- Mozambique has been given two years to improve Anti-Money Laundering Framework or face bans on international financial transactions.
- Mozambique was placed on the grey list of the FATF for non-compliance with anti-money laundering and terrorist financing.
- If Mozambique fails to comply with the FATF standards, it will be backlisted under non-cooperative countries and territories (NCCTs).
The Financial Action Task Force (FATF) has given Mozambique two years to improve its framework to prevent and combat money laundering and terrorist financing. Authorities in Maputo will suffer wide sweeping bans in international financial transactions if they fail. Currently, policymakers in the country have their feet on the gas pedal, sealing leakages in Mozambique’s financial flows.
Under pressure, the government has set up an executive committee led by Luís Cezerilo to seek Mozambique’s removal from Grey List. The listing has placed the country among the most vulnerable to crimes of money laundering and terrorism financing.
Although it may seem difficult, Mozambique maintains improving its score and of getting struck off the grey list, according to Luís Cezerilo, who talks of the advances made so far, and of what should be expected in terms of reforms in the 18 months that are left to “put the house in order.”
What led to Mozambique’s poor rating?
Mozambique ended up on the grey list of the FATF for not complying with its recommendations on anti-money laundering. This list is used by the FATF to identify countries that have weak anti-money laundering and terrorist financing framework.
In October 2022, the FATF found only 11 deficiencies but issued 96 recommendations for Mozambican institutions to fix within two years.
The FATF is not interested in the oranges but in the orchard. This means that they have seen that Mozambique has institutions and legislation to prevent and combat money laundering. However, they want to understand, the institutions’ capacity says Luís Cezerilo. Luís is the National Coordinator of the Executive Committee on Removing Mozambique from the Grey List.
Luís Cezerilo admits that both in compliance and effectiveness, Mozambique had negative results. However, he adds everything that was done was not enough for the country to be considered compliant with the 40 FATF recommendations.
The new task force
In addition to the leadership of the Minister of Economy and Finance, the task force comprises a national coordinator (Luís Cezerilo), with three major areas or subsectors, namely the Technical Assistance and Coordination subsector, of which the technical assistance partners are part; the Multisectoral Working Group led by the Mozambique Financial Information Office (GiFim); and the private sector and civil society organizations.
Luís team looks at this situation holistically. Because Mozambique may have many institutions functional in preventing and combating money laundering and terrorist financing, but if two or three of them have deficiencies, they will not pass the FATF. This means that Mozambique will be evaluated in an integrated manner.
In other words, the institutions should be working to show that there is articulation, from the National Criminal Investigation Service (SERNIC) to the courts, among other institutions that should convict or acquit any accused persons.
The envisaged planned action may, however, require some revisions of the law. But Luís believes that the country has good legislation. What the FATF and ESAAMLG (Eastern and Southern Africa Anti-Money Laundering Group) want is for the legal office of the institutions, such as the Inspectorate General of Gaming, to address matters of money laundering and financing of terrorism. So, the recommendation is that a revision be made to add this matter to the law.
What happens if Mozambique fails?
If Mozambique fails to comply with the FATF standards, Maputo will be enjoined with other non-cooperative countries and territories (NCCTs). This can have severe consequences for the country’s economy, as it would result in financial sanctions and reputational damage. The country could also face difficulties in accessing international financial markets, and investors could lose confidence in the country’s economy.
Moreover, Mozambique could also face renewed pressure from the World Bank and the International Monetary Fund (IMF). These organizations may close financing taps to Mozambique. Alternatively the lenders may significantly cut financial assistance until the country addresses the said deficiencies.
Money laundering is a serious issue that affects countries all over the world, and Mozambique is no exception. While the country has made progress in recent years to strengthen its anti-money laundering and counter-terrorist financing framework, more work needs to be done to ensure full compliance with the FATF standards. By taking the necessary measures, Mozambique can continue to attract foreign investment and ensure the integrity of its financial system.