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
Equatorial Guinea 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 Equatorial Guinea was undertaken in 2016. According to that Evaluation, Equatorial Guinea was deemed Compliant for 0 and Largely Compliant for 6 of the FATF 40 + 9 Recommendations.
US Department of State Money Laundering assessment (INCSR)
Equatorial Guinea 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: -
Equatorial Guinea (EG) is not a regional financial center. There is no known connection to drug trafficking organizations, organized crime, or terrorists operating in EG. Implementation of EG’s AML laws is not complete and enforcement is weak. Widespread corruption, involving the highest levels of the government, is a primary catalyst for money laundering and other financial crimes. Diversion of public funds and corruption are widespread in both commerce and government. Proceeds from the extractive industries, including oil, gas, and timber, or outright theft of state funds are the most likely sources of laundered money. Cross-border currency transactions and the illegal international transfer of money by companies or corrupt individuals are the most significant methods used to launder funds. In 2015, an EG elected official was convicted in a foreign country for bulk cash smuggling. Although there is no significant market for smuggled goods, smuggling for personal use/consumption is endemic. There are no significant offshore sectors or free trade zones.
EG is a member of the Economic and Monetary Community of Central African States (CEMAC) and shares a regional Central Bank (BEAC) with other CEMAC members. EG is also a member of the Banking Commission of Central African States (COBAC) and the Central African Monetary Union (CEMU) within CEMAC.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 16
World Governance Indicator – Control of Corruption 0
Exploitation of oil and gas deposits, beginning in the 1990s, has driven economic growth in Equatorial Guinea, allowing per capita GDP to rise to over $29,000 in 2014. Forestry and farming are minor components of GDP. Although preindependence Equatorial Guinea counted on cocoa production for hard currency earnings, the neglect of the rural economy since independence has diminished the potential for agriculture-led growth. Subsistence farming is the dominant form of livelihood. Declining revenue from hydrocarbon production, high levels of infrastructure expenditures, lack of economic diversification, and corruption have pushed the economy into decline in recent years and led to limited improvements in the general population’s living conditions.
Foreign assistance programs by the World Bank and the IMF have been cut since 1993 because of corruption and mismanagement, and as a middle income country Equatorial Guinea is now ineligible for most donor assistance. The government has been widely criticized for its lack of transparency and misuse of oil revenues and has attempted to address this issue by working towards compliance with the Extractive Industries Transparency Initiative. US foreign assistance to Equatorial Guinea is limited in part because of US restrictions pursuant to the Trafficking Victims Protection Act.
Equatorial Guinea hosted two economic diversification symposia in 2014 that focused on attracting investment in five sectors: agriculture and animal ranching, fishing, mining and petrochemicals, tourism, and financial services. Undeveloped mineral resources include gold, zinc, diamonds, columbite-tantalite, and other base metals.
Agriculture - products:
coffee, cocoa, rice, yams, cassava (manioc, tapioca), bananas, palm oil nuts; livestock; timber
petroleum, natural gas, sawmilling
Exports - commodities:
petroleum products, timber
Exports - partners:
China 16.6%, South Korea 15.1%, Spain 9%, Brazil 8.2%, Netherlands 6.8%, South Africa 6.6%, India 5.8%, UK 5.7%, France 5.7% (2015)
Imports - commodities:
petroleum sector equipment, other equipment, construction materials, vehicles
Imports - partners:
Netherlands 16.9%, Spain 16.3%, China 14.8%, US 8.9%, Cote d’Ivoire 6%, France 4.8% (2015)
Investment Climate - US State Department
Equatorial Guinea (EG) is endowed with abundant oil and gas resources and hosts billions of dollars in direct U.S. investment. The general investment climate in EG, however, is undermined by corruption and a burdensome, inefficient bureaucracy. International watchdog organizations give EG one of the world’s lowest rankings in various global indices including corruption, transparency, and ease of doing business. These poor ratings underscore the challenging environment in which businesses operate.
The Government of the Republic of Equatorial Guinea (GREG) is seeking investment in several sectors: agribusiness; fishing; energy and mining; chemicals, petrochemicals, plastics & composites; travel/tourism; and finance. Most of these sectors are fairly undeveloped. The Equatoguinean domestic market is small, with a population of less than one million, although EG is a member of the Central African Monetary and Economic Union (CEMAC) sub-region, which is home to over 50 million people. The zone has a central bank and a common currency – the CFA franc.
Following rapid economic growth in the early 2000’s spurred by the discovery of oil a decade earlier; growth has slowed in recent years as operational oil fields have matured. With the drop in oil prices in 2015, EG has extended the timelines for completing infrastructure projects to balance its budget. EG is nearing completion of the first phase of the Horizon 2020 social development plan, which emphasized infrastructure construction. Now EG boasts some of the region’s best roads and other essential infrastructure including development of its ports. In February 2014, the GREG announced plans to improve the ease of doing business by creating a one-stop-shop for investors and entrepreneurs, and creating a body to solve business disputes and a government co-investment fund of $1 billion. The fund is said to be in place, but the other measures have not yet been implemented. Although certain tax exemptions have been instituted to attract investment, with the decrease in the oil prices, those exemptions are strictly scrutinized. Recent commercial disputes have involved delayed payment, or non-payment, by the GREG to foreign firms for goods and services already delivered. December 2015 saw a marked exodus of foreign businesses from EG as the government grappled with its finances.
The judicial system is not independent, as the President is the Chief Magistrate. Corruption throughout the government, including the judiciary, makes it difficult for a U.S. business to protect its investment, raising the risk of doing business in Equatorial Guinea. Occasionally, business disputes are treated as criminal cases and passports of foreign managers are confiscated until the case is resolved. U.S. citizens do not require visas to enter EG, but visas can be very difficult to obtain for third-country nationals, and generally require a letter of invitation from the GREG, which can take months to obtain. Residency permits can be similarly difficult to obtain and renew and are expensive. Even the U.S. Embassy regularly experiences delays for residency permits of six months or more, with the GREG occasionally misplacing original documents or losing them entirely. Customs suffers from similar delays and is plagued by corruption.
Despite the many challenges, U.S. businesses, which strictly comply with Foreign Corrupt Practices Act (FCPA) requirements, have had success in the hydrocarbons sector, and some U.S. businesses have found rewards in other sectors. U.S. businesses will continue to seek the many opportunities that exist in Equatorial Guinea, but potential business people must understand the risks that accompany them.
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