Member States : Burkina Faso
Having endured some social and political crises, including a series of army mutinies, in 2011, Burkina Faso registered commendable democratic progress in 2012. The country held its first joint local elections in December 2012, with more than 75% of its adult citizens casting their ballots. The turnout was a considerable increase from the 54% turnout rate in the 2010 presidential election. Significantly, despite continuous domination of the ruling Congress for Democracy and Progress (CDP), which won 70 seats in the 127-member parliament, the opposition Union for Progress and Change (UPC) proved to be formidable, having won an unprecedented 19 seats.
Despite this progress, however, Burkina Faso faced a series of challenges and uncertainties in the reporting year. In particular, there were concerns that attempts by the president and the ruling party to remove the two-term limit on the former by amending Article 37 of the Constitution, and the possibility of the president seeking another term in 2015 were not only potential sources of unrest and insecurity in the country, but also could undermine its fragile democratic progress. The high number of weapons used during the crises still in circulation and the numerous citizens, mostly soldiers, awaiting trial are of particular concern.
Perhaps the most notable of the challenges was the threat of terrorist infiltration and destabilization posed by the worsened insecurity in the Sahel region, particularly in neighbouring Mali. In addition to acting as designated mediator of the ECOWAS on the Malian crisis, Burkina Faso hosted thousands of Malian refugees.28 During several Ordinary and Extra-Ordinary Summits of the Authority of Heads of State and Government of the ECOWAS, the chief mediator, His Excellency, Blaise Compaore, was highly commended together with his Co-mediator, His Excellency, Goodluck Jonathan, President of the Federal Republic of Nigeria.
At the same time, in terms of good governance, the Transparency International corruption perception index for 2012 ranks Burkina Faso 83rd out of 174 countries with a score of 38. With this ranking, Burkina Faso remains in the category of countries whose public sector is very corrupt and thus vulnerable to ML. This underlines the need for the country to have institutions that are more transparent and accountable for their actions.
Economic and Financial Situation
Burkina Faso’s economic outlook was favorable, particularly with an expected growth rate of 7% in 2012 and in 2013. The projected 2012 rate is higher than the 5.3% projected by the African Development Bank (AfDB).
With its heavy dependence on agriculture, growth in 2012 was attributed to relatively good rainfall. Specifically, following a 16% contraction in 2011, agricultural production was expected to increase by nearly 25%. Cotton spinning in particular, the mainstay of the economy, was expected to increase by an estimated 13% over the previous years.Unfortunately, cotton prices declined by 43% in 2012. Expansion of mining activities, as manifested by the slight increase in gold production to 32 metric tons, contributed to the country’s growth. Gold prices continue to appreciate on the international markets. Revival of the industrial sector, which began in the fourth quarter of 2011, was sustained in the first quarter of 2012.
The Financial sector of Burkina Faso is developing with 12 commercial banks accounting for over 90% of the sector’s total assets, which according to World Bank figures, represents 21% of GDP in 2010. Remittances inflows in 2011 amounted to USD111 million, equivalent to 1.1% of GDP.
Notwithstanding this progress, Burkina Faso was considered among the poorest and least developed countries in the world, having been ranked 181st out of 187 countries in the UNDP’s 2012 Human Development Index. An estimated 56.5% of the population live below the poverty line with a life expectancy rate of 55.4%. Unemployment and underemployment affects a large part of the population, particularly those in the rural areas who constitute 80% of the population. This has a potential effect on crime and criminality, especially the predicate offences for money laundering.
At the same time, an increase in the prices of gas and grain, particularly during the second quarter of 2012, resulted in increased inflationary pressures in the first eight months of the year. The BCEAO also projected an increase in Burkina Faso’s budget deficit from 2.6% of GDP in 2011 to 2.9% in 2012.
In response, the Government of Burkina Faso adopted an Accelerated Growth Strategy and Sustainable Development (SCADD) program for 2011-2015 to foster the well-being of its people. SCADD is based on four main areas: developing the pillars of accelerated growth, consolidating human capital and social protection; strengthening governance (economic, political, administrative and local); and mainstreaming cross-cutting priorities in policies and programmes. Good governance and poverty alleviation measures help to reduce the incidence of acquisitive crime, and are thus helpful to AML/CFT.
Prevalence of Predicate Crimes
Sharing largely porous and unmonitored borders with six West African countries, Burkina Faso remains an ideal transit point for narcotics from West Africa across the Sahel to Europe. In July 2012, Burkinabe authorities reported that their seizure of narcotics totaled 991 kilograms. Some Burkina Faso citizens work for pharmaceutical corporations and participate indirectly in trafficking drugs on transit. However, they are not producers, organizers, financiers or major players. They are mostly organized as small drug couriers serving criminals from Nigeria, Togo, Ghana, Côte d’Ivoire and Guinea Bissau. Moreover, cannabis cultivation remains prevalent in Burkina Faso, particularly in areas along the south borders and on the outskirts of Ouagadougou.
Furthermore, corruption and embezzlement of public funds persists in Burkina Faso, as exemplified by the refusal of the Banque Internationale pour le Commerce, l’Industrie et l’Agriculture in Burkina Faso (BICIAB) to accept a deposit of 36 million CFA francs in cash from a former government minister39. Likewise, an unknown, albeit, large sum of money was found in the home of a former senior custom official.
Moreover, the Embassy of Burkina Faso in the United States is one of the seventeen (17) African diplomatic missions banned, until further notice, from opening an account in any bank inside the United States. According to the U.S. State Department, “American banks suspect that these African diplomatic missions conduct bank transfers that may not always relate to the work of the Embassy and its staff”. A memo has been sent to embassies stating that the list of African countries concerned was established following a U.S. Congress investigation on the corruption and use of U.S. banks for money laundering by the authorities of some African countries.
