Financial Crime World

Sierra Leone’s Strides in Combating Money Laundering and Financing of Terrorism and Prohibited Weapons: A GIABA Evaluation

In July 2019, the Economic Community of West African States’s Inter-Governmental Action Group Against Money Laundering, Criminality and Terrorism Financing (GIABA) conducted an evaluation of Sierra Leone’s regulatory framework, enforcement, and technical standards for combating money laundering and terrorist financing. This article outlines the significant strides made by the West African nation in meeting the Financial Action Task Force (FATF) 40 recommendations.

Positive Developments in Sierra Leone’s AML/CFT Regime

The latest FATF mutual evaluation report, released in November 2020, identified several positive developments in Sierra Leone’s approach to combating financial crimes. These include:

  • Strengthening of the legal framework: The Central Bank of Sierra Leone (CBSL) has introduced several legislative amendments, such as the Financial Institutions Supervision Act 2018 and the Banks Act 2018, which significantly enhance the regulatory powers and penalties for non-compliance.
  • Customer due diligence measures: Improvements in customer due diligence measures have been noted, and Sierra Leone continues to take steps to address deficiencies in this area.
  • Enhanced international cooperation: There have been ongoing efforts to improve international cooperation in the fight against money laundering and terrorist financing.

Progress in Meeting FATF Recommendations

Sierra Leone has made considerable progress in implementing specific FATF recommendations. The report highlights the following accomplishments:

  • Establishment of a Financial Intelligence Unit (FIU): The country has established an FIU and introduced a Suspicious Transaction Reporting (STR) regime.
  • Collaborative efforts: The CBSL and the Financial Secretariat are collaborating closely to ensure that the FIU functions effectively.

Challenges and Recommendations

Despite these advancements, the report identified several challenges that require further attention:

  • Real estate sector and non-financial businesses: The AML/CFT framework should be more effective in addressing money laundering risks in the real estate sector and non-financial businesses and professions.
  • Raising awareness: Continued efforts are needed to raise awareness among financial institutions and the business community about the need to comply with AML/CFT measures.
  • Regulatory and supervisory frameworks for non-bank financial institutions: There is a need for improvements in the regulatory and supervisory frameworks for administered and other non-bank financial institutions. Recommendations include establishing a regulatory body for these institutions and developing a risk-based AML/CFT supervisory approach.

Conclusion

The report underscores Sierra Leone’s commitment to strengthening its AML/CFT regime and enhancing its capacity to combat money laundering and terrorist financing. The recommendations provide a roadmap for further improvements, including addressing emerging risks, enhancing coordination, and establishing effective regulatory frameworks for non-bank financial institutions. These steps are essential in Sierra Leone’s ongoing efforts to build a robust and resilient financial system and protect its citizens from financial crimes.