12/05/20

AFRICA: EU set to launch an investigative body, after blacklisting four African countries for money laundering.

As published on venturesafrica.com, Monday 11 May, 2020.

As a result of the risk posed from money laundry and terrorism finance, the European Union recently raised a red flag on four African countries -Botswana, Ghana, Mauritius, and Zimbabwe. In a more aggressive approach, the EU now intends to create an arm to fight financial crime and monitor banks and other issues around monetary transactions.

The 27 state commission believes it needs an efficient EU-level supervisor, that can grossly tackle financial loopholes that enable criminals to penetrate financial protocols.

“An integrated system should be put in place,” read the document made public on Thursday. However, the commission will first carry out a survey and assessment of the possible impact that may come with the resolution.

Furthermore, the European body emphasized on building an investigation body that will have a unique position in the financial world as opposed to being outrun by the European Banking Authority and other investigative bureaus.

“We need to put an end to dirty money infiltrating our financial system. Today we are further bolstering our defenses to fight money laundering and terrorist financing, with a comprehensive and far-reaching Action Plan,” EU Executive Vice President of the European Commission, Valdis Dombrovskis said.

African countries already blacklisted are looking at more grave consequences like the thorough vetting of financial transactions that involve countries within the European territory.

Already companies in the blacklisted regions are prohibited from receiving funds from the EU.

The revised list is set to take effect from October 2020, a proactive measure which will involve African countries and financial institutions collaborating extensively to develop feasible ways to appeal for consideration and also maintain an amicable international relation with the European organization.

On the positive side, Ethiopia and Tunisia were redeemed and cleared off the blacklist due to their significant realization in tackling money laundering and terrorism financing.

Over the last 2 years, African nations have been consistent on the EU red flag region. This also indicates that the continent as a whole needs to combat the derogatory reputation of money laundering, dirty money bags, and getaway location.

That sort of derogatory image might hinder potential investors from other promising continents.

Another negative reputation to consider is the tax haven tag which Seychelles was listed on in February 2020. Mauritius was once blacklisted as well but was cleared in 2019.

The EU and its member states donate approximately €20 billion yearly to Africa in terms of development aid at the continental, regional and national levels.