According to the US INCSR, a certain number of drug traffickers who have been intercepted in Burkina Faso over the past two years were found with drugs, cocaine or cannabis that they had ingested and/or were hiding on their bodies. The security officers at Ouagadougou airport have received basic training in profiling drug couriers and identifying suspicious behaviour by passengers.
The other threats facing Burkina Faso are fraudulent or counterfeit products and trafficking of endangered animal species. This is evidenced by the large amount of snake and crocodile skins seized by the Customs in July 2012 (247 crocodile skins and 12 reptile skins). Burkina Faso is also faced with the threat of terrorism and terrorist financing. Indeed, Burkina Faso has until now been spared from the activities of Al-Qaeda in the Islamic Maghreb which operates in the Sahel-Saharan strip. However, the group’s renewed activism in neighbouring Mali and the presence of other Islamist groups in the West African region may spill over into the country. In fact, there is reason to fear that the crisis in Mali is going to have repercussions on the internal security of Burkina Faso through the incursion of fighters, the rise of Islamic fundamentalism, the upsurge of cross-border banditry, and insecurity induced by the presence of hundreds of Malian refugees. Predictably, that would go along with the threat and risk of ML and TF.
Burkina Faso submitted the third follow-up report on its mutual evaluation exercise to the GIABA Technical Committee/Plenary in November 2012. The report highlighted measures taken by Burkinabe authorities to correct the deficiencies in its anti-money laundering and counter terrorist financing system. According to the report, the country, made progress in strengthening the operational capability of the FIU and the Interdepartmental Committee on AML/CFT. For instance, the GIABA AML/CFT analytical software was installed in the FIU of Burkina Faso in November 2012. User training on the software was provided to the FIU by GIABA to allow them take ownership and operate the software along with the hardware to improve and expedite their receipt, analysis, and dissemination of STRs. Progress was also made in strengthening the legal and institutional framework, particularly with the appointment of a specialized ML/TF magistrate to handle money laundering related issues.
Having recognized the threat posed by ML/TF, the Burkina FIU conducted a study on the extent, nature and dynamics of the problem in the country. It was envisaged that the findings of the study will inform the design of policy and operational responses, including finalization of the draft National Strategy on AML/CFT.
The FIU also organized a series of training and awareness workshops for students, compliance officers including directors of insurance companies, among others. Furthermore, it initiated formalities to become a member of the Egmont Group by July 2013. The report on the on-site visit of its sponsors (TRACFIN and the Senegal FIU) was discussed and adopted at the Egmont Group’s 20th plenary meeting, held from 9 to 13 July 2012 in Saint Petersburg. The FIU signed cooperation agreements with the FIUs of Nigeria, Ghana, Gabon, the Principality of Monaco and the Kingdom of Morocco. This brings the number of MOUs signed to seven (7) since its inception.
With regard to raising awareness, the Minister of Economy and Finance presented a report prepared by the FIU to the cabinet meeting so as to inform and sensitize high-ranking political and administrative authorities on AML/CFT issues. The report informed the officials about the country’s progress on AML/CFT as well as the FIU’s decisive role in processing financial information for good governance and the implementation of the approved national AML/CFT strategy.
The FIU organized training and awareness activities at the national level, including:
• The AML/CFT information and awareness workshop, organized on 3 June 2012 for the students of the Ouagadougou based African Management Institute (Fr. Institut Africain de Management (IAM-Ouaga);
• The AML/CFT information and awareness workshop, organized on 5 July 2012 for the Directors of National Insurance Companies and Board Members of the Yaoundé International Insurance Institute;
• A national validation and finalization workshop on Burkina Faso’s national AML/CFT strategy and action plan, organized on 29 August 2012;
• Assistance to the Société Burkinabè d’Intermédiation Financière (SBIF) to enable the association to establish its internal AML/CFT compliance framework in 2012.
Nonetheless, challenges exist as evidenced by the filing of only seventeen (17) STRs to the FIU in 201242. This shows a lack of active involvement from the other AML/CFT reporting entities. Owing to the lack of personnel (analyst), appropriate software and a database, the FIU began processing STRs only in 2012. Two cases have been referred to the prosecution authorities. However, there has been no conviction yet for money laundering or terrorist financing in Burkina Faso. Technical Assistance
Burkina Faso requires assistance for various training activities designed for personnel, particularly regulatory, supervisory, and judicial and law enforcement officials. In the same vein, the FIU needs funding for study trips to foreign FIUs to optimize the performance of its staff.
Concerning the safety of people and data, the FIU intends to procure a video surveillance system, an alarm system, fireproof safe boxes, back-up power generating plants and a heavy-duty central inverter with enough capacity to sustain electricity during the several outages in Burkina Faso.
Burkina Faso experienced a period of economic and financial progress in 2012. Yet, it remained vulnerable and faced threats emanating from predicate criminal activities and insecurity in the Sahel region. The capacity to respond to these threats remains relatively weak.
Furthermore, Burkina Faso achieved minimal progress with regard to AML/CFT, not least because of major deficiencies in its existing AML/CFT regime. Although Burkina Faso remains under regular follow-up for producing follow-up reports on its mutual evaluation process, it is recommended that more efforts be made to get the AML/ CFT system in line with the FATF sixteen (16) core principles and key recommendations. To do so, Burkina Faso has to strengthen the customer due diligence measures in the financial system, the supervision and monitoring of reporting entities, and international cooperation. There is no evidence of any TF related STR received by the FIU. Therefore the country must put in place the mechanism required for freezing and confiscation. An effective National AML/CFT Strategy should be put in place, as well as an Inter-Ministerial Committee at the technical level to coordinate the national efforts in fighting these scourges.