UN, EU and US
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
South Sudan is on the FATF List of Countries that have been identified as having strategic AML deficiencies
FATF Statement re AML Deficiencies - 25 June 2021
In June 2021, South Sudan made a high-level political commitment to work with the FATF to strengthen the effectiveness of its AML/CFT regime. South Sudan will work to implement its action plan, including by: (1) applying and engaging with ESAAMLG for membership and committing to undergo a mutual evaluation by ESAAMLG or other assessment body; (2) conducting a comprehensive review of the AML/CFT Act (2012), with the support of international partners, including technical assistance, to comply with the FATF Standards; (3) designating an authority/authorities in charge of coordinating the national ML/TF risks assessments; (4) becoming a party to and implementing the 1988 Vienna Convention, the 2000 Palermo Convention, and the 1999 Terrorist Financing Convention; (5) competent authorities should be suitably structured and capacitated to implement a risk-based approach to AML/CFT supervision for financial institutions; (6) developing a comprehensive legal framework to collect and verify the accuracy of beneficial ownership information for legal persons; (7) operationalising a fully functioning and independent FIU; (8) establishing and implementing the legal and institutional framework to implement targeted financial sanctions in compliance with United Nations Security Council Resolutions on terrorism and proliferation financing; and (9) commencing implementation of targeted risk-based supervision/monitoring of NPOs at risk of TF abuse.
Compliance with FATF Recommendations
South Sudan has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.
US Department of State Money Laundering assessment (INCSR)
South Sudan 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: -
South Sudan borders a number of jurisdictions in various states of conflict or lacking strong authorities. South Sudan continues to deal with an intra-party conflict amongst political elites, which broke out in December 2013, and developed into an internal civil war. Although the government and diverse opposition forces concluded a peace agreement in August 2015, fighting has continued in various parts of the country. The effects of the conflict on the economy will be evident for some time.
While the Republic of South Sudan had begun to develop prior to the outbreak of civil conflict, much remains to be accomplished in this fledgling state. The country has a cash-based economy, with a small, poorly developed financial system. Corruption and the flow of illicit funds; the offshoring of assets by elites; large-scale abuse and mismanagement of the extractives industry, particularly oil; financial and trade-based fraud; the convergence of licit and illicit systems; disguised beneficial ownership; and regulatory evasion have all combined to create a kleptocratic governing system. Lacking an AML/CFT regime and possessing long, porous borders, South Sudan is vulnerable to exploitation by criminals of every type, including those seeking overland routes for bulk cash smuggling, those financing terrorist activities, and those wishing to perpetrate other forms of financial crime. Reports of money laundering by Somali nationals through foreign exchange bureaus in South Sudan are persistent, though unconfirmed.
The UN, EU, and United States have imposed travel restrictions and asset freezes against six members of the government and former opposition militaries for actions that were found to undermine the peace, stability, or security of South Sudan or threaten or impede the cessation of hostilities.
The UN, EU and US have imposed an arms embargo against South Sudan and there are asset freezes in place against certain individuals.
2 June 2014 - US Dept of the Treasury: Publication of Frequently Asked Question on South Sudan-related Executive Order
Blocking Property of Certain Persons with Respect to South Sudan:
Are humanitarian aid groups prohibited from making payments to or otherwise transacting with non-designated individuals or entities in South Sudan, including militias and armed groups under the command or control of a designated individual?
An entity in South Sudan that is commanded or controlled by an individual designated under Executive Order 13664 is not considered blocked by operation of law. Payments, including “taxes” or “access payments,” made to non-designated individuals or entities under the command or control of an individual designated under E.O. 13664 do not, in and of themselves, constitute prohibited activity. U.S. persons should employ due diligence, however, to ensure that an SDN is not, for example, profiting from such transactions.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 12
World Governance Indicator – Control of Corruption 0
Corruption is widespread in South Sudan and businesses operating or planning to invest in the country should beware of these risks. Bribery is widespread in all sectors of the economy and close relations between the government and businesses are mentioned as a crucial factor in succeeding in business. The country's judicial system is inefficient and is plagued by corruption and a culture of impunity. Accordingly, South Sudan's primary corruption legislation, the Southern Sudan Anti-Corruption Commission Act 2009 and the South Sudan Penal Code Act 2008, despite covering a range of corruption offences, are not adequately enforced. Gifts are prohibited under South Sudan's laws, but minimal enforcement results in gifts and facilitation payments being widespread. For further information - GAN Integrity Business Anti-Corruption Portal
Following several decades of civil war with Sudan, industry and infrastructure in landlocked South Sudan are severely underdeveloped and poverty is widespread. Subsistence agriculture provides a living for the vast majority of the population. Property rights are insecure and price signals are weak, because markets are not well organized. After independence, South Sudan's central bank issued a new currency, the South Sudanese Pound, allowing a short grace period for turning in the old currency.
