FATF AML Deficiency List
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Supporter/safe Haven for international terrorism
Weakness in Government Legislation to combat Money Laundering
Sudan is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Latest FATF Statement - 23 October 2015
The FATF welcomes Sudan’s significant progress in improving its AML/CFT regime and notes that Sudan has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in February 2010. Sudan is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Sudan will work with MENAFATF as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Sudan was undertaken by the Financial Action Task Force (FATF) in 2013. According to that Evaluation, Sudan was deemed Compliant for 0 and Largely Compliant for 4 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)
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: -
Sudan has been designated a State Sponsor of Terrorism by the United States. In November 1997, the United States imposed comprehensive economic, trade, and financial sanctions against Sudan, which have limited Sudan’s access to international financial markets and banking institutions. Following the Treasury Department’s fine and penalties on BNP Paribas in 2014, most banks in Saudi Arabia, the Arab Gulf states, and Europe ceased processing financial transactions from Sudan or with Sudanese banks.
The trafficking of narcotics is a source of concern, especially with the increase of smuggling operations across the extended land and sea borders of Sudan. Traders and legitimate business persons often carry large sums of cash because Sudan is largely a cash-based society and electronic transfer of money outside of Sudan is challenging. This dependence on cash complicates enforcement and makes Sudan’s banking system vulnerable to money laundering. Sudan is vulnerable to trade-based money laundering. Corruption is widespread in government and commerce and facilitates criminal activity and money laundering.
Sudan has two free trade zones (FTZs) and plans to open a border trade zone with Chad. Preliminary agreements are in the works with China, Eritrea, and Ethiopia for additional FTZs. There are no known money laundering or terrorism financing activities through these zones.
The UN, and the EU have imposed an arms embargo against Sudan and there are restrictions against the supply of technical, financial and other assistance related to military activities.
The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -
Cutting off transactions with the Syrian central bank
Halting funding by Arab governments for projects in Syria
A ban on senior Syrian officials travelling to other Arab countries
A freeze on assets related to President Bashar al-Assad's government
The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.
The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 16
World Governance Indicator – Control of Corruption 8
Corruption is a very high risk in Sudan, which is considered to be one of the most corrupt countries in the world. Public servants are known to demand extra facilitation payments for services that individuals or companies are legally entitled to. Government officials hold direct and indirect stakes in many enterprises, which creates a system of patronage and cronyism and distorts market competition to the disadvantage of foreign firm without political connections. Government officials are frequently involved in corrupt practices with impunity. The lack of transparency in Sudan retains the status quo both due to a weak administrative setup, which allows for poor record-keeping and lax budget handling, and due to the absence of legislation providing public access to government information. Active and passive bribery, gifts and facilitation payments are prohibited in the public sector, but enforcement is weak. For further information - GAN Integrity Business Anti-Corruption Portal
Sudan has experienced protracted social conflict, civil war, and, in July 2011, the loss of three-quarters of its oil production due to the secession of South Sudan. The oil sector had driven much of Sudan's GDP growth since 1999. For nearly a decade, the economy boomed on the back of rising oil production, high oil prices, and significant inflows of foreign direct investment. Since the economic shock of South Sudan's secession, Sudan has struggled to stabilize its economy and make up for the loss of foreign exchange earnings. The interruption of oil production in South Sudan in 2012 for over a year and the consequent loss of oil transit fees further exacerbated the fragile state of Sudan’s economy. Ongoing conflicts in Southern Kordofan, Darfur, and the Blue Nile states, lack of basic infrastructure in large areas, and reliance by much of the population on subsistence agriculture, keep close to half of the population at or below the poverty line.
Sudan is also subject to comprehensive US sanctions. Sudan is attempting to develop non-oil sources of revenues, such as gold mining, while carrying out an austerity program to reduce expenditures. The world’s largest exporter of gum Arabic, Sudan produces 75-80% of the world’s total output. Agriculture continues to employ 80% of the work force.
Sudan introduced a new currency, still called the Sudanese pound, following South Sudan's secession, but the value of the currency has fallen since its introduction. Khartoum formally devalued the currency in June 2012, when it passed austerity measures that included gradually repealing fuel subsidies. Sudan also faces high inflation, which reached 47% on an annual basis in November 2012 but subsided to 18% in 2015.
Agriculture - products:
cotton, groundnuts (peanuts), sorghum, millet, wheat, gum Arabic, sugarcane, cassava (manioc, tapioca), mangoes, papaya, bananas, sweet potatoes, sesame seeds; animal feed, sheep and other livestock
oil, cotton ginning, textiles, cement, edible oils, sugar, soap distilling, shoes, petroleum refining, pharmaceuticals, armaments, automobile/light truck assembly, milling
Exports - commodities:
gold; oil and petroleum products; cotton, sesame, livestock, peanuts, gum Arabic, sugar
Exports - partners:
UAE 32%, China 16.2%, Saudi Arabia 15.5%, Australia 4.7%, India 4.2% (2015)
Imports - commodities:
foodstuffs, manufactured goods, refinery and transport equipment, medicines, chemicals, textiles, wheat
Imports - partners:
China 26.4%, UAE 10.1%, India 9.1%, Egypt 5.6%, Turkey 4.7%, Saudi Arabia 4.4% (2015)
Investment Climate - US State Department
Due to U.S. and international sanctions imposed on Sudan, the trade and investment environment is not favorable for American firms, despite limited exemptions. Endemic corruption, minimal ground and air transportation links, very limited banking services, high unemployment, multiple exchange rates, government misrule, and internal conflicts undermine commercial activity.
There is no American Chamber of Commerce in Sudan, although a U.S.-Sudan Business Council (USSBC) was formed in late 2014. There is no U.S. foreign direct investment, and the potential for American commercial activity with Sudanese entities must remain within the framework of the exempted areas that permits trade between the two countries. General licenses from the Department of Treasury exempt U.S. exports of: agricultural equipment, inputs, and livestock food, medicine, and medical equipment; certain educational activities and exchanges; and, information and communications technology products and services. Lucrative opportunities exist in these areas.
Sudan has emerged as an attractive market for U.S.-manufactured agricultural machinery such as tractors, pivot irrigation systems, and seeds. Sudan’s major dairies began purchasing thousands of American-breed dairy cattle in the past two years. Medicine and medical equipment as well as a variety of academic services remain in high demand; however, activities in these areas are minimal due to the difficulty in executing financial transactions with Sudan, even for legal activity. Since mid-2014, correspondent banks have closed accounts of Sudanese and those residing in Sudan, and have in many cases refused to conduct financial transactions if Sudanese individuals, businesses, or institutions are involved in the commercial transaction – including those transactions with licenses issued by the Treasury Department’s Office of Foreign Assets Control (OFAC). Banks and financial institutions abroad have declined to do business with clients who have any connection to Sudan. Some American firms avoid conducting business with Sudan because the benefit does not outweigh the costs of staying compliant to U.S. law. For these reasons, American and Sudanese businesses alike are deterred from pursuing permissible commercial activity.
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