FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
Weakness in Government Legislation to combat Money Laundering
World Governance Indicators (Average Score)
Benin is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Benin was undertaken by the Financial Action Task Force (FATF) in 2010. According to that Evaluation, Benin was deemed Compliant for 0 and Largely Compliant for 7 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Benin is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.
Benin’s main east-west road forms part of the high-volume Abidjan-Lagos transportation corridor, and the Port of Cotonou is a shipping hub for the sub-region, serving Nigeria and landlocked countries in the Sahel. Criminal networks exploit the volume of goods and people moving through Benin.
Benin is a transit point for a significant volume of drugs and precursors moving from South America, Pakistan, and Nigeria into Europe, Southeast Asia, and South Africa. It is difficult to estimate the extent of drug-related money laundering in Benin, believed to be done through the purchase or construction of real estate for rent or re-sale, casinos, bulk cash smuggling, and payments to officials.
Benin has a specialized trial court, the Economic Crimes and Terrorism Court (CRIET), for economic and financial crime. The majority of financial crime cases before the CRIET in 2019 were related to financial scams, including organized crime- and cyber-based.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 41
World Governance Indicator – Control of Corruption 43
Corruption is a very high risk across most sectors in Benin. Petty bribery and systems of patronage are common obstacles, especially when interacting with the judiciary, law enforcement and customs authorities. Public funds are often diverted, harming the implementation of affected projects and effectively deterring foreign investment. A law against corruption (in French) criminalizes active and passive bribery in the public and private sectors, but its provisions are poorly enforced. Even though undue advantages are illegal, bribery, facilitation payments and gifts are commonplace. For further information - GAN Integrity Business Anti-Corruption Portal
The free market economy of Benin remains underdeveloped and dependent on subsistence agriculture, cotton production, and regional trade. Cotton is a key export commodity; high prices supported export earnings. Growth in real output has averaged 6.5% since 2014. Inflation has subsided and remained 1% over the past several years.
An insufficient electrical supply continues to hamper Benin's economic growth though the government recently has taken steps to increase domestic power production. Private foreign direct investment is small, and foreign aid accounts for the majority of investment in infrastructure projects.
Benin’s 2001 privatization policy continues in telecommunications, water, electricity, and agriculture. Benin has appealed for international assistance to mitigate piracy against commercial shipping in its territory. Though security remains a problem, the Port of Cotonou has made progress towards implementing the International Ship and Port Facility Security (ISPS) Code in an effort to remain competitive. Projects included in Benin's $307 million Millennium Challenge Corporation (MCC) compact (2006-2011) were designed to increase investment and private sector activity by improving key institutional and physical infrastructure. The four projects focused on access to land, access to financial services, access to justice, and access to markets (including modernization of the port). The Port of Cotonou is the largest component of Benin’s economy with revenues projected to account for more than 40% of Benin’s national budget. Realizing its economic potential requires further efforts to infrastructure upgrades, stemming corruption, and expanding access to foreign markets in Nigeria and neighboring landlocked countries. In September 2015, Benin signed a MCC second Compact for $375 million that is designed to strengthen the national utility service provider, attract private sector investment, fund infrastructure investments in electricity generation and distribution, and develop off-grid electrification for poor and unserved households. In order to raise growth, Benin plans to attract more foreign investment, place more emphasis on tourism, facilitate the development of new food processing systems and agricultural products, encourage new information and communication technology, and establish Independent Power Producers (IPP).
Agriculture - products:
cotton, corn, cassava (manioc, tapioca), yams, beans, palm oil, peanuts, cashews; livestock
textiles, food processing, construction materials, cement
Exports - commodities:
cotton, cashews, shea butter, textiles, palm products, seafood
Exports - partners:
India 24.2%, Gabon 14.6%, China 7.2%, Niger 6%, Bangladesh 5%, Nigeria 4.9%, Vietnam 4.2% (2015)
Imports - commodities:
foodstuffs, capital goods, petroleum products
Imports - partners:
China 42.1%, US 8.9%, India 5.7%, Malaysia 4.8%, Thailand 4.3%, France 4% (2015)
Investment Climate - US State Department
Benin held peaceful, democratic presidential elections in March 2016 and transitioned to a new government in April 2016. The government’s newly-defined priorities, on the economic front, include investment in the agriculture sector to improve production capacity, job creation linked to tourism, and ensuring access to water and electricity as means for economic development.
Benin continues its efforts to attract private investment in support of economic growth - a link the Government of Benin (GOB) emphasizes is central to boosting Benin’s development prospects. It has set up an Investment and Exports Promotion Agency (APIEX) that comprises one-stop- business startup, investment promotion center and foreign trade promotion. Benin’s overall macroeconomic conditions were positive in 2015. According to revised estimates by Benin’s National Institute of Economic Analysis and Statistics (INSAE), Benin GDP was up 6.5 percent in 2014, largely driven by the cotton industry, improvements at the Port of Cotonou, and developments in telecommunications. The country’s GDP is roughly 71 percent services, 21 percent agriculture, and 8 percent manufacturing. Cotton production increased to 359,000 metric tons in 2014/2015.
In September 2015, the United States Government and the Government of Benin signed a $375 million Millennium Challenge Corporation (MCC) compact focused on electricity. It is Benin’s second MCC compact and will advance policy reforms to bolster financing for the energy sector, attract private capital into power generation, and strengthen regulation and utility management. Infrastructure to be funded by the compact includes 78 megawatts of power generation capacity and modernization of the distribution grid. The compact also includes a significant off-grid electrification project.
Benin’s 2006-2011 MCC compact modernized the country’s port and improved land administration, the justice sector, and access to credit. The Port of Cotonou is the largest component of Benin’s economy with revenues projected to account for more than 40% of Benin’s annual budget. Significant MCC investment in the port helped attract private sector investment; encouraged security and management enhancing reforms; and contributed to increased customs receipts and cargo processing capacity. The GOB is considering granting a concession of the North quay of the Port for its reconstruction, modernization, and its management. If successful, this concession will increase foreign direct investment in Benin. Realizing the port’s full economic potential requires concerted efforts to modernize, stem corruption, and expand access to foreign markets, particularly in Nigeria and landlocked neighboring countries.
Benin’s National Infrastructure Program is the country’s largest planned infrastructure venture in recent history. Envisioned as a series of Public Private Partnerships suitable for foreign investment, the proposed projects include construction of international airports, a new deep water seaport, inland ports, rail networks, and roads supporting major transport routes. At an estimated $2 billion, the Benin-Niger railway is the centerpiece project that calls for the rehabilitation and extension of 1000 km of railway infrastructure from Cotonou to Niamey. These projects have the potential to greatly increase regional trade and significantly boost container traffic at the Port. The tourism sector is growing with the construction of 4 new hotels in Cotonou
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