Sanctions list heads compliance debate at Africa roundtable

Improving regulatory compliance in Africa could see a focus on implementing a sanctions list – similar to those applied by the US and Europe – delegates at a roundtable held recently in Accra, Ghana decided.

The event, for African banks, regulators and industry bodies from 12 countries, was organised by risk and compliance software provider Accuity. It was attended by representatives of the Association of Certified Compliance Professionals in Africa (ACCPA); commercial banks; the Inter-Governmental Action Group against Money Laundering in West Africa, aka GIABA; central banks; financial intelligence units (FIUs); and universities

Discussions focused on four key issues relating to the future of compliance in Africa: sanctions; politically exposed persons (PEPs), compliance; and trade-based money laundering (TBML).

“We worked with the ACCPA to share international and regional experience,” said Hugh Jones, chief executive officer (CEO) Accuity.

“Our objective was to better understand the African perspective on a range of compliance issues and work together to find recommendations for how to address these issues in Africa.”

Sanctions

Discussions on sanctions produced a broad consensus that Western sanctions lists solve global problems whereas an African list, with consolidated sanctions within the region, would be the best way to target distinctly African issues.

“With international sanctions, we see a major imbalance between Western practices and local African practices,” said Idrissa Diop, group head of compliance at EcoBank.

“For African banks, monitoring international sanction lists is not an issue, since the information is readily available and regularly updated. Local banks would benefit from regular updates of the sanctions issued by African authorities, in order to secure their respective licences.”

Pattison Boleigha, chief conduct and compliance Officer at Access Bank, said: “More stringent implementation of local laws will improve compliance in Africa and put us on the path to achieving global best practice standards.”

The debate moved on to which authority should assume responsibility for facilitating this change, with most participants agreeing that any solution would need to be politically-driven. Participants questioned whether the African Union could be called upon to implement a sanctions list for the continent, similar to the European Union’s (EU).

“Boosting compliance in Africa requires a comprehensive approach,” said Adama Coulibaly, director general of GIABA. “As it goes beyond mere compliance with laws and technical standards, compliance raises the need to create and implement a global network that may promote the sharing of information and best practices in real time.”

It was agreed that the solution will involve collaboration between regional and central banks and will need regulatory and government support.

Politically Exposed Persons (PEPs)

Delegates agreed that Africa should adopt a wider definition of PEPs than the West given the number of different organisations involved in political activity.

The notion of Prominent Influential Persons (PIPs) was raised, with participants stressing the importance of local influencers, such as religious leaders or chiefs of provinces. According to the Banking Association South Africa (BASA) the term ‘PIP’ is “a deviation from internationally accepted terminology.

Regional/local needs and international regulation

Among issues discussed on this topic:
• A local sanctions list and the potential for fines or penalties issued by local regulators would be taken seriously and would help to raise compliance standards across the continent.
• Criminal behaviour appears to be moving to Africa’s smaller, regional banks.
• Know-your-client (KYC) compliance is difficult when a number of addresses share the same utility bill.
• ‘Derisking’ by larger global banking institutions will accelerate and the unbanked will find alternatives to meet their demand which introduce risk.

Trade-based money laundering (TBML)

Delegates agreed that TBML is a growing issue but there is a lack of regulatory pressure, with banks currently suffering little to no monetary loss if TBML occurs.

Most global trade transactions are made in US dollars (USD) and are therefore subject to Office of Foreign Assets Control (OFAC) standards. There was unanimous agreement on the importance of respecting and complying with such international regulation.

Accuity representatives highlighted the need to identify and prevent the shipping of dual use and controlled goods lists to sanctioned or high risk jurisdictions.

Conclusion

“Compliance is both a global and a local phenomenon,” said Ernest Honya, chairman and president, ACCPA, in his summing-up. “All over the world, compliance professionals are constantly seeking local expertise to solve their most challenging problems.

“For African compliance, we look forward to building collaborative, information sharing networks within our compliance community and beyond.”

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