FATF AML Deficiency List
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
US Dept of State Money Laundering assessment
Weakness in Government Legislation to combat Money Laundering
Sierra Leone 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 Sierra Leone was undertaken by the Financial Action Task Force (FATF) in 2007. According to that Evaluation, Sierra Leone was deemed Compliant for 2 and Largely Compliant for 1 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.
Public statement GIABA’s Enhanced Follow-Up Process in respect of Sierra Leone (November 29, 2011)
The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) has since 2007 been concerned about the identified significant weaknesses in the anti money laundering/combating the financing of terrorism (AML/CFT) regime of the Republic of Sierra Leone.
At its 16th Technical Commission/Plenary (TC/Plenary) meeting held in Lome, Togo from 14-16 November, 2011, GIABA noted that the passage of the draft AML/CFT Bill of Sierra Leone had been pending since April 2009. Even after the assistance by GIABA, the World Bank and UNODC in the revision of the draft Bill to ensure that the legislation is comprehensive, and that it meets international AML/CFT standards, Sierra Leone is yet to pass the bill into law, and as such, the weaknesses identified persist in the Sierra Leone’s AML/CFT regime. The TC/Plenary noted further that a considerable number of actions required to be taken to rectify the deficiencies are dependent on the enactment of the AML/CFT bill. In addition, Sierra Leone has not operationalised its approved National AML/CFT Strategy designed to facilitate the implementation of the AML/CFT regime in a coordinated and concerted manner. GIABA calls upon Sierra Leone to pass this draft AML/CFT Bill into law before April 30, 2012, and urgently to implement satisfactory and comprehensive AML/CFT regime.
GIABA also calls on the Authority of Heads of State and Government of the Economic Community of West African States (ECOWAS) to prevail on Sierra Leone to address the identified deficiencies in its AML/CFT system as the continued non- compliance poses serious threat to the integrity and soundness of the regional and global financial system. November 29, 2011 - The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) has since 2007 been concerned about the identified significant weaknesses in the anti money laundering/combating the financing of terrorism (AML/CFT) regime of the Republic of Sierra Leone.
US Department of State Money Laundering assessment (INCSR)
Sierra Leone was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Sierra Leone is not a regional financial center. Loose oversight of financial institutions, weak regulations, pervasive corruption, and lack of financial crimes enforcement has made the country vulnerable to money laundering. Due in part to its large seaport, Sierra Leone is an attractive trans-sea shipment point for illegal drugs and other forms of illegal commerce. Smuggling of pharmaceuticals, foodstuffs, gold, and diamonds occurs across porous land borders. There is little evidence drug smuggling is a significant source of laundered money. The small-scale artisanal diamond mining industry is exploited by domestic groups and individuals rather than by transnational cartels. The trade in stolen automobiles, many originating in the United States, continues to be a concern.
Most financial transactions, including currency exchanges and remittances, are unregulated and vulnerable to money laundering. There is no indication money laundering activity in Sierra Leone is tied to the financing of terrorism. After making limited progress in this area in 2014, Sierra Leone shifted its attention and resources in 2015 almost entirely to ending the Ebola outbreak. As a result, the country’s AML/CFT controls remain underdeveloped and underfunded.
There are no international sanctions currently in force against Sierra Leone.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 33
World Governance Indicator – Control of Corruption 38
Sierra Leone is extremely poor and nearly half of the working-age population engages in subsistence agriculture. The country possesses substantial mineral, agricultural, and fishery resources, but it is still recovering from a civil war that destroyed most institutions before ending in the early 2000s.
In recent years economic growth has been driven by mining - particularly iron ore. The country’s principal exports are iron ore, diamonds, and rutile, and the economy is vulnerable to fluctuations in international prices. Until 2014, the government had relied on external assistance to support its budget, but it was gradually becoming more independent. The Ebola outbreak of 2014 and 2015, combined with falling global commodities prices, caused a significant contraction of economic activity in all areas.
