Liberia

The 14-year civil strife in Liberia from 1989 to 2003 not only saw the mismanagement of government resources and the destruction of Liberia’s physical infrastructures (in and around the capital, Monrovia), but also the systematic erosion of the rule of law and the closure of many businesses, the illegal and rampant exploitation of natural resources (e.g. timber and diamonds), the proceeds of which were presumably laundered and used by the Charles Taylor government to consolidate its hold on power and for the continued perpetration of civil strife until 2001 when the United Nations imposed sanctions on Liberian diamond and timber exports.

Liberia is seen as a transshipment point for Southeast and Southwest Asian heroin, and South American Cocaine for European and US markets. Corruption, criminal activities, arms-dealing, the overwhelming dominance of the use of the US dollar as an accepted medium of exchange, and the illegal diamond trade/timber logging along the porous borders outside the security cover of the UN Mission in Liberia provides a significant potential for money laundering and the illicit drug trade in Liberia.

The Liberian economy is essentially cash-based, with the US dollar almost replacing the Liberian dollar as the medium of exchange. The formal financial sector in Liberia includes five commercial banks, three officially recognized money remittance agencies, 56 licensed bureau de change service providers, 19 insurance companies, and a very large number of non-licensed foreign currency exchange bureaux.

The operative legislation on ML in Liberia is the June 2002 amendment to the new Penal Law, Title 26, headed Chapter 15 – Offenses against Property, Sub-Chapter G – Prevention of Money Laundering. This amendment, enacted in the wake of the allegation of illicit exploitation and mismanagement of Liberia’s mineral and natural resources, and gun-running charges leveled against the Charles Taylor Government, is regarded by the authorities as the appropriate legal framework for combating money laundering in Liberia. The Central Bank of Liberia (CBL), though the apex supervisory and regulatory agency of financial institutions in Liberia, is not specifically assigned any roles and responsibilities in the Liberian AML law. A general assessment of the contents and provisions of the present Liberian AML law is that it falls short of the general provisions and contents of the Vienna and Palermo Conventions. There is also no legislation in Liberia against financing terrorism.

The CBL, which presently houses the Office of the GIABA National Correspondent in Liberia, is providing administrative and logistics coordination on ML issues. The AML Law does not provide for establishing an FIU, but the Liberian authorities are proposing setting one up, to be housed initially at the Bank. No date has been fixed for this, though Liberian officials have attended seminars on drafting the legal framework.

In an attempt to comply with UN Resolution 1373, in 2005 Liberia established a body called the Liberian Policy Committee against Money Laundering and Terrorist Financing. The committee has as members the Ministers of Finance, Justice, and National Security and the Governor of the Central Bank. This body, though not designated a stakeholders’ forum because of its present restricted membership, functions as a forum for national stakeholders. If it is intended to serve as the AML/CFT Inter-Ministerial Committee, as mandated by the GIABA Ad Hoc Ministerial Committee, there is no evidence of its effectiveness – through regular meetings, for example.

Apart from Amendment Title 26, there are other laws and regulations that relate to combating money laundering and terrorist financing: An Act creating the Public Procurement and Concessions Commission 2005; Central Bank of Liberia Regulation on Know Your Customer and Customer Due Diligence 2005; Central Bank of Liberia Regulations for the Licensing and Supervision of Foreign Exchange Bureau 2000; Regulation for the Licensing and Supervision of Money Remittance Entities 2004; Regulations Dealing with the Physical Movement of Foreign Currency Bank Notes 2001; and Regulations Concerning Transfer of Foreign Currency 2001.

Liberia is a signatory to a couple of international conventions and treatises. According to the Liberian Minister of Justice, Liberia has ratified ten out of 16 UN conventions and treatises, and six are still under consideration. Though Liberia ratified the UN Convention against Corruption in September 2006, it has yet to ratify the African Union Convention on Preventing and Combating Corruption and Related Offences.

In broad outline, the Central Bank KYC/CDD regulations try to identify when KYC/CDD measures are to be undertaken, and under what circumstances KYC/CDD should be undertaken. On suspicious transaction reporting, the legal framework for the preventive measures is the CBL guideline on KYC/CDD. The regulation defines designated thresholds of expenditure or banking transaction beyond which the transaction must be considered and treated as a high risk or suspicious transaction/activity. The established threshold or limit for transactions is US$25,000 or its equivalent in Liberian dollars or other currencies. The Regulation does not specify whether this threshold applies to individuals or corporate bodies, or whether it relates to a single transaction or a series of transactions.The reporting requirement under the Regulation is that banks should promptly submit to CBL a suspicious transaction return, wherever and whenever applicable. The banks were also required to freeze the proceeds of a suspicious account pending investigation by the appropriate government authority. The CBL KYC/CDD Regulation is however silent on suspicious transaction reports thought to relate to terrorism and terrorist financing. Other regulations issued by the CBL are Regulation #25 of 2001 dealing with Physical Movement of Foreign Currency Bank Notes; Regulation #26 of 2001, Regulations Concerning Transfer of Foreign Currency; Regulation #3 of 2004 dealing with the Licensing and Supervision of Money Remittance Entities; and the CBL Regulations for the Licensing and Supervision of Foreign Exchange Bureaux.