Rwanda’s Fight Against Money Laundering and Terrorist Financing: Strengthening the System

A recent report by the International Monetary Fund (IMF) as part of its Financial Sector Assessment Program (FSAP) has highlighted the progress made by Rwanda in establishing a national anti-money laundering and combating the financing of terrorism (AML/CFT) framework. However, the report also identifies areas where the system can be strengthened to better prevent and detect money laundering and terrorist financing.

Key Findings

The report notes that while Rwanda has taken significant steps to establish an AML/CFT framework, there is a need for greater awareness among relevant authorities and reporting entities about the prevention and detection of these crimes. The country’s financial sector is small and dominated by banks, but further action is needed to bolster the legal framework, improve its implementation, and strengthen overall supervision.

Recommendations

To strengthen Rwanda’s AML/CFT system, the report recommends:

Enhance awareness: Conduct training programs for relevant authorities and reporting entities on the prevention and detection of money laundering and terrorist financing.
Strengthen legal framework: Clarify and enhance the legal provisions related to money laundering and terrorist financing, including the definition of a prior conviction for predicate offenses.
Improve seizure and confiscation procedures: Ensure that seizure and confiscation procedures are used in practice, and protect the rights of bona fide third parties.
Enhance legal framework against terrorism: Strengthen the legal framework to fight against terrorism and its financing, including measures to freeze without delay funds or other assets of terrorists.
Strengthen authorities competent in AML/CFT analysis and investigation: Enhance the operational independence and powers of the Financial Intelligence Unit (FIU) and relevant law enforcement agencies.
Improve preventive measures for financial institutions: Strengthen customer due diligence requirements, internal controls, and reporting obligations for financial institutions.
Enhance AML/CFT supervision: Conduct regular inspections and provide guidance to financial institutions on AML/CFT compliance.

Conclusion

Rwanda has made significant progress in establishing an AML/CFT framework, but there are areas where the system can be strengthened to better prevent and detect money laundering and terrorist financing. By implementing these recommendations, Rwanda can enhance its ability to combat these crimes and protect its financial system.