FATF AML Deficiency List
Non - Compliance with FATF 40 + 9 Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
Chad 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 Chad was undertaken in 2014. According to that Evaluation, Chad was deemed Compliant for 0 and Largely Compliant for 4 of the FATF 40 + 9 Recommendations.
US Department of State Money Laundering assessment (INCSR)
Chad was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Chad’s financial services sector is small and relatively underdeveloped. Chad’s economy is predominately cash-based, with relatively few transactions passing through formal financial institutions. Despite measures to process public servant salaries through local banks, only 5 percent of the Chadian population uses formal banking services.
On January 16, 2015, the Parliament approved sending troops to the northern regions of Cameroon to counter Boko Haram. This decision, which received popular support, came amid rising concerns about the economic impact of the siege on the Chadian economy. Chad depends heavily on the import of goods that transit through Nigeria and northern Cameroon. As a result of the August border closure and the continued attacks, the prices of imported goods have increased in the local market. Increased border security significantly reduced incidences of contraband and goods smuggled across the Sahel and borders with Nigeria and Cameroon.
Instability in the Central African Republic (CAR) and the subsequent return of displaced Chadians and the arrival of CAR refugees facilitate trafficking of goods between the two countries. Across Chad’s northern desert and along the Sudan/Chad border in the east, smuggled items include drugs and weapons. Drugs, mainly cannabis and cocaine, are transported via Chad and Sudan to the Arabian Peninsula.
Wildlife poaching in Chad and the related illicit trade in ivory and other wildlife products finance transnational criminal networks and armed rebel groups across Africa. There is no indication that illegally smuggled household goods are related to narcotics trafficking or other illegal activities. However, the trafficking of weapons, wildlife products, and drugs may be linked to organized criminal groups, some of which have links to terrorist groups. Illicit proceeds do not appear to enter Chad’s formal financial system.
Chad’s banking system is supervised by the Bank of Central African States (BEAC), the central bank that serves six Central African countries. BEAC’s Economic Intervention Service harmonizes the regulation of currency exchanges in the six member states of the Central African Economic and Monetary Community (CEMAC).
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 21
World Governance Indicator – Control of Corruption 6
Corruption is a very high risk for companies seeking to invest in Chad. Corruption is systemic and often takes the form of nepotism and cronyism. It pervades all levels of the economy and is perpetuated by a weak rule of law and a lack of security. Chad is one of the world's poorest countries, and the majority of Chadians work outside the formal economy. Key anti-corruption legislation includes the anti-corruption law, which criminalizes active and passive bribery and stipulates harsh penalties. However, enforcement is poor, and prosecutions usually target political opponents of the government. Chad has not signed the United Nations Convention against Corruption. For further information - GAN Integrity Business Anti-Corruption Portal
Chad’s landlocked location results in high transportation costs for imported goods and dependence on neighboring countries. Oil and agriculture are mainstays of Chad’s economy. Oil provides about 60% of export revenues, while cotton, cattle, livestock, and gum arabic provide the bulk of Chad's non-oil export earnings. The services sector contributes about one-third of GDP and has attracted foreign investment mostly through telecommunications and banking.
Nearly all of Chad’s fuel is provided by one domestic refinery, and unanticipated shutdowns occasionally result in shortages. The country regulates the price of domestic fuel, providing an incentive for black market sales.
Chad’s fiscal position is encumbered by declining oil prices, though high oil prices and strong local harvests supported the economy in recent years. Chad relies on foreign assistance and foreign capital for much public and private sector investment. Chad's investment climate remains challenging due to limited infrastructure, a lack of trained workers, extensive government bureaucracy, and corruption. Chad obtained a three-year extended credit facility from the IMF in 2014 and was granted debt relief under the Heavily Indebted Poor Countries Initiative in April 2015.
Agriculture - products:
cotton, sorghum, millet, peanuts, sesame, corn, rice, potatoes, onions, cassava (manioc, tapioca), cattle, sheep, goats, camels
oil, cotton textiles, brewing, natron (sodium carbonate), soap, cigarettes, construction materials
Exports - commodities:
oil, livestock, cotton, sesame, gum arabic, shea butter
Exports - partners:
US 58.5%, India 13.3%, Japan 11.3%, China 4.1% (2015)
Imports - commodities:
machinery and transportation equipment, industrial goods, foodstuffs, textiles
Imports - partners:
France 16.5%, China 14.2%, Cameroon 11%, US 6.4%, India 6%, Belgium 5.7%, Italy 4.8% (2015)
Investment Climate - US State Department
Chad is one of Africa’s largest countries, with a land area of 1.3 million square kilometers that encompasses three agro-climatic zones. Chad is a landlocked country bordering Libya to the north, Sudan to the east, Central African Republic (CAR) to the south, and Cameroon, Niger, and Nigeria on the west. The nearest port, Douala, Cameroon, is 1,700 km from the capital, N’Djamena. Chad is one of six countries that comprise the Central African Economic and Monetary Community (CEMAC), a common market.
Chad’s human development is low according to the Human Development Index (HDI), and poverty continues to afflict a large proportion of the population. Since oil production began in 2003, the petroleum sector has dominated economic activity and has been the largest target of foreign investment. However, agriculture and livestock breeding are important economic activities that employ the majority of the population, and the government has prioritized these sectors in an effort to diversify the economy and to maximize non-petroleum tax receipts in the wake of the drop in global oil prices.
The Government of Chad (GOC) has focused on improving internal economic and social conditions, although its efforts have been constrained by regional instability arising from the continued threat of terrorist attacks by Boko Haram, an influx of refugees along the Chad-Sudan-Central African Republic (CAR) border, and the effects of reduced oil prices. This triple threat has forced the GOC to adopt a 2016 budget that is more austere than in past years.
The GOC is favorably disposed to foreign investment, with a particular goal of attracting North American companies. There are opportunities for foreign investment in Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Architecture & Engineering; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Industrial Equipment & Supplies; Information & Communication; and Services.
Chad’s business and investment climate remain challenging. Private sector development is hindered by poor transport infrastructure, lack of skilled labor, unreliable energy, weak contract enforcement, corruption and high tax burdens.
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