The fight against money laundering must focus on mobile money – GIABA

Company News from Monday 1st April 2019

Source: citibusinessnews.com

2019-04-01

GIABA, an intergovernmental action group against money laundering, urges Ghana to adopt new and modern methods to combat illicit money transfers in order to combat criminal offenses related to money laundering.

The group is calling for a redesign of new money transfer methods, including mobile money, in several countries in the West African subregion to quickly detect money laundering.

GIABA's Executive Director, Kimelabalou Aba, provides some explanation in the questions and answers below.

Q. How has financial crime evolved in West Africa in recent years?

Answer: Criminal methods evolve in response to a number of factors, including advances in technology and communications. For example, although technological breakthroughs are revolutionizing the service delivery process in the financial and DNFBP sectors, with a positive impact on the access and delivery of financial services to clients, it has also created new opportunities for criminals facing new criminal trends such as cybercrime (Internet fraud). , theft of identity, theft of credit card accounts, etc.). This, coupled with existing vulnerabilities in the Member States, such as weak institutional capacity, the large informal economy, the preponderance of cash transactions and porous borders have worsened the criminal climate in the region and opened new avenues for financial crimes. . Overall, the improved application of anti-money laundering (AML) measures in the financial sector is shifting criminal activity, especially money laundering, to the business and non-financial professions sector (DNFBP) ) appointed due to poor compliance with AML measures and lack of supervision.

Over the years, Member States have made efforts to implement robust AML / CFT measures, including the establishment and / or strengthening of frameworks (legal, regulatory and institutional), regulatory measures and repression that helped control financial crime. The effectiveness and impact of these actions on the level of financial crime have not yet reached the desired level. To move forward, Member States should implement effective measures to combat money laundering, including by investing more in the prevention, detection and disruption of financial crimes. Specifically, it will include improving the capacity of the institutions involved, effectively monitoring and supervising the reporting institutions, strengthening inter-agency and international cooperation and, most importantly, strengthening the political will to conduct it. .

Q. What is the impact on West African economies? What are the sectors most affected by money laundering?

Answer: Its effects on regional economies are devastating and affect socio-economic and political spheres. They include sudden inflows and outflows of illicit funds – which can lead to macroeconomic distortions; loss of government revenue for criminals through corruption, fraud, tax evasion, etc., thus depriving governments of the financial resources needed to invest in public goods such as health, education and infrastructure. It also contributes to poverty, increasing unemployment and its negative consequences, confers a negative national image (perception index of corruption, for example), with a negative impact on international economic relations.

Today, the regional compliance environment has progressed significantly through GIABA's activities in the areas of technical support, mutual evaluation / compliance monitoring, and research / typology studies. In particular, with the support of GIABA, Member States have put in place relevant legal and institutional frameworks to address the technical shortcomings identified in their AML / CFT systems.

The country reports submitted to GIABA in 2017 and 2018 by Member States generally indicate that the designated sector of non-financial businesses and professions (DNFBPs), especially real estate agents, is the most affected by money laundering in relation to the sector. financial. This may be due in large part to improvements in the implementation of anti-money laundering measures by financial institutions.

Q. To what extent has the rise of mobile money promoted money laundering in the world?
sub-region?

Answer: Mobile money services in West Africa have evolved rapidly in recent years, largely due to the expansion of mobile networks to underserved communities, the increased affordability of services and the availability of mobile phones. cost of appliances; government policy of financial inclusion and deliberate efforts to reduce cash transactions as part of anti-money laundering measures. In addition to point-to-point transfers in the country, some mobile money operators offer international remittances as well as other products and services. The nature of the services / products provided makes them vulnerable to abuse or risk of money laundering / financing of terrorism. Conscious of this fact, Member States have put in place regulations and subject operators of the sector to the AML / CFT regime, with the obligation to implement a wide range of measures, such as vigilance at the same time. With respect to customers, while checking their compliance. It is also important to mention that some of the mitigation measures in place include low transaction values ​​(a cap that can limit the amounts that can be laundered). For example, in francophone countries, there is a daily transfer limit of 200,000 FCFA. Anything above this requirement will require authorization and a higher degree of due diligence.

Despite the vulnerabilities, there is currently no evidence of money laundering through mobile money systems. Although some Member States, such as Liberia and Senegal, have received suspicious transaction reports from mobile financial services operators, it has not been available until now. no evidence or reported cases of such agents in money laundering. Overall, Member States have acknowledged the vulnerabilities but do not think that rising mobile money promotes money laundering in their country. On the country, the rise in mobile money has instead improved access to formal financial services in the region and has notably helped to strengthen financial inclusion with a positive impact on the regional AML regime. / FT compared to species. Other economic contributions include job creation, poverty reduction, public financing through taxes, and the stimulation of trade and commerce between several countries through cross-border money transfers through some of the operators.

Q. What are GIABA's priorities in the fight against money laundering in the context of mobile money transactions?

Answer: While the direct responsibility for the fight against money laundering in the context of mobile money transactions rests with the Member States, GIABA's priority will be to conduct a typological study on the misuse of money transactions. mobile for the purpose of money laundering. the necessary interventions and support, including capacity building for relevant regulators and mobile money operators, and collaboration with national authorities to strengthen or develop appropriate legal and regulatory frameworks.