Financial Crime World

Senegal Entangled in Complex Web of Drugs, Real Estate, and Money Laundering: ISS Africa Investigates

Subtitle

  • As the Financial Action Task Force eyes Senegal’s grey list status, uncovering the roots of illicit activities could herald significant economic gains

Introduction

Dakar, Senegal - Senegal’s vibrant economic landscape belies a complex and interconnected network of drugs, real estate, and money laundering that has attracted international scrutiny. The Financial Action Task Force (FATF), an intergovernmental body dedicated to combating money laundering and terrorist financing, has identified Senegal’s non-compliance with several recommendations to prevent and mitigate these risks, leading the country to be placed on the grey list. In this article, we delve into the nexus of drugs, real estate, and money laundering in Senegal and explore potential solutions.

The Nexus of Drugs and Money Laundering

  1. Drug smuggling and money laundering
  • Senegal’s borders have long served as a transit point for drug smugglers.
  • The proceeds from drug trafficking often find their way through complex networks involving real estate developers, construction firms, and other businesses.
  1. Economic consequences
  • Opaque real estate transactions make it challenging for law enforcement to trace financial flows.
  • A lack of transparency in business registration procedures creates opportunities for criminals to establish shell companies and mask illicit profits.
  • Escalating property prices and income inequality intensify the challenges faced by Senegal’s population.

FATF’s Concerns and Senegal’s Response

  1. Identified weaknesses
  • Opaque real estate transactions.
  • Lack of transparency in business registration procedures.
  1. Governmental efforts
  • Senegal passed a law in 2021 strengthening anti-money laundering measures.
  • Real estate transactions must now be conducted through regulated intermediaries.
  • Increased due diligence for both buyers and sellers.
  • Additional resources for the Financial Intelligence Unit (FIU).

Next Steps

  • Effective implementation of new measures.
  • Addressing the root causes of porous borders.
  • Improving coordination between law enforcement agencies.

Conclusion

  • The interconnected issues of drugs, real estate, and money laundering necessitate decisive action to strengthen Senegal’s regulatory framework and engage with FATF.
  • The lessons learned from Senegal’s predicament offer valuable insights for other countries dealing with similar challenges, highlighting the importance of sharing knowledge, best practices, and collaborative efforts.

About ISS Africa

The Institute for Security Studies (ISS) is a non-profit organization based in South Africa, with the main goal of enhancing human security in Africa. ISS Africa’s work includes generating knowledge, fostering debate, and promoting policy engagement to build a safer, more peaceful, and prosperous continent. Supported by various international donors, the organization has offices in Addis Ababa, Ethiopia; Dakar, Senegal; Harare, Zimbabwe; Maseru, Lesotho; and a regional center in Pretoria, South Africa.