FATF AML Deficiency List
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
The Republic of the Congo 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 the Republic of Congo was undertaken in 2015. According to that Evaluation, the Republic of Congo was deemed Compliant for 0 and Largely Compliant for 2 of the FATF 40 + 9 Recommendations.
US Department of State Money Laundering assessment (INCSR)
The Republic of the Congo 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: -
The Republic of the Congo (Congo-Brazzaville) is not a major regional financial center, nor is it a major narcotics destination or source. The port city of Pointe-Noire is frequently utilized as a transshipment point for narcotics moving north to Europe or into Angola and the Democratic Republic of the Congo. Most financial crimes involve domestic corruption and embezzlement. The economy is cash dependent, relying very little on electronic transfers and checks. When they travel, business executives and government officials alike carry large amounts of cash, which are frequently used to settle transactions. Money laundering through investments in domestic real estate is a growing problem, given increased scrutiny of funds sent overseas.
Congo-Brazzaville, as part of the Euro-CFA Zone Agreements, deposits reserves with the Bank of Central African States (BEAC), a regional central bank that serves six Central African countries. BEAC conducts the Economic Intervention Service, which harmonizes the regulation of currency exchanges in the member states of the Central African Economic and Monetary Community (CEMAC). The BEAC also supervises the country’s banking system, though evidence suggests the BEAC’s supervision is insufficient.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 19
World Governance Indicator – Control of Corruption 6
Corruption is rife in the Republic of the Congo (also known as Congo-Brazzaville). Almost every sector of the economy suffers from rampant corruption. President Sassou Nguesso holds a tight grip on power, thus rendering all government institutions susceptible to political interference and patronage. The extractive industries and public procurement are particularly at risk. The government has put in place an anti-corruption regulatory framework; however, implementation remains very poor and government officials engage in corruption with impunity. The Penal Code (in French) criminalizes several forms of corruption, including passive and active bribery, extortion and abuse of office in the public sector. Gifts and facilitation payments are illegal but are widely practiced in the Republic of Congo. For further information - GAN Integrity Business Anti-Corruption Portal
The economy is a mixture of subsistence farming and hunting, an industrial sector based largely on oil and support services, and government spending. Oil has supplanted forestry as the mainstay of the economy, providing a major share of government revenues and exports. Natural gas is increasingly being converted to electricity rather than being flared, greatly improving energy prospects. New mining projects, particularly iron ore, which entered production in late 2013, may add as much as $1 billion to annual government revenue.
Economic reform efforts have been undertaken with the support of international organizations, notably the World Bank and the IMF, including the recently concluded Article IV consultations. The current administration faces difficult economic challenges of stimulating recovery and reducing poverty. The recent drop in oil prices has constrained government spending; lower oil prices forced the government to cut more than $1 billion in planned spending. However, the government increased infrastructure spending for the September 2015 All-Africa Games and also ahead of the March 2016 presidential election, putting further pressure on the budget.
Officially the country became a net external creditor as of 2011, with external debt representing only about 16% of GDP and debt servicing less than 3% of government revenue.
Agriculture - products:
cassava (manioc, tapioca), sugar, rice, corn, peanuts, vegetables, coffee, cocoa; forest products
petroleum extraction, cement, lumber, brewing, sugar, palm oil, soap, flour, cigarettes
Exports - commodities:
petroleum, lumber, plywood, sugar, cocoa, coffee, diamonds
Exports - partners:
China 42.1%, Italy 16.9%, US 4.9%, India 4.7%, Portugal 4.2% (2015)
Imports - commodities:
capital equipment, construction materials, foodstuffs
Imports - partners:
China 20.3%, France 14.2%, South Korea 9.8%, US 4.9%, UK 4.4%, Italy 4.1%, India 4.1% (2015)
Investment Climate - US State Department
The Republic of Congo (RoC) is a country of enormous potential wealth relative to its small population of 4.5 million. However, the RoC’s fiscal and external accounts have deteriorated due to the sustained crash of oil prices, owing to the country’s continued dependence on oil. Weak economic growth has been revised from 5 percent in 2015 to approximately 2.5 percent in 2016 according to Fitch Ratings. Oil remains a big driver of growth, but its contribution to government revenue is expected to be halved, from 80 percent a year ago to approximately 40 percent at current crude oil prices. The non-oil sector is primarily focused on the logging industry, but growth is also occurring in the telecommunications, banking, construction, and agricultural sectors. The RoC is a country poised for economic diversification, with some of the largest iron ore and potash deposits in the world, a heavily-forested land mass, a deep-water International Ship and Port Facility Security (ISPS) Code-certified port, fertile land, and a small but heavily urbanized population. The RoC has been AGOA eligible since October 2000, providing an additional enticement for export-related investment. RoC is a member of the Financial Community of Africa (FCA).
