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DIFFERENT ANGLE by Kenneth Rijock
DIFFERENT ANGLE by Kenneth Rijock
Financial Crime Consultant, for World-Check
Africa is becoming a target of opportunity for money launderers and their narcotics trafficking clients
27 June 2007
The latest reports released by the United Nations show that whilst use of illicit drugs has declined in North America, consumption of cocaine and heroin is on the rise in Europe. Since law enforcement interdiction has become more efficient, and indeed successful, along the established smuggling routes into Europe, narcotics traffickers (and the money launderers who assist them) are creating new pipelines in Sub-Saharan Africa. This poses a serious threat to financial institutions whose international clients conduct business in that region.
Cocaine, for example, which primarily flows into Europe through gateways in Spain, is now being shipped to African nations en route to its Euro-destination. Likewise, returning cash profits has been known to take the reverse route, ultimately ending up in Caribbean tax havens in accounts controlled by Latin American cartels.
Here's why this presents a clear and present danger for compliance officers:
Therefore, MLROs and compliance officers who review international funds transfers to Africa should look at possible:
Transfers of funds that are the proceeds of crime through Africa, especially African nations that are former British possessions, are expected to increase. Watch for them.
Here's why this presents a clear and present danger for compliance officers:
- AML compliance in many African countries is not up the level of EU banking best practices, and is simply no match for experienced and imaginative money launderers.
- The use of poor African jurisdictions, which are neither known as drug transit regions, nor money laundering centres, means that commercial financial traffic in or out will receive barely a glance for criminal activity, particularly if the laundrymen have set up solid-looking trading companies, which are really non-transparent fronts for crime, and which do not practise suspicious activity.
- Programmes in Financial Intelligence Units of most African countries are not up to Egmont standards; only a very few countries in the region are Egmont members.
- Anti-money laundering laws are either not vigorously enforced, or effective to reduce financial crime.
Therefore, MLROs and compliance officers who review international funds transfers to Africa should look at possible:
- Trade-based money laundering
- Transfer pricing
- Criminal proceeds that are disguised as art & antique payments/
- Charitable payments that are, in reality, bogus organisation.
Transfers of funds that are the proceeds of crime through Africa, especially African nations that are former British possessions, are expected to increase. Watch for them.
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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