Sierra Leone’s Battle Against Financial Crimes: A New Report Unveils Money Laundering and Terrorism Financing Risks
In a significant step forward for enhancing its financial crime prevention efforts, Sierra Leone has published its first ever National Money Laundering and Terrorism Financing Risk Assessment (NMLTFRA) report. This publication is a milestone in the country’s commitment to strengthening its anti-money laundering and combating the financing of terrorism (AML/CFT) regime.
National Money Laundering and Terrorism Financing Risk Assessment (NMLTFRA)
Resulting from extensive consultations and collaboration between various stakeholders, including the Financial Intelligence Unit (FIU), law enforcement agencies, regulatory bodies, the private sector, and international organizations such as the World Bank, this report assesses money laundering (ML) and terrorism financing (TF) risks in Sierra Leone and provides recommendations to mitigate these risks.
Objective & Importance
According to the Minister of Finance and Economic Development, Hon. Momodu Kargbo, the NMLTFRA plays a crucial role in enabling the identification, assessment, and understanding of the vulnerabilities of different sectors to ML/TF risks. By providing guidance on how to effectively address these vulnerabilities, the report paves the way for a more robust and risk-based AML/CFT framework in the country.
Sectors with High Vulnerabilities
The NMLTFRA identifies several sectors with high vulnerabilities to ML/TF risks, including designated non-financial businesses and professions (DNFBPs) such as:
- Real estate agents
- Casinos
- Dealers in precious stones and metals
- Automobiles
For these sectors, the assessment reveals ‘very high’ levels of vulnerability to ML/TF transactions due to the lack of adequate AML/CFT control measures. other sectors like financial inclusion products and services, foreign exchange bureaus, remittance providers, and community banks, also exhibit varying degrees of vulnerability to ML/TF risks.
Predicate Offenses & Associated Risks
The assessment highlights significant vulnerabilities to ML and TF associated with:
- Bribery and Corruption
- Drug trafficking
- Fraud
The overall threat of ML from these offenses was rated as medium-high. On the other hand, the assessment revealed a low threat level of TF in Sierra Leone due to the robust legal provisions criminalizing the financing of terrorism.
Addressing Capacity Gaps & Key Measures
The report also underscores the need for addressing capacity gaps in law enforcement agencies and supervisory bodies, reviewing the AML/CFT Act 2012 and Regulations, and extending AML/CFT controls to other financial institutions and DNFBPs as key measures to mitigate ML/TF risks.
Next Steps
The next steps for Sierra Leone include using the findings of the NMLTFRA to develop a national strategy on AML/CFT, implementing the recommendations, and collaborating with international partners to strengthen its AML/CFT regime.
The second round of mutual evaluation by the Financial Action Task Force (FATF) is scheduled for 2019, and the NMLTFRA will serve as an essential input for this assessment.