Member States : Guine-Bissau
In January 2012, Guinea-Bissau’s President, Mallam Bacai Sanha, died. This prompted a presidential election in March 2012, during which the interim president, Raimundo Pereira, did not win the requisite majority to avoid a run-off. Guinea-Bissau suffered another political setback when the military staged a coup in April 2012 ahead of the nation’s presidential run-off. The coup illustrated the country’s precarious political situation. The ECOWAS decided to establish a Military Force (ECOMIB) and deployed 679 troops to restore peace and stability in the country. Furthermore, the Authority of Heads of State of the ECOWAS appointed His Excellency, Goodluck Jonathan, President of the Federal Republic of Nigeria as the Chairman of the ECOWAS Contact Group with Guinea-Bissau.
Perhaps it is crucial to point out that the problem in Guinea-Bissau is political and not security per se. About 30 political parties in a country of 1.4 million struggle for supremacy. This is a manifestation of the extreme poverty and fragility of the State. The sanctions imposed on Guinea-Bissau by the international community are becoming counterproductive as nothing can move without constructive engagement. The main political challenge in this country is to conclude the Road Map for elections.
Economic and Financial Situation
The exploitation of natural resources is the main driver of the economy in Guinea-Bissau, which boasts considerable economic potential, thanks to its natural resource wealth and yet untapped sectors. But the economy is not very diversified and relies mainly on cashew, which made up 90% of exports in 2011.
Economic growth in 2011 was 5.1% and driven by exports. These contributed 14.4% to GDP. Forecastsshow that cashew demand and prices would drop from USD 1350 per ton to USD 1130.6 in 2012 and USD 1121.3 in 2013. Exports would also drop from 14.4% of GDP in 2011 to 13.9% in 2012 and 13.7% in 2013, taking their contribution to growth from 3.7% in 2011 to 0.1% in 2012 and 1.6% in 2013. On the whole, economic growth would rise from 4.6% in 2012 to 4.9% in 2013.
The Financial sector of Guinea-Bissau is still underdeveloped. There are 4 deposit money banks with a limited capital base and accounting for over 90% of the sector’s total assets valued at 11.2% of GDP in 2010. Remittances inflows in 2012 were at USD46 million, which represents about 4.7% of GDP.
The implementation of AML/CFT measures, including CDD is very weak, if it is done at all. However The Doing Business 2012 report shows that the country moved to the 176th position out of 183 countries, five (5) places better than in 2011, which is high potential for growth of the financial sector. The private sector is dominated by informal trade, which is difficult to regulate and shield from the laundering of proceeds of crime. Nevertheless, a number of reforms need to be made to bolster confidence in the donor community and help secure their investments.
Owing to many obstacles that include political instability, Guinea Bissau has a relatively high unemployment rate estimated at over 30% among young people. This unemployment results mainly from the lack of orientation for graduates entering the job market.
Apart from the impact of instability on production and investments, problems in the education system contribute also in depriving young people of their first job. Thus, there is need to create a national entity that identifies and assists unemployed persons so as to have a true assessment of the unemployment rate and tackle the problem effectively.
Prevalence of Predicate Crimes
The main sources of money laundering in Guinea-Bissau are drug trafficking, corruption and tax evasion. Smuggling and trafficking in persons, especially children, are the other threats and sources of illicit wealth.
Furthermore, many drug cartels have made Guinea-Bissau a transit point, trafficking drugs from Latin America to Europe due to the weaknesses in the institutional and control structures of the country. Guinea-Bissau is neither a producer nor a renowned consumer of illicit drugs; nevertheless, drug trafficking remains the biggest challenge to address. Many reports have decried the close relationship between the military leaders and narcotics traffickers. For example, the Chief of Staff is said to be the mastermind behind the junta. He and a group of others are suspected to have taken control of the Latin American cocaine trafficking trade that continues to pass through the country. Guinea-Bissau needs to take the necessary measures to restore political stability in the country in order to mitigate these threats that put its strategic and economic development in jeopardy.
Guinea-Bissau seems to have made no progress since the discussions on its third follow-up report in May 2012. For example, the President has still not approved the Counter-Terrorist Financing Act, the enforcement of which will have an impact on Recommendations 3 -6, 20 and 37. The main areas of progress have been the appointment and installation of FIU members, the development of the STR model template approved by the Finance Minister and sent to all departments as required by law, and the adoption of the Anti-Money Laundering Uniform Law by virtue of the National Assembly Resolution Nr. 4/2004 of 2 November, 2004 and of the Counter-Terrorist Financing Act.
However, a lot more still remain to be done. For example, Guinea-Bissau provided no information on the time it requires to obtain the President’s approval of the said legislation. On top of this, BCEAO has still not finished reviewing the Anti-money Laundering Uniform Law. From a general perspective, Guinea-Bissau’s fourth follow-up report failed to demonstrate the effectiveness of its AML/CFT system.
To rectify the deficiencies mentioned above, the Plenary suggested some interventions and the implementation of more enhanced procedures and monitoring of activities in the country.
The FIU of Guinea-Bissau was installed with the assistance of GIABA and UNODC. There has been no further action to improve the AML/CFT framework apart from the passage of the laws. In terms of technical assistance, the needs expressed by Guinea-Bissau are primarily in the legislative and judicial domains. The country is actually required to raise the awareness of its political authorities for them to provide stronger support for AML/CFT.
Building capacity for investigation is another major concern for the FIU authorities. To bolster the transfer of skills, training workshops for AML/CFT subject persons are required to ensure that they acquire the requisite skills for discharging their duties conscientiously.
The political instability in Guinea Bissau is a real burden on the economy. It is also slowing down progress in many other areas. The country report submitted to the 18th GIABA Plenary clearly states the challenges resulting from this situation.
The general review of progress in AML/CFT suggests that Guinea Bissau has not made any progress and nothing has changed in the country’s situation on AML/CFT since it submitted its third follow-up report in May 2012. Since the assistance rendered to the country to rent office accommodation, the government has not provided any support to the FIU. Despite the fact that nominated members are being paid by their primary organizations, more than four years has gone down the drain in terms of making the FIU truly effective with only one STR, which was referred to the Ministry of Justice more than a year ago. There is no idea what happened to that STR to date. Concerned about the lack of political commitment and progress in dealing with AML/CFT issues in Guinea-Bissau, the GIABA Plenary, at its 18th Meeting in Dakar, Senegal in November 2012, requested the Director General to undertake a high level mission to that country, if possible with representatives from member States.