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 Guinea was undertaken by the Financial Action Task Force (FATF) in 2012. According to that Evaluation, Guinea was deemed Compliant for 1 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.
Evaluation of National AML/CFT activities - 2012
The Anti-money laundering and counter-terrorism financing campaign has not recorded any improvement in routine activities in Guinea. There is no operational mechanism, which makes it difficult to obtain statistics indicating the level of performance.
Though provided for by the law, the FIU is yet to be operational. This significantly reduces the country's AML/CFT activities. However, within the banking sector, suspicious transaction reports are sent to the Central Bank, where an ad hoc unit has been created for this purpose. The summary analysis of the files by the unit shows that most of the offences identified concern transfer of funds without a valid economic justification and such monies were simply returned to the institutions that originated the transaction. This highlights the weakness of the AML/CFT regime in place.
Finally, another equally important aspect of the country’s anti-money laundering regime relates to public expenditure control. Guinea is plagued by misappropriation of public finances. This was particularly persistent during the transition period. The new Government has adopted corrective measures and intends to restore the uniqueness of Government accounts, a major factor in curbing the embezzlement of public funds and corruption within the State administrative apparatus, and therefore a source of money laundering.
The main challenge of the AML/CFT regime in Guinea has to do with the failure to establish an FIU, which naturally makes it impossible to contact the other segments and entities accountable to money laundering and the financing of terrorism.
US Department of State Money Laundering assessment (INCSR)
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: -
The lack of record-keeping, weak law enforcement, corruption, and the informal, cash-based economy in Guinea provide a fertile environment for money laundering and its predicate offenses. The situation is made more complex by the Economic Community of West African States’ principle of free movement of persons and goods. The country’s openness to the sea and the existence of a large seaport provide a major economic opportunity but also constitute risks that should be addressed by the authorities. With the 2015 presidential elections completed and the Ebola epidemic in Guinea winding down, the government is turning its attention to economic expansion and rule of law.
The number of unauthorized currency dealers that resist government measures against unlicensed operators continues to grow. Guinea has an extensive black market for smuggled goods, which includes illegal drugs trafficked from Guinea-Bissau and Sierra Leone. The Port of Conakry is also used as a way-point between drug suppliers in South America and consumers in Europe. The Guinean customs office, for example, reported its participation in the interdiction of 71 kilos of cocaine headed for Spain in 2015. Local officials believe the sale of counterfeit U.S. currency in Guinea involves money laundering. It is estimated that 80 percent of the pharmaceutical drugs sold in the region are counterfeit, although the government has recently undertaken efforts to address this out of concern for public safety.
Reportedly, certain segments of the large Lebanese expatriate community launder the proceeds of outside criminal activity by purchasing or constructing buildings in Guinea for immediate sale. Other money laundering methods used in Guinea include the purchasing of diamonds or gold for resale. Stolen cars from the United States are often destined for West African markets, including Guinea. Due to limited law enforcement capacity, Guinean authorities struggle to determine the nexus between illicit funds and criminal organizations, and possible links to terrorism financing.
Guinea is plagued by misappropriation of public funds; however, there are no investigations that have connected corrupt Guinean officials with laundering activities. Most illicit funds are transferred via a widespread and well established network of money transfer agents operating out of local markets.
The EU has an arms embargo in place which includes restrictive measures on the sale, supply, transfer and export of equipment which might be used for internal repression. There are also restrictive measures in place concerning members of the National Council for Democracy and Development (NCDD) and persons associated with them.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 29
World Governance Indicator – Control of Corruption 14
Guinea is a poor country of approximately 11.7 million people that possesses the world's largest reserves of bauxite and largest untapped high-grade iron ore reserves (Simandou), as well as gold and diamonds. In addition, Guinea has fertile soil, ample rainfall, and is the source of several West African rivers, including the Senegal, Niger, and Gambia. Guinea's hydro potential is enormous and the country could be a major exporter of electricity. The country also has tremendous agriculture potential. Gold, bauxite, and diamonds are Guinea’s main mineral exports. International investors have shown interest in Guinea's unexplored mineral reserves, which have the potential to propel Guinea's future growth.
Following the death of long-term President Lansana CONTE in 2008 and the coup that followed, international donors, including the G-8, the IMF, and the World Bank, significantly curtailed their development programs in Guinea. However, the IMF approved a new 3-year Extended Credit Facility arrangement in 2012, following the December 2010 presidential elections. In September 2012, Guinea achieved Heavily Indebted Poor Countries completion point status. Future access to international assistance and investment will depend on the government’s ability to be transparent, combat corruption, reform its banking system, improve its business environment, and build infrastructure. In April 2013, the government amended its mining code to reduce taxes and royalties. In 2014, Guinea also complied with requirements of the Extractive Industries Transparency Initiative by publishing its mining contracts and was found to be compliant.
