Financial Intelligence Unit report shows Liberia prone to money laundering


MONROVIA – Liberia’s Financial Intelligence Unit (FIU) has found that the risks of money laundering in the financial sector and among “Designated Non-Financial Business Professionals (DNFBP)” are high.

The finding was contained in the National Risk Assessment (NRA) report on “Money Laundering and Terrorist Financing in Liberia”.

Addressing a press conference marking the official launch of the report on Tuesday, FIU Director General Edwin W. Harris said the ENR final report, which is the first of its kind in Liberia, is on the verge of providing stakeholders and the world on the risks Liberia faces in money laundering and terrorist financing.

While the report shows that key findings from the NRA describe Liberia’s money laundering risks as high in the financial sector as well as DNFBPs, the NRA report also reveals that the risk of terrorist financing in Liberia is high. Liberia is weak.

With the completion and publication of the report, Mr. Harris said the FIU will launch an anti-money laundering policy, strategy and action plan to mitigate the risks of money laundering in Liberia. .

In line with Financial Action Task Force (FATF) ‘Recommendation 1’ 40+ recommendations that countries should identify and understand their risks, Mr Harris said the FIU will distribute over 300 hard copies of the ENR report to all stakeholders and partners in October 2021.

He said financial institutions and DNFBPs will be required to use the NRA’s Money Laundering and Terrorist Financing Report as a guide to mitigate money laundering risks in their respective industries.

He revealed that the Liberia Task Force, in the second round of mutual evaluation, will organize a range of activities, including panel discussions, public meetings and contacts with all stakeholders in the anti-regime regime. money laundering and terrorist financing in Liberia.

The report, he added, can be downloaded from major county websites, including the FIU itself, the Central Bank of Liberia (CBL), the Liberia Revenue Authority (LRA), the Executive Mansion, the Ministry of Finance and Development Planning (MFDP), the Liberia Extractive Industries Transparency Initiative (LEITI) and the General Audit Commission (GAC), among others.

Content of the report

The report named corruption and bribery, drug trafficking and tax evasion, among others, as the predicate offenses most committed in Liberia.

Extract from the report: “After a comprehensive collection and analysis of the LEA database information with the application of qualitative and quantitative research methods, the following offenses were deduced from the predicate offenses most committed in Liberia on the basis of the number of cases investigated and referred to court, the number of prosecutions and convictions, namely; Corruption and bribes, Illicit trafficking in narcotic drugs and psychotropic substances, Robbery or theft, Tax evasion, Trafficking in human beings and smuggling of migrants, Counterfeiting and pirating of products, counterfeiting of currency and terrorism, including financing terrorism.

Main conclusions

The NRA concluded that the regulatory and supervisory framework for microfinance in Liberia is not based on a comprehensive, multi-tiered risk-based approach, where microfinance institutions (MFIs) are regulated and supervised based on risk. that they present to the financial sector and consumers. Instead, the current regulatory and supervisory framework attempts to regulate and monitor uniformly by type of institution.

He added that Rural Community Financial Institutions (RCFIs) cannot meet all of the important standards set out in RCFI regulations and are distinct from MDI regulations although they have a similar line of business. .

MDIs, non-depository MFIs, RCFIs and credit unions are not subject to a tiered risk-based approach that regulates based on risk, she said.

In addition, 129 MFIs that do not take deposits are not fully regulated despite providing credit to over 21,000 consumers with loans approaching USD 10,000, and many institutions do not meet the requirements. especially in terms of report.

The NRA report also pointed out that Liberia has nine commercial banks with a network of ninety (90) branches, of which 51 are in Montserrado County.

The use of automated teller machines and points of sale (POS) also remains low, according to the report, adding that the infrastructure and limited access points provided by institutions in the formal financial sector are a major obstacle to achieving financial inclusion.

With this limited infrastructure, the report said it has been difficult to reach a highly rural population; with about 3.4 million or 75% of the Liberian population living outside Monrovia, according to a rough estimate from the IMF from 2013. “Liberia’s financial sector is dominated by banks, as is typical of developing countries in low income, ”the report says.

Recommendations

In its recommendations, the FIU called for the adoption of a risk-based approach at several levels in the financial sector. According to the anti-transplant institution, this is the approach adopted by several other African countries such as Kenya, Uganda and Ghana.

He adds that in these countries, the regulatory framework of the financial system allows for a wide range of institutional microfinance service providers in a tiered structure, and the microfinance sectors appear to be much larger, made up of more diverse institutions. and have better prospects for self-financing. durability

The FIU called for the introduction of amendments to various regulations such as Regulation 2012, No. CBL / RSD / 004/2012 on microfinance depository institutions (MDI), financial institutions in rural communities, CBL / RSD / 002/2016 and credit unions. Regulation No. CBL / RSD / 001/2015, among others, to reflect the multi-level risk-based approach and level 130 categorization.

Such amendments, the report notes, involve setting capital thresholds and other requirements for level 3 in order to distinguish themselves from small MFIs accepting deposits in level 4, and incorporating the activities of large RCFIs and financial institutions. credit unions, among others.

He called on the CBL to define an original vision in a national monetary strategy to “foster a national mobile money ecosystem in Liberia that promotes economic growth, contributes to financial inclusion, increases transparency and reduces waste of public resources. “.


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