The technical note on Anti-Money Laundering and Combating the Financing Terrorism (AML-CFT) and supervision of the banking sector of the West African Economic and Monetary Union (WAEMU) has observed clear gaps in the effectiveness of AML/CFT supervision of the West African Economic and Monetary Union (WAEMU) financial sector and of banks’ application of preventive measures.
The note said that the current-round Mutual Evaluation Report (MERs) that were completed and published for WAEMU member states as of January 1, 2022, indicate that the frequency and intensity of off- and on-site supervision of banks were not fully risk-based, that the analysis of preventive measures during on-site visits lacked sufficient depth, that the sanctions implemented by the Banking Commission (BC) were not strong enough to achieve remedial action in many cases, and that the level of cooperation between regional supervisory authorities and national Financial Intelligence Unit (FIUs) was too low to allow the development and sharing of AML/CFT good practices.
They also indicate that the understanding of Money Laundering and Terrorist Financing ( ML/TF) risks and AML/CFT obligations was relatively strong among larger banks belonging to international financial groups, whereas smaller banks had a less developed understanding and presented significant shortcomings in their internal controls and procedures (shortcomings that were often linked to inadequate human resources); that in many cases an existing business relationship was continued even when customer profiles were incomplete or potentially out-of-date; and that the level of STR reporting was generally low, especially regarding TF.
The technical note (TN) discusses anti-money laundering and combating the financing of
terrorism (AML/CFT) supervision.
This International Monetary Fund (IMF)-World Bank analysis of the AML/CFT supervision of the WAEMU banking sector benefited from the cooperation of the regional authorities, including the Banking Commission (BC)/General Secretariat of the BC (GSBC), the Central Bank of West African States (BCEAO), and the financial intelligence units (FIUs) of several WAEMU member states, and from consultation with private sector representatives. However, the analysis was constrained by the authorities’ confidentiality concerns and by the COVID-19 pandemic.
Documents considered “confidential” were made available in hard
copy at the BCEAO’s offices in Paris, France, but pandemic-related restrictions prevented the (U.S.- based) authors from traveling overseas to review them. By contrast, the authors were permitted to review certain other, “sensitive” documents electronically, but not to reveal or reproduce the information contained therein. As a result, the observations and recommendations in this TN are focused on the BC/GSBC’s supervisory methodology and procedures; those instances in which the authors were unable to review key documents, cite pertinent information, or form specific views are noted where relevant in the text.