While the World Health Organization declared an end to the Ebola outbreak in Sierra Leone in November 2015, economic recovery will depend on rising commodities prices and increased efforts to diversify the sources of growth. Pervasive corruption and undeveloped human capital will continue to deter foreign investors. Sustained international donor support in the near future will partially offset these fiscal constraints.
Agriculture - products:
rice, coffee, cocoa, palm kernels, palm oil, peanuts, cashews; poultry, cattle, sheep, pigs; fish
diamond mining; iron ore, rutile and bauxite mining; small-scale manufacturing (beverages, textiles, footwear)
Exports - commodities:
Iron ore, diamonds, rutile, cocoa, coffee, fish
Exports - partners:
China 31.3%, Belgium 27.8%, Romania 11.3%, US 7.3%, India 4% (2015)
Imports - commodities:
foodstuffs, machinery and equipment, fuels and lubricants, chemicals
Imports - partners:
China 23%, India 7.9%, US 6.4%, Netherlands 5.1% (2015)
Investment Climate - US State Department
Sierra Leone is home to more than six million people and provides easy access to markets of 45 million via its membership in the Mano River Union and over 300 million in the Economic Community of West African States (ECOWAS).
Sierra Leone enjoys duty-free access to large markets for certain goods through the EU’s Everything But Arms Initiative and the United States’ African Growth and Opportunity Act (AGOA). With English as the official language, generally favorable views of the United States, extraordinary religious tolerance, and political stability since the end of the civil war in 2002, Sierra Leone presents significant opportunities for investment and engagement.
In recent years, Sierra Leone’s economy has been among the fastest-growing in sub-Saharan Africa. Following peaceful multi-party elections in 2007 and 2012, real GDP growth hit 15.2% in 2012 and 20.1% in 2013. Growth came to an abrupt halt in 2014, with the largest Ebola outbreak in history coinciding with a slump in global commodities prices, which shuttered the nation’s two largest iron ore mines and left the country without critical export revenue and foreign exchange reserves. The IMF estimates that the economy contracted by 24% in 2015. Despite its plentiful natural resources, large areas of fertile land, and abundant fisheries, Sierra Leone remains largely dependent on foreign assistance. The country ranks 181st out of 188 nations on the UN Development Program’s Human Development Index for 2015.
The investment climate in Sierra Leone offers certain challenges. The World Bank ranked Sierra Leone 147th among 189 countries in 2016 for the ease of doing business, identifying particular challenges in getting electricity, registering property, and trading across borders. Firms have significant difficulty accessing credit and must pay high interest rates; foreign investors generally bring capital from abroad. Corruption is endemic throughout the economy. Investments outside of Freetown require special attention to local dynamics and community needs, particularly due to the significant authority of traditional leaders, the Paramount Chiefs.
At the same time, Sierra Leone offers great opportunities. There are significant opportunities in energy (including renewables), infrastructure, agriculture, fisheries, tourism, and natural resources. The government is engaged in significant infrastructure projects, and recognizes that drawing new foreign investment requires a more supportive business environment. The government has enacted regulatory reforms to simplify the process of starting a business and to protect the rights of minority investors. In 2016, the Millennium Challenge Corporation, a U.S. government agency, will begin to implement a four-year, $44 million threshold program to support policy reforms, build institutional capacity, and improve governance in the water and electricity sectors.
The World Health Organization declared an end to the Ebola outbreak in Sierra Leone on November 7, 2015 (and again on March 17, 2016 after a small flare-up). The country and its international partners remain vigilant against more potential cases. Sierra Leone is now implementing a National Ebola Recovery Strategy, which sets forth a 24-month plan to rebuild the health sector, strengthen social protections, and restore economic growth. President Ernest Bai Koroma is completing his second and legally mandated final term and the country is therefore looking ahead to national and local elections in early 2018. The government seeks foreign investors who will partner on projects that will deliver both immediate and long term benefits to the Sierra Leonean economy and public.
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