Benin's Fight Against Money Laundering

Updated: Jan 10, 2019

(c) 2018 Basel AML Index

The International Anti-Corruption Day on December 9, 2018, provided the perfect backdrop to assess the successes, failure and benefits of the fight against money laundering in West Africa. The World Economic Forum estimates that the cost of corruption is at least $2.6 trillion or 5 per cent of global gross domestic product, while the United Nations Office on Drugs and Crime estimates that Africa loses approximately 50 billion USD every year due to illicit financial flows. West Africa’s vulnerability to illicit financial flows has been consistently highlighted by various international organisations and the exponential growth of violent extremism in the Chad basin and the rise of the Islamic State’s West African Province (ISWAP) requires that efforts in combating corruption, money laundering and the financing of terrorism need to be accelerated. However, the question now is, how have countries in the region fared compared to international standards?

It is important to note that anti-money laundering and counter-terrorist financing (AML/CFT) measures are only as strong as the weakest link. In essence, while West African regional leaders Nigeria and Ghana remain resolute and dogged in their attempt to enact relevant legislation and comply with FATF regulations, the limited ability of neighbour, Benin to join the effective fight poses a problem to not just the region but the world at large. As a regional re-export hub, Benin is extremely vulnerable to money laundering risks, and the deficiencies in its structures were exposed in the now infamous investigation where the country was implicated in a large international scheme involving autos purchased in the United States then shipped to Benin. Hezbollah-linked financial institutions laundered the proceeds of the sales of such cars, moving the proceeds through West Africa and into Lebanese financial institutions.

Benin is a member of GIABA, a FATF-style regional body and has criminalised money laundering since 1997, it also has a dedicated institution for financial information processing called CENTIF. Despite efforts made, Benin still ranks poorly on all AML/CFT performance indicators, including the annual Basel Anti-Money Laundering Index. The 2018 edition includes 129 countries and features the former French colony at number 12, with a high score of 7.25 and a 0.09 decline from the previous year. These figures highlight the importance of effective response to tackle the issue at its root cause. Given the current socio-political atmosphere of the West African region ,it truly is one for all and all for one.

In its country report, GIABA states that Benin has continued to struggle to comply with international AML/CFT standards, as well as implementation of recommendations contained in its Mutual Evaluation Report (MER). The lack of political will to incorporate and implement regional and international policy recommendations into the domestic legal framework such as the National AML/CFT Strategy drafted by GIABA in 2011 has significantly hampered its fight against money laundering.

It is imperative from the foregoing that the war against money laundering and terrorist financing cannot exist in isolation and for success to be recorded particularly in the West African region there has to be a coordinated approach to ensure that smaller Jurisdictions are carried along in adoption and implementation of relevant AML/CFT Strategies. Helping these countries understand the risks they face and providing technical assistance needed, remains critical in ensuring the protection of its financial system, economies and their people. Despite setbacks, Benin Republic’s recent admission into the Egmont Group provides proof that with concerted effort, improved technical support, regional cooperation in training and access to information more wins can be recorded.

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