Despite continuing yearly improvements in the macroeconomic figures for the RoC, 46 percent of the population lives on less than $1.40 per day, putting poverty prevalence much higher than in peer oil-exporting countries. There is no apparent middle class with respect to education, skills, and material living standards. The RoC suffers from low education standards and little social mobility. Most of the population still operates in the informal sector of the economy.
In addition to risks stemming from fluctuating oil prices and income inequality, the RoC also faces periodic internal political and security risks. The RoC is a post-conflict society, with the final peace accord of the 1997-1999 civil war signed in 2003. In late 2015 and early 2016, political unrest resulted in over 30 dead, hundreds injured, and thousands of temporarily displaced persons. Such tensions may occur around elections, and potential investors should always check www.travel.state.gov for the latest security information.
In the past couple of years, the RoC has made significant investments to develop its weak infrastructure, including the completion of thousands of kilometers of paved roads linking its departmental capitals, including all but 80 miles of the road between the commercial capital of Pointe-Noire and administrative capital Brazzaville. The remaining section should be completed this year. The GRoC signed a contract in November 2015 to rehabilitate its river ports along the country’s two main waterways, the Congo and Oubangui rivers, as well as refurbish over 500 kilometers of railway from Brazzaville to Pointe-Noire. Challenges remain, in particular with the RoC’s nascent broadband internet, and inconsistent electric and water supply, which present the biggest hurdles for most foreign direct investment. The country’s paved road system remains underdeveloped and its railroad system to connect inland iron ore and timber resources in the north and west of the country to the port of Pointe-Noire is still on the drawing board. However, infrastructure improvement projects are evident in the major cities of the RoC, and the government continues to report spending enormous amounts of capital on infrastructure improvements, though at a decreasing rate with the drop in oil revenues.
International landlines are non-existent, but mobile phone saturation in the RoC is strong; however, supporting infrastructure, particularly for data communications, is lagging. Internet penetration is 7.1 percent and extremely expensive, providing significant room for competition and growth in that sector. And, while overall low income keeps people from having their own personal computers and internet services, prevalence of cyber cafes and other Wi-Fi hotspots is increasing, indicating both a desire for internet services as well as a potential market for local internet advertisers. However, the government closely controls internet and telecommunication access. This was demonstrated during the referendum to change the constitution in October 2015 when the government suspended internet and text, communication throughout the country for 10 days; and in March 2016 during the presidential election, it suspended internet, text, and voice services for four days.
Investors report that the commercial environment in RoC has not improved substantially in the last few years. Many feel that they have good working relations with government officials, but corruption, especially among “informal” tax collectors, is still widespread. In January 2013, the Congolese government created an Agency for the Promotion of Investments (API) to promote economic diversification through expanding the pool of external investors. Throughout 2013, the government continued to put in place regulatory reforms with the stated goal of improving the business environment. Nevertheless, businesses are not yet noticing positive impacts from the new regulations, and the RoC remains near the bottom (176 out of 189) on the World Bank’s “Ease of Doing Business” rankings. Established American businesses operating in the RoC – as well as companies interested in establishing a presence – continue to encounter obstacles. Various companies have raised concerns to the U.S. Embassy related to land titles, tax law misapplication, and general difficulty initiating negotiations with GRoC officials.
In May 2014 the RoC promulgated several decrees to promote business and reduce constraints. These include eliminating any customs-like controls of goods within the territory of the RoC, authorization for land purchases, a time limit of 48 hours in which to establish a business, simplifying the means of paying of taxes, and streamlining the procedures for obtaining building permits. Though the government is taking steps in the right direction, the business community is yet to see any changes, and continues to cite challenges in dealing with government officials and processes.
The energy and mining sectors will continue to be important in the coming years. Oil remains important to the GRoC, which has just issued a draft of the new hydrocarbons law that will be voted in the next parliamentary session. After parliamentary approval, the GRoC is likely to launch a new bid round. Mining is seen as a significant sector for the future, and many large projects are currently in the exploration phase. The government is eager to support mining investment as a means of diversifying its economy. Additionally, agribusiness presents a growth opportunity, given that the country cultivates only about 2 percent of its arable land, most agriculture is practiced at the subsistence level, and the country imports more than 80 percent of its food.
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