Republic of Côte d'Ivoire

Political Situation

Cote d’Ivoire continues to incrementally transit to long-term peace and stability. Yet, the country’s political and security situation remains fragile, with the security situation deteriorating between August and October 2012. A series of deadly attacks targeting national security forces in and around Abidjan and along the borders with Ghana and Liberia were reportedly planned, financed and often executed by groups and individuals with connections to the previous government of Laurent Gbagbo. These attacks, particularly those alleged to have been carried out by opposition and rebel elements based in Ghana, and the resultant outbreak of violence in south-western Cote d’Ivoire, which led to  the closure of the border with Ghana in September 2012, not only threatened to undermine the country’s progress towards peace, but also deepened mistrust and divisions between the ruling coalition and the opposition. Furthermore, the government’s announcement of an alleged failed attempt by opposition-aligned soldiers, former presidential guards, and other rebel elements to overthrow it reflects the country’s continuously difficult transition to peace.

The volatile security situation and the stealing of weapons and ammunition by assailants during attacks on security installations have significant implications for the trafficking and circulation of Small Arms and Light Weapons (SAWLs) in Cote d’Ivoire.

Despite these challenges, governance has improved considerably in Cote d’Ivoire. The country, having scored 39 out of 100, was ranked 46^st out of 52 African countries in the 2012 Mo Ibrahim Index of African Governance (IIAG). This represents a slight improvement on the ranking of 36 out of 100 that it received in 2011 and also in 2010⁵⁶. At the regional level, President Alassane Dramane Ouattara was elected Chairman of the ECOWAS and he demonstrated exemplary leadership in the management of the political crisis in Guinea Bissau and Mali. With the support of his fellow Heads of State, he presided over more than 10 ordinary and extra-ordinary Summits of the ECOWAS, the highest so far recorded within one year in terms of meetings of Heads of State to deal with conflict and political unrest in the region.

Economic and Financial Situation

Notwithstanding the volatile security situation and increased political tensions, economic activities in Cote d’Ivoire exhibited considerable resilience and returned to normalcy in 2012. The real GDP was expected to grow by 8.6% and 5.5% in 2012 and 2013 respectively. The 2012 projection was slightly less than the 8.9% and 8.1% projected respectively by the World Bank and IMF. To be sure, the projected growth is dependent on the consolidation of peace and the restoration of productive capacities. Higher cocoa exports, however, are expected to contribute to growth⁶⁰. Other services such as banking/insurance and the tourism/hotel industries recorded a growth rate of 17.1%.

Meanwhile, the government reported a 44.7% and 2.7% increase in revenues from taxes and non-tax sources respectively. The total revenue accounted for 20% of nominal GDP, up from 14.9% in 2011. At the same time, efforts by the government to revive the economy after the electoral crisis resulted in a 39.7% increase in expenditure. Investment expenditure, in particular, increased considerably in view of the execution of construction of social and economic infrastructures. These expenditures were at 5.4% of GDP against 2.6% in 2011. Similarly, current expenditure recorded an increase of 29.1%, prompted mainly by the increase in operating costs, salaries and conceded subsidies in the electricity sector.

These improvements were as a result of the economic reforms initiated through an ambitious national development programme for the period 2012 – 2015, which focus on galvanising public investment, and pushing growth while creating jobs. The IMF has agreed to support this economic programme under its interest-free Extended Credit Facility program to the tune of US$300 million over a 3-year period. At the same time, Cote d’Ivoire’s business 183 countries in 2012, compared with 170^th in 2011.

Notwithstanding this commendable progress, an estimated 65.5% and 29.4% of Ivorians remain in poverty. Despite the lack of reliable data, the situation was exacerbated by the post-electoral crisis. UNDP’s 2012 report on human development reveals that Cote d’Ivoire has a Human Development Index (HDI) of 0.4, which is slightly below the African Sub-Saharan Index of 0.463. Similarly, income per capita came to USD$1,387, far below the USD$1,966 recorded by the region.

The Financial sector of Cote d’Ivoire – the largest in the UEMOA zone – is not very much different from its other members. There are 21 banks that form the bulk of the financial sector, accounting for about 22% of GDP and equal to 80% of the sector. Remittances in 2011 added up to USD 373 million, which represented about 1.6% of GDP.

Prevalence of Predicate Crimes

The series of deadly attacks carried out and the volatile security situation point to the continuous smuggling and circulation of small arms and light weapons (SALWs) in Cote d’Ivoire. This is evidenced by the destruction of about 600 SALWs by the United Nations Mines Action Service in July 2012. Much of the arms and weapons suspected, were trafficked through Guinea, Mali, and other neighbouring countries. There is suspicion that some former rebel commanders used proceeds received from diamond districts in northern Cote d’Ivoire to purchase and traffic weapons into the country. Although diamond production has declined, there is suspicion that about $23 million is made from illegal diamond trade.

Cote d’Ivoire also continues to experience a series of other criminal activities, particularly cybercrime and smuggling of goods. An estimated 3 billion FCFA was stolen in three Ivorian banks by cyber criminals during 2012. The Director of Pharmacy of the Ministry of Health reported a loss of 21 billion FCFA due to smuggling of drugs in 2012. Furthermore, cocoa smuggling, particularly from neighbouring Ghana, remains prevalent not least because of large price differences between the two countries.

