Central Register: The establishment of a central register of beneficial owners and the requirement for real estate transactions to be recorded electronically.
  3. Anti-Corruption Agency: The anti-corruption agency, CNL, has stepped up efforts to investigate and prosecute financial crimes.

Economic Implications of Senegal’s Presence on the FATF Grey List

  1. International Business Concerns: International financial institutions and businesses have become increasingly wary of doing business with countries on the FATF grey list, posing a significant challenge for Senegal’s economy.
  2. Long-term Economic Growth: To position itself for long-term economic growth, Senegal must address the root causes of its financial crimes and demonstrate progress in its efforts to combat money laundering and terrorist financing.