FATF Status

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.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                         35

World Governance Indicator – Control of Corruption             33

Sierra Leone, with an estimated population of 8.7 million people (2023 World Population Review), is located on the coast of West Africa between the Republic of Guinea in the north and northeast, the Republic of Liberia in the south and southeast, and the Atlantic Ocean on the west, with a land area of 71,740 square kilometers and a humid tropical climate.
Sierra Leone emerged from a decade-long civil war in 2002 and has been politically stable with remarkable religious tolerance among its people. Since 2002, the country economically outperformed other west African countries before it was struck by an outbreak of the Ebola epidemic in 2014. When the country emerged out of the Ebola scourge in 2015, the government turned to foreign direct investment (FDI) to return the economy to the pre-Ebola growth trajectory.

Sierra Leone was recovering from the ravages of the Ebola epidemic of 2014-15 when the COVID-19 pandemic struck in March 2020 and took a heavy toll on the economy. Economic activity dipped sharply in 2020 with elevated inflation and limited fiscal space. According to the International Monetary Fund (IMF), in August 2021, Sierra Leone grappled with severe and persistent effects of the COVID-19 pandemic amidst signs of early economic recovery.
The economy was again recuperating from these disruptions when Russia further invaded Ukraine in February 2022. This war and its related sanctions have contributed to rising inflation, especially fuel and food prices, a deteriorating foreign exchange rate and reserves, disrupted supply chains, and worsening terms of trade, all severely impacting living standards, and creating uncertainty.

Sierra Leone offers significant investment potential across numerous sectors. The country is rich in mineral reserves and natural resources with a favorable tropical climate, fertile soil advantageous for agriculture, extensive continental shelf with multiple varieties of fishery resources, a natural environment offering touristic prospects, and vast mineral resources, especially iron ore, diamonds, gold, rutile, ilmenite, and bauxite. Possibilities also exist in energy, water, telecommunications, and other infrastructure. FDI is crucial to the country’s economic recovery. Therefore, there has been a continuous drive and policy focus on encouraging FDI into the country.

There are also opportunities for public-private partnership projects in energy, water, telecommunications, and other infrastructure. Opportunities further exist for investors to benefit from several preferential trade agreements. These include duty-free access to the Mano River Union market of more than 50 million, ECOWAS market of over 420 million, and the African Continental Free Trade Agreement of about fifty-four African countries with a combined population of more than one billion. The country also benefits from the European Union’s Everything but Arms initiative and the United States African Growth and Opportunity Act (AGOA).

President Julius Maada Bio of the Sierra Leone Peoples Party (SLPP) was re-elected for a second term in June 2023 in an election that was marred by logistical challenges and irregularities that call into question the integrity of the election results. The SLPP’s 2023 manifesto, “The New Direction: Consolidating Gains and Accelerating Transformation”, outlined the party’s aspirations for development with the “Big Five Game Changers”: food security and investment in agriculture; human capital development; youth employment; improved public service; and technology and infrastructure, especially in digitizing the financial sector and expanding the power sector. During Bio’s first term, his government’s took actions such as the enactment of the Arbitration Act 2022 and the establishment of the National Investment Bureau (NIB) with the aim to make it easier to invest and do business in Sierra Leone.

There are, however, legislative, institutional, and regulatory challenges to investment, including governance, the rule of law, business and human rights, dispute resolution, finance, and banking. Poor quality and limited infrastructure also pose significant investment challenges as the country lacks the capacity necessary to support practical commercial activities. Challenges similarly persist in corruption, skilled labor, accessing land, high-interest rates, and contract enforcement.

Country Links

Bank of Sierra Leone