2023-10-05 06:00:00
The Council of Ministers announced yesterday the receipt of the preliminary draft law on the revision of the law on money laundering and the financing of terrorism (AML-CFT).
Last week, the Madagascar Business Group (GEM) warned the authorities of the urgency of adopting this preliminary draft to avoid the integration of Madagascar into the gray list of the Financial Action Task Force (FATF) .
“Madagascar will have until the end of September before being placed on the FATF gray list,” notes the GEM in its press release, published a week ago. However, the next parliamentary session will not start until October 17 and the amendments made will still have to travel between the two chambers.
If the country falls into this gray list, the economy will be heavily impacted, warns the GEM. Officially called Jurisdictions Subject to Enhanced Supervision, the FATF gray list includes countries with gaps in their AML/CFT regimes. This was the case of Mauritius in 2020 due to failures in terms of controls on beneficial owners and procedures for confiscation of proceeds of crime.
“Being placed on the gray list would jeopardize the country’s credibility on the international scene, thus discouraging domestic and foreign investors. This situation would damage our reputation for good governance and financial matters,” warns the GEM.
Adopted in 2019, the money laundering law requires revision to comply with the 40 FATF recommendations. Madagascar has only met 3 out of these 40 recommendations so far. The 40 recommendations offer a comprehensive set of countermeasures covering the criminal justice system and law enforcement, the financial system and its regulation, and international cooperation.
This compliance is essential to promote healthy commercial practices, maintains the GEM. The adoption of this text will thus ensure the credibility of financial transactions coming from Madagascar and help avoid illicit financial flows.
In 2021, the annual report of the Committee for the Protection of Integrity (CSI), recalled that inclusion in the gray list will have repercussions on the country’s economy. The Central Bank or Banky foiben’i Madagasikara (BFM) also called for the adoption of this draft law. Last June, Governor Aivo Andrianarivelo declared that the amendment and adoption by parliament of these texts is one of the conditions allowing the continuation of the constitution of the gold reserve for the country.
The Big Island was ranked last February in the top 5 in the AML (Assessing Money Laundering) index of countries at risk for money and capital laundering with a score of 7.59 out of 10.
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