ICA Regional Spotlight: Africa

By Gary Duncan, 19 August 2024

Twelve of the 21 countries currently grey listed by the Financial Action Task Force (FATF) are in Africa, and are subject to increased monitoring of their anti money laundering (AML) and counter financing of terrorism (CFT) measures. Kenya and Namibia were added to the list in February, but Uganda was recently removed, and countries across the continent are seeking to strengthen public-private partnerships and overhaul outdated regulations to exit the list.[1]

A recent ICA Member Webinar, hosted by ICA President Pekka Dare, provided practical guidance and insights for the region. Dare was joined by Xolisile Khanyile, Chair of the African Chapter of the Global Coalition to Fight Financial Crime; Felicite Kirkman-Pillay, Regulatory and Compliance Advisor at Navigate Compliance; and Ashvin Ramgoolam, Onboarding and Monitoring Manager at ABC Banking Corporation in Mauritius.

‘We have lots of priorities’

Kirkman-Pillay began by saying it’s hardly surprising that so many African countries have been grey listed. ‘Their priorities are not so much fighting AML or terrorist financing,’ she said, ‘but actually providing inhabitants with food, shelter and education.’

Some of the poorest countries on the continent are on the list, and they face numerous challenges, such as wildlife trafficking, gold smuggling and arms trading. Kirkman-Pillay singled out South Sudan. Grey listed in 2021, the country has been racked by civil war, famine and climate change, and has had nine million people displaced. ‘It’s little wonder it has other priorities,’ she said.

Khanyile agreed. No one in Africa is losing sleep over FATF regulations, she said. ‘We don’t sleep at night because we want our kids to get jobs,’ she said. ‘We want security. We have lots of priorities and we don’t have funding for everything.’

Kirkman-Pillay highlighted the differences between Africa and Monaco, the European tax haven for the super-rich, which was grey listed in June.[2] Monaco will take a very different approach to countries such as Namibia, Kenya or South Sudan, she said: ‘If you look at Africa, you’ve got a very informal economy. In South Africa alone there are about 19 million unbanked people, and people who have informal types of businesses and trades that use a cash economy.’

The panel highlighted a range of other issues hampering countries’ efforts to get their house in order: outdated legislation and technology, porous borders, a lack of political will, a shortage of resources and limited cooperation.

Kirkman-Pillay said political and diplomatic instability is a major obstacle. There are currently 35 armed conflicts taking place in Africa, so getting off the grey list is not the main focus for many countries. ‘It’s actually about trying to survive from day to day, and making sure that your economy moves forward,’ she said.

Khanyile pointed to the lack of resources in the public sector. ‘The banks and reporting institutions send reports to the financial intelligence units, but they don’t have the capacity to look at everything,’ she said. Even when cases are looked at, the police and prosecutors might not have the resources to follow up. ‘The banks will think, “What’s the use of reporting if we don’t hear anything?”’ she said.

Bright spots: Uganda and Mauritius

Kirkman-Pillay said South Africa has responded positively since it was grey listed in 2023, and hopes to exit the list in 2025. ‘If you look at how we approached it, there was a flurry of activity and very good activity around amending legislation, trying to get a call to action from the private and public sectors,’ she said. ‘Our Financial Intelligence Centre worked very hard to create awareness among accountable institutions.’

Dare highlighted the progress made in Uganda, which was delisted in February 2024, and in Mauritius.

Ramgoolam said there were no ‘secret ingredients’ in Mauritius’ success. The country has enhanced its AML and CFT frameworks, and has implemented laws and regulations to combat financial crimes and protect its financial systems. This includes introducing the Financial Crimes Commission Act and amending the Financial Intelligence and Anti-Money Laundering Act. Mauritian authorities have also improved customer due diligence, transparency and suspicious transaction reporting.

Ramgoolam said technology, such as AI, has a key role to play and that cooperation is essential – in Mauritius and across the continent.

He said laws should be harmonised across member states to facilitate cross-border cooperation and reduce ‘regulatory arbitrage’ where criminals exploit the differences between jurisdictions. He urged countries to set up bilateral agreements to analyse and disseminate information through financial intelligence units, and strengthen public-private partnerships.

Khanyile pointed out that the FATF already encourages these partnerships, but that there is no agreed standard to work towards. Organisations, she said, need to be more proactive: ‘If you want to form a partnership, don’t wait for a financial intelligence unit to start it. Anyone can do it, and that’s how you make an impact.’

New FATF presidency

Dare asked the panel what impact the FATF’s new presidency, headed by Mexico’s Elisa de Anda Madrazo, could have on its approach to Africa, especially if it gives regional bodies a greater say.

Khanyile welcomed Madrazo’s appointment and the focus on asset recovery – one of the new presidency’s key pledges, along with improving financial inclusion, strengthening the FATF Global Network, and implementing FATF standards for beneficial ownership and virtual assets.

‘Hopefully, Africa will have a stronger voice,’ Kirkman-Pillay said. ‘Regionally, it would be great if we could cooperate and put our problems before the FATF, so they get a better understanding of what's going on in each African country.’