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
Rwanda 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 Rwanda was undertaken in 2014. According to that Evaluation, Rwanda was deemed Compliant for 2 and Largely Compliant for 5 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Rwanda 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: -
Rwanda is not a major or offshore financial center. The Rwandan financial system remains relatively unsophisticated, although the number of electronic fund transfers and credit card transactions is rising. Money transfers by cell phone are common. While the black market for smuggled goods is limited, the smuggling of tin, tantalum, tungsten, and gold from neighboring Democratic Republic of Congo (DRC) generates funds that may be laundered through Rwanda’s financial system. The scope of this smuggling is difficult to quantify; the Mid-Term Report of the UN Group of Experts on the Democratic Republic of Congo, released in September 2015, noted continued smuggling of minerals from the DRC to Rwanda by way of Lake Kivu and the Ruzizi River.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 54
World Governance Indicator – Control of Corruption 71
Rwanda is a rural country with about 90% of the population engaged in subsistence agriculture and some mineral and agro-processing. Tourism, minerals, coffee and tea are Rwanda's main sources of foreign exchange. Despite Rwanda's fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Energy shortages, instability in neighbouring states, and lack of adequate transportation linkages to other countries continue to handicap private sector growth.
The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and temporarily stalled the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy to pre-1994 levels. GDP has rebounded with an average annual growth of 7%-8% since 2003 and inflation has been reduced to single digits. Nonetheless, in 2015, 39% of the population lived below the poverty line, according to government statistics, compared to 57% in 2006.
Africa's most densely populated country is trying to overcome the limitations of its small, landlocked economy by leveraging regional trade; Rwanda joined the East African Community and is aligning its budget, trade, and immigration policies with its regional partners. The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment, and pursuing market-oriented reforms. In recognition of Rwanda's successful management of its macro economy, in 2010, the IMF graduated Rwanda to a Policy Support Instrument.
The Rwandan Government is seeking to become a regional leader in information and communication technologies. In 2012, Rwanda completed the first modern Special Economic Zone (SEZ) in Kigali. The SEZ seeks to attract investment in all sectors, but specifically in agribusiness, information and communications, trade and logistics, mining, and construction.
Agriculture - products:
coffee, tea, pyrethrum (insecticide made from chrysanthemums), bananas, beans, sorghum, potatoes; livestock
cement, agricultural products, small-scale beverages, soap, furniture, shoes, plastic goods, textiles, cigarettes
Exports - commodities:
coffee, tea, hides, tin ore
Exports - partners:
Democratic Republic of the Congo 19.8%, US 10.8%, China 10.3%, Swaziland 7.9%, Malaysia 7%, Pakistan 6.2%, Germany 5.9%, Thailand 5.5% (2015)
Imports - commodities:
foodstuffs, machinery and equipment, steel, petroleum products, cement and construction material
Imports - partners:
Uganda 15.7%, Kenya 11.8%, India 8.7%, China 8.7%, UAE 8.6%, Russia 6.6%, Tanzania 5.1% (2015)
Investment Climate - US State Department
Rwanda enjoys strong economic growth, high rankings in the World Bank's Ease of Doing Business Index, and a reputation for low corruption. The Government of Rwanda (GOR) has undertaken a series of pro-investment policy reforms intended to improve Rwanda’s investment climate and increase foreign direct investment (FDI). The country presents a number of opportunities for U.S. and foreign direct investment, including in renewable energy, infrastructure, agriculture, mining, tourism, and information and communications technology (ICT). Rwanda’s national plan, Vision 2020, focuses on consolidating the gains made in infrastructure development, developing skills that allow youth to find jobs and create their own employment, and strengthening the contribution of the private sector.
Yet, despite its business-friendly reputation, FDI in Rwanda lags behind some of its neighbors in the East African Community (EAC), making up less than 4 % percent of GDP in 2014. According to the National Bank of Rwanda, Rwanda attracted USD 314.7 million of FDI inflows in 2014. FDI inflows to Rwanda increased 26 percent from the 2010 level of USD 250.5 million. Rwanda has a total USD 1.1 billion of FDI stock, a significant increase from USD 69 million in 2004.
The GOR, in pursuit of its goal to position Rwanda as a regional hub for tourism, services, and logistics, has plans to commission a number of high-profile energy and infrastructure projects, including a new international airport (Bugesera), an “Innovation City,” new tourist facilities, ring roads around Kigali, wastewater treatment and potable water facilities, and large ticket regional items such as railway links to Uganda and Tanzania and regional oil pipelines.
However, private sector stakeholders continue to stress that they do not have enough visibility on the bidding and decision-making processes for many of the infrastructure projects. Many companies have asked the government to provide greater transparency in the bidding and tender process for Rwanda-specific infrastructure projects and for regional projects such as the Northern and Central Corridor Initiatives.
General labor is available, but Rwanda suffers from a shortage of skilled workers, including accountants, lawyers, and technicians. Higher institutes of technology, private universities, and vocational institutes are improving and producing more and better-trained graduates each year. The change in 2009 from French to English as the language of instruction, from grade four onward, was abrupt, and deficits among some graduates remain a significant issue.
The Rwandan National Bank (BNR) has maintained macroeconomic stability in terms of inflation and exchange rates. In 1995, the government abandoned the dollar peg and established a floating exchange rate regime, under which all lending and deposit interest rates were liberalized. The BNR sets the exchange rate on a daily basis and the resulting market exchange rate is typically within a 2 percent range of the official rate. Although there is generally no difficulty obtaining foreign exchange in Rwanda, some investors reported temporary foreign exchange shortages in the second half of 2015. Foreign exchange shortages were partly driven by lower prices for commodity exports and the country's widening trade deficit, which created some instability in the domestic currency market. As throughout the region, there was a serious depreciation of the Rwandan Franc against the U.S. dollar, reaching 7.6 percent. Although higher than expected, the franc's depreciation still compared favorably to double-digit depreciations in neighboring Uganda, Kenya and Tanzania. As a result, the franc’s real effective exchange rate actually appreciated with Rwanda’s regional trading partners.
The government maintains a high-profile anti-corruption effort and senior leaders articulate a consistent message emphasizing that fighting corruption is a key national goal. The government investigates corruption allegations and generally prosecutes and punishes those found guilty.
There are neither statutory limits on foreign ownership or control, nor any official economic or industrial strategy that discriminates against foreign investors.
Rwanda benefits from low violent crime rates; its strong police and military provide a security umbrella that minimizes potential criminal activity and political conflicts. On multiple occasions between 2008 and early 2014, unknown assailants detonated grenades in Kigali and other areas of the country. There have been no such attacks in Rwanda in over two years.
Rwanda is a member of the EAC, and participates in a customs union that helps facilitate the movement of goods produced in the region and allows EAC citizens with certain skills to work in any member state. In 2014, Rwanda, Uganda, and Kenya implemented new policies that enables their citizens to travel freely between the three countries (using only National Identity cards) and allows tourists to travel between the three countries on a single EAC visa and that waive visa fees for foreign residents.
Rwanda has also established a free trade zone outside the capital, Kigali, which includes current and planned future communications infrastructure. Bonded warehouse facilities are now available both in and outside of Kigali for use by businesses importing duty-free materials.
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