The biggest threats to Guinea’s economy are political instability, a reintroduction on of the Ebola virus epidemic, and low international commodity prices. Rising international donor support and reduced government investment spending will lessen fiscal strains created by the Ebola virus epidemic, but economic recovery will be a long process while the government continues efforts to prevent an outbreak of the disease. The economic toll of Ebola virus epidemic on the Guinean economy is considerable. Ebola stalled promising economic growth in 2014-15, and the economy will continue to stagnate in 2016. Several projects have stalled, such as offshore oil exploration and the giant Simandou iron ore project. The 240 megawatt Kaleta Dam, which was inaugurated in September 2015, has expanded access to electricity for residents of Conakry. Although the recent political stability has brought renewed interest in Guinea from the private sector, an enduring legacy of corruption, inefficiency, and lack of government transparency, combined with fears of Ebola virus, continue to undermine Guinea's economic viability.
Successive governments have failed to address the country's crumbling infrastructure, which is needed for economic development. Guinea suffers from chronic electricity shortages; poor roads, rail lines and bridges; and a lack of access to clean water - all of which continue to plague economic development. The present government, led by President Alpha CONDE, is working to create an economy to attract foreign investment and hopes to have greater participation from western countries and firms in Guinea's economic development.
Agriculture - products:
rice, coffee, pineapples, mangoes, palm kernels, cocoa, cassava (manioc, tapioca), bananas, potatoes, sweet potatoes; cattle, sheep, goats; timber
bauxite, gold, diamonds, iron ore; light manufacturing, agricultural processing
Exports - commodities:
bauxite, gold, diamonds, coffee, fish, agricultural products
Exports - partners:
India 22.5%, Spain 8.2%, Ireland 7.3%, Germany 6.2%, Belgium 5.5%, Ukraine 5.3%, France 4.1% (2015)
Imports - commodities:
petroleum products, metals, machinery, transport equipment, textiles, grain and other foodstuffs
Imports - partners:
China 20.4%, Netherlands 5.4%, India 4.4% (2015)
Investment Climate - US State Department
Despite endemic corruption and fiscal mismanagement, the long-term economic prognosis of Guinea, buoyed by strong endowments of natural resources, energy opportunities, and arable land, remains promising. Constrained by an austere budget, Guinea has increasingly looked to foreign investment to stimulate growth. China, Guinea’s largest trading partner, has dramatically increased its role through investment agreements.
Blessed with abundant mineral resources, Guinea has the potential to be an economic leader in extractive industry. Guinea is home to over half the world’s reserves of bauxite (aluminum ore). Bauxite is the most active mining activity in Guinea, accounting for over half of Guinea’s exports. Guinea also possesses over four billion tons of untapped high-grade iron ore, significant gold and diamond reserves, undetermined amounts of uranium, as well as prospective off-shore oil reserves. Most of the country’s bauxite is exported by Compagnie des Bauxites de Guinee (CBG) via a designated port in Kamsar. CBG, a joint venture between the Government of Guinea, American company Alcoa and Anglo-Australian firm Rio Tinto, is the largest single producer of bauxite in the world. New investment in CBG in addition to new market entries are expected to significantly increase Guinea’s bauxite output over the next five to ten years.
Medium to long term, Guinea’s greatest potential economic driver is the Simandou Project (iron ore). Simandou is slated to be the largest greenfield project ever developed in Africa. Rio Tinto with its partners (Chinalco – China Aluminum Corporation, the Guinean government, and International Finance Corporation) are developing two of the four Simandou iron ore concessions. The infrastructure costs for the project are projected to be $20 billion, which is enormous considering Guinea’s GDP is less than $7 billion/year. When fully operational, the project could double Guinea’s GDP. Depressed commodities markets, however, have slowed iron ore mining development.
Guinea’s abundant rainfall, sunny weather, and natural geography bode well for hydroelectric and renewable energy production. The largest energy sector investment in Guinea is the 240MW Kaleta Dam project that began operating its first hydro turbine in May 2015. Built and financed ($526 million) by China, Kaleta more than doubled Guinea’s electricity supply and for the first time furnished Conakry with relatively dependable electricity. The government is seeking backing for even larger hydroelectricity projects and investing in distribution infrastructure to become an energy supplier in West Africa. The government is also looking to invest in solar and other energy sources to compensate for lost hydroelectric production in Guinea’s dry season.
Agriculture and Fisheries are another area of opportunity and growth in Guinea. Already an exporter of fruits, vegetables, and palm oil to its immediate neighbors, Guinea is climatically well-suited for large-scale agricultural production. However, the sector has suffered from decades of neglect and mismanagement.
Guinea’s macroeconomic and financial situation is weak. Ebola stifled Guinea’s economic growth prospects in 2014 and 2015 leaving the government with few financial resources to support the Guinean economy. Decreased natural resource revenues and ill-advised government loans have strained an already sparse government budget. Modest growth is projected to return in 2016, but the government is under pressure from segments of Guinean society to deliver tangible development progress. The demand for credit, particularly for small and medium sized enterprises, exceeds available supply. The government is increasingly looking to international investment to increase growth, provide jobs, and kick-start the economy.
Guinea has recently updated its Investment Code and renewed efforts to attract international investors. Guinea’s investment promotion agency rolled out a new website (invest.gov.gn) in 2016 to increase transparency and streamline investment. However, Guinea’s capacity to enforce its more investor-friendly laws is compromised by a weak and unreliable legal system.
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