Republic of The Gambia

Political Situation

The Gambia maintained its image as a peaceful and stable country in West Africa. It remains on a difficult democratic trajectory, as evidenced by the absence of a strong political opposition. The March 2012 parliamentary elections, during which the ruling Alliance for Patriotic Reorientation and Reconstruction (APRC) won 47 of the 57 parliamentary seats, were boycotted by the opposition United Democratic Party, the National Alliance for Democracy, and others, as fraudulent. The formation of a government in exile, the National Transitional Council of The Gambia (CNTG), in neighboring Senegal by an opposition political group in September 2012 further illustrated The Gambia’s democratic deficits⁷¹.

According to the Mo Ibrahim Foundation’s 2012 Ibrahim Index of African Governance (IIAG), The Gambia’s performance improved slightly, the country having scored 52 out of 100 and ranked 27^th out of 52 countries, compared with its score of 51 out of 100 in 2011 and in 2010. However, it was ranked low on accountability and Human Rights categories, scoring only 32.7% and 28.6% respectively. Indeed, the execution of several foreign prisoners provoked an international outcry and re-ignited long standing concerns about continuous human rights infractions in The Gambia. The absence – and in many cases repression – of political opposition, as well as the country’s problematic human rights record, could potentially undermine AML/CFT efforts, as groups and citizens, particularly journalists, may be unwilling to report cases involving public officials.

Economic and Financial Situation

The Gambia’s economy was expected to grow by 5.6 percent in 2012, compared with 5.5% in 2011. The International Monetary Fund projected a 1.2% contraction in 2012 and a 9.7% expansion in 2013.

Considering that agriculture is the mainstay of the country’s economy, poor weather conditions negatively affected crop production and economic activities in the first three quarters of 2012. Nonetheless, a strong rebound in crop production, growth in the tourism sector, and international development assistance helped mitigate the impact on farmers and vulnerable families. Reforms implemented by the government in agriculture, however, will continue to boost the economy and sustain its growth.

Owing to fiscal adjustments, inflation was projected to rise from 4.7% to slightly less than or equal to 5% in 2012 and in 2013. The budget deficit is expected to decline from 4.2% in 2011 to 3.8% in 2012 and 2.8% in 2013. Furthermore, the current-account deficit was estimated to have declined slightly from 17.5% in 2011 to 16.9 percent in 2012, not least because imports were expected to decrease.

The pace of monetary expansion remained modest. By September 2012, money supply grew by 7%, lower than the 11.5% in 2011. Both components of money supply increased, with narrow money growing at a slower pace of 4.7% and quasi-money by 8.9%. Reserve money contracted by 3.1%, significantly lower than the growth rate of 13.0% a year earlier. Reserve money is projected to increase by 5.8% by end-December 2012.

The Financial sector of the Gambia, mainly dominated by banks, has 14 deposit money banks, accounting for 90% of the sector’s total assets valued at 47.2% of GDP in 2010. Remittances inflows in 2012 amounted to USD91 million, which represents about 8.2% of GDP.

The Government sought to pursue a comprehensive tax reform that would broaden the tax base, simplify procedures, and lower tax rates, while preserving revenues. However, fuel subsidies continued to cut into potential tax revenues, as little progress was achieved toward eliminating them, despite monthly price adjustments.

Growth of credit to the private sector and deposits in commercial banks slowed considerably in 2012. In May, with inflation pressures contained, the Central Bank of The Gambia (CBG) acted to ease its monetary policy stance by reducing the reserve requirement on deposits by two percentage point (to 10%). Also, the CBG continued to strengthen banking supervision. In preparation for the upcoming increase in the minimum capital requirement at the end of 2012, the CBG reviewed banks’ plans for meeting the new requirement and stood ready to strictly enforce the new measure.

Prevalence of Predicate Crimes

The Gambia is a tourist attraction in West Africa. Consequently, it is one of the targets of drug cartels from the South Americas to transit drugs to the US and Europe, as evidenced by recent seizures. Another major challenge that the country faces is the level of cash involved in business transactions in cross-border trade. The economy is cash-based with an underdeveloped financial system. The financial sector has regulatory and supervisory challenges coupled with a rudimentary payment system. The Non-Financial Businesses sector is unregulated with weak supervision. There are limited state apparatuses to combat crime, with very porous borders. In general, there is neither empirical data on the size of the informal economy, nor the prevalence and impact of various petty crimes on money laundering and terrorist financing. Nevertheless, The Gambia’s governance rating declined, having scored 34 out of 100 and ranked 105^th out of 174 countries in Transparency International’s 2012 Corruption Perception Index (CPI), compared with its ranking of 77^th out of 182 countries in 2011. In response, the Government of The Gambia introduced an anti-corruption bill aimed at combating malpractices.

AML/CFT Situation

The Gambia’s mutual evaluation was conducted and adopted by the GIABA Plenary in 2008. After a threat of issuance of a Public Statement against the country during the GIABA Plenary meeting in May 2012 The Gambia revised the 2003 AML/CFT bill and re-enacted a new AML/CFT Act in July 2012. The Act aims to address the deficiencies identified by assessors during the mutual evaluation exercise. Prior to the passage of the Act, the Inter-Ministerial Committee was reactivated, with its new members being sensitized on issues related to AML/CFT. The Committee coordinated the process of passing the new Act, and is currently considering the budgetary modalities of the FIU. Further details on progress made by this country on the implementation of the recommendations in its MER can be found in Chapter 3.

Meanwhile, a Chief Executive Officer of the FIU and National Correspondent to GIABA was appointed. These are welcome developments as they will speed up the operationalization of the FIU.

The FIU remained semi-operational as there was no clarity on its actual budget or personnel size.  Also, until an independent Board is appointed, it is difficult to rule out the possibility of its being influenced by the authorities of the Central Bank since most of, if not all, the staff members were drawn directly from the banking department of the CBG. In addition to the non-operationalization of the FIU and the persistent logistic and capacity constraints, application of the AML/CFT Act has not been fully tested. For instance, out of the 14 Suspicious Transaction Reports (STRs) received by the FIU in 2012, only five were forwarded to the law enforcement for further investigation. Even though the fourteen STRs represent a considerable increase from the 3 STRs filed in 2011, there is no information regarding what happened to the referred STRs and there is no record of ML or TF Conviction in the Gambia.

Technical Assistance

The Gambia was the first country to benefit from the GIABA’s comprehensive technical assistance for the provision of hard and software to the FIUs of 13 countries. The equipment was installed and tested in The Gambia FIU in July 2012 and more than two weeks user training was provided for the staff who would manage the system. Nevertheless, The Gambia needs technical assistance to enable the authorities to put in place an effective AML/CFT regime and bolster the fight against transnational organized crime. Such assistance would involve training and mentoring for judicial authorities, law enforcement and specialized investigating and prosecution agencies that deal with AML/ CFT issues. Specific needs include training and study tours to well established FIUs; further support for the development of a national AML/CFT strategy; acquiring currency scanners for border post interdiction; erection of an FIU office; and training on techniques of investigating and prosecuting drug trafficking and other ML/TF predicate offences.

Conclusion

Following the passage of the new law, the Gambia is now working on implementation strategies, starting particularly with the operational autonomy of the FIU. The Gambia needs to improve oversight supervision over financial and non-financial institutions, as well as DNFBPs; efforts must be made to test the law by bringing offenders to justice; and the country needs to put in place a proper mechanism for the freezing and confiscation of criminal assets as contained in the FATF R6, among other measures.