South Sudan has little infrastructure - approximately 200 kilometres of paved roads. Electricity is produced mostly by costly diesel generators, and indoor plumbing and potable water are scarce. South Sudan depends largely on imports of goods, services, and capital - mainly from Uganda, Kenya and Sudan.
Nevertheless, South Sudan does have abundant natural resources. At independence in 2011, South Sudan produced nearly three-fourths of former Sudan's total oil output of nearly a half million barrels per day. The government of South Sudan derives the vast majority of its budget revenues from oil. Oil is exported through two pipelines that run to refineries and shipping facilities at Port Sudan on the Red Sea. The economy of South Sudan will remain linked to Sudan for some time, given the long lead time and great expense required to build another pipeline, should the government decide to do so. In January 2012, South Sudan suspended production of oil because of its dispute with Sudan over transhipment fees. This suspension lasted 15 months and had a devastating impact on GDP, which declined by 48% in 2012. With the resumption of oil flows the economy rebounded strongly during the second half of calendar year 2013. This occurred in spite of the fact that oil production, at an average level of 222,000 barrels per day, was 40% lower compared with 2011, prior to the shutdown. GDP grew by nearly 30% in 2013. However, the outbreak of conflict on 15 December 2013 combined with a further reduction of oil production and exports, meant that GDP growth fell significantly in 2014 and poverty and food insecurity rose. South Sudan holds one of the richest agricultural areas in Africa with fertile soils and abundant water supplies. Currently the region supports 10-20 million head of cattle.
South Sudan is currently burdened by considerable debt because of increased military spending and revenue shortfalls due to low oil prices and decreased production. South Sudan has received more than $4 billion in foreign aid since 2005, largely from the UK, the US, Norway, and the Netherlands. Annual inflation peaked at 79.5% in May 2012 but declined rapidly thereafter, to 1.7% in 2014, before jumping back to 52.8% in 2015, following the December 2013 outbreak of violence. The decision in December 2015 by the central bank to abandon a fixed exchange rate and allow the South Sudanese Pound to float has not reduced inflation in the short term. Long-term challenges include diversifying the formal economy, alleviating poverty, maintaining macroeconomic stability, improving tax collection and financial management and improving the business environment.
Agriculture - products:
sorghum, maize, rice, millet, wheat, gum arabic, sugarcane, mangoes, papayas, bananas, sweet potatoes, sunflower seeds, cotton, sesame seeds, cassava (manioc, tapioca), beans, peanuts; cattle, sheep
Investment Climate - US State Department
Trade and investment conditions in South Sudan are not favorable to foreign firms.
Armed conflict broke out in December, 2013 between government and anti-government forces and since then has continued at varying levels of intensity. The sides reached a peace agreement in August2015 and pledged to stop fighting and create a transitional government, but implementation of the agreement has been drawn out. Active fighting has continued in various parts of the country. The turmoil has halted most economic and development efforts and led to large-scale displacement, worsening food security, severe human-rights abuses, restricted humanitarian access, and disrupted trade, markets, and cultivation activities. The war has claimed thousands of lives and spurred one of the world’s most serious humanitarian crises, with an estimated 1.69 million Internally Displaced People (IDPs), almost 800,000 refugees, and 188,000 South Sudanese sheltering at six UN Mission in South Sudan (UNMISS) Protection of Civilian (POC) sites throughout the country. Out of a population of approximately 12 million, some 4 million people are considered "food insecure" and only half of school-age children, roughly 1.3 million, attend classes. The conflict has been marked by grave human rights abuses, especially pervasive gender-based violence.
In response, the USG has provided nearly USD 1.5 billion in humanitarian assistance since December 2013 for populations affected by the crisis in South Sudan. During 2015, the bulk of U.S. and the international community’s support efforts were directed at the immediate needs of the ongoing humanitarian crisis brought on by the civil conflict, and other development assistance has been significantly reduced. South Sudan was terminated as an African Growth and Opportunity Act (AGOA) beneficiary effective January 1, 2015 due to its failure to address human rights violations and other concerns related to eligibility. With no access to external financing, the government has used domestic borrowing from the central bank to cover a growing financial shortfall and pay monthly operating expenses. The U.S Department of State maintains a Travel Advisory warning United States citizens not to travel to South Sudan.
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