The seizure by customs officials in the department of Bondoukou of 1,200 kg of narcotics, including an unknown quantity of cannabis, with an estimated street value of 12 million FCFA, illustrated the persistence of illicit drug trafficking and production in Cote d’Ivoire. With regard to corruption, Cote d’Ivoire was rated 29 out of 100 and was ranked 130^th out of 174 countries in Transparency International’s 2012 Corruption Perception Index (CPI), compared with its ranking of 154^th out of 182 countries in 2011⁶⁸.

AML/CFT Situation

Cote d’Ivoire’s AML/CFT regime was evaluated by GIABA in May 2012. The Mutual Evaluation Report (MER) was discussed at the 18^th GIABA Plenary, held in Dakar, Senegal on 20-22 November 2012. The MER revealed that the country had signed and ratified the main conventions relating to organized crime, namely the 2000 Palermo Convention against Transnational Organized Crime, the 2003 Merida Convention against Corruption, the Vienna Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the UN 1999 Convention against Terrorism.

Following sustained advocacy engagement by the Director General of GIABA with Cote d’Ivoire’s political leaders in November 2011 and in February 2012, the country registered commendable progress on AML/CFT. Not only was the FIU’s budget increased to approximately 1 billion FCFA, but also its president was appointed as National Correspondent to GIABA. The FIU signed partnership agreements with its counterparts in France, Belgium, and Lebanon, and established contacts with the FIUs of Ghana and Morocco.

The FIU also carried out a study on the “Vulnerabilities of the Ivorian economy in the face of ML/TF, particularly in the Housing and Agricultural sectors”. Under networking, the FIU welcomed the organization of the Forum of WAEMU FIUs and its president was, thereafter, designated to head the structure. The FIU also regained its membership status in the Egmont Group.

Nonetheless, considerable challenges remain in Cote d’Ivoire, not least because compliance with international AML/CFT standards and implementation of recommendations in the MER may pose some challenges. Underpinning these challenges in particular is the lack of a national AML/CFT strategy, as well as an effective freezing mechanism as required under the FATF R6.

Despite passing its AML law in 2005, Ivorian law enforcement officials are yet to prosecute a case involving money laundering. Hence, the law is yet to be implemented. For instance, out of the sixty-one (61) STRs received by the FIU between November 2011 and September 2012, only one (1) was investigated and the report forwarded to the judiciary. There is still no information regarding the action taken by the judiciary on this case. Surveillance and Controlling agencies lack specific legal and operational powers under the AML law, thereby seriously undermining their ability to detect and prevent ML/TF. Also, the existing legal instrument on terrorist financing, namely, Order No. 2009-367 of 2009, fails to clearly define “terrorist organizations” or individual “terrorists” as envisaged by international standards.

Also the conditions set out for the execution of the UNSC Resolution 1267 (1999) on the confiscation of funds and other financial resources of persons and entities targeted by the UN Security Council are not satisfactory. The procedure fixed by Community Regulation No. 14/CM/ UEMOA of 19/09/2002 imposes a decision-making process and communication of lists to reporting entities that are relatively tedious. Moreover, there is no coordination and monitoring of the effective enforcement of confiscation decisions. In addition, lists from the Security Council are not widely circulated to banks and incidentally, do not receive any notices concerning these lists. There are equally no instructions or clear guidelines to help decision-makers understand and efficiently execute Resolution 1267 (1999) and 1373 (2001).

Technical Assistance

In addition to the high level missions undertaken by the Director General in preparation for the conduct of the mutual evaluation of Cote d’Ivoire and the hosting of the GIABA Plenary and Ministerial Committee meetings, GIABA supported the country to organize a pre-assessment workshop from 5 to 7 March 2012. The main objectives of the preparatory mutual evaluation seminar were basically to (a) inform and sensitize national stakeholders on the significance of the mutual evaluation and the preparation process required for them to be fully involved in the project and ensure the success of the exercise; and (b) use the opportunity of the workshop to update the Mutual Evaluation Questionnaire (MEQ) submitted to the GIABA Secretariat in October 2009. About sixty (60) participants representing the various sectors of the public and private administration in Cote d’Ivoire participated in this seminar.

As the adopted MER revealed significant deficiencies, especially in a number of core and key recommendations, Cote d’Ivoire requires further technical assistance in developing an efficient AML/CFT framework, including elaborating its legislative and regulatory frameworks, as well as developing a national AML strategy. Further investments are required to provide capacity training for personnel, including analysts, investigators and judges, and institutions responsible for the implementation of the AML/CFT means.

Conclusion

Cote d’Ivoire continues to steadily transit to long-term peace and stability. Yet it remains beset by insecurity, violence, and political tension. At the same time organized criminal activities, including illicit trade in arms and weapons, underpinned by the prevailing security situation, cybercrime, smuggling of goods and drug trafficking  persist in Cote d’Ivoire. The country also continues to struggle to comply with international AML/CFT standards, not least because its AML/CFT framework remains significantly weak. Accordingly, Cote d’Ivoire must take steps to implement recommendations contained in its Mutual Evaluation Report, including criminalizing individual acts of terrorism, developing a mechanism for the freezing of assets in accordance with UNSCRs 1267 and 1373, and finalizing and adopting its national AML/CFT strategy to ensure synergy and proper coordination in its AML/CFT efforts.