By Usman Konneh: Senior Officer, National Risk Assessment and Outreach Division

In the early 2000s, the Bank of Sierra Leone (BSL) issued the country’s first Anti-Money Laundering Regulations (AMLR) to the financial sector intended to combat the threats of Money Laundering and Terrorist Financing as well as to protect the integrity of the financial system. The Bank of Sierra Leone went a step further to establish the Anti-Money Laundering Division (AMLD) tasked with the responsibility of monitoring the compliance of Financial Institutions (FIs) with Anti Money Laundering Regulation.

In 2005, a major phenomenon happened and that was the passing of the first AML Act. This Act had provisions which, for the first time in the history of the country, criminalized Money Laundering in line with the Palermo Convention, the creation of the Financial Intelligence Unit, requirements for the implementation of preventive measures by both Financial Institutions and the Designated Non-Financial Businesses and Professions (DNFBPs) and a host of other measures intended to strengthen the Sierra Leone AML/CFT Regime.

Thereafter, the country was assessed by the World Bank in 2006. Even though Sierra Leone had made some progress in strengthening her AML/CFT systems, some major deficiencies were identified based on the assessment conducted. Key amongst them included the non-existent of an autonomous Financial Intelligence Unit, the lack of implementation of AML/CFT measures by Financial Institutions and DNFBPs, weak declaration of the cross-border currency regime and the implementation into domestic law the ratification of United Nations Security Council Resolutions (UNSCRs) 1267 and 1373. “Resolution 1267 The Security Council imposed targeted sanctions on the Taliban and demanded its leadership to cease its support of terrorists and turn over Usama bin Laden to a place where he would be brought to justice” and “Resolution 1373 (2001) imposed binding legal obligations on all Member States, requiring them to adopt appropriate legislative measures to counter the flow of resources and arms to terrorists, and to deny them safe havens”.

In response to these strategic deficiencies, the country went on to repeal and replace the AML Act of 2005 with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Act of 2012. The Act addressed good number of deficiencies based on the 2006 assessment. Notable amongst them was the establishment of the Financial Intelligence Unit as an autonomous government agency mandated to coordinate and spearhead Government policy formulation in the fight against Money Laundering/Terrorist Financing.

The 2020 Mutual Evaluation also identified various deficiencies to be addressed by Sierra Leone to further deepen her strength in the fight against ML/TF/PF. The International Monetary Fund notes that good policies are key to the integrity and stability of the international financial system and member countries’ economies. Therefore, to overhaul the rules and regulations and standardize the legal instrument was one of the key recommendations from the MER. Thus, the leadership of the Agency initiated a repeal process of the AML/CFT Act, 2012. A lot of consultations and deliberations were done, key areas were highlighted for adjustments. Over fifteen areas in the AML/CFT Act, 2012, have either been modified/repealed or completely replaced. In the new act, contentious issues have been addressed. Issues like the lack of a clear provision for the independence and autonomy of the Unit, the overwhelming power vested in the governing body (the Inter-Ministerial and Technical Committees), establishment of the office of the deputy director (now deputy director general) have all been adequately taken care of.  The Inter-Ministerial Committee, for instance, has been replaced with an advisory board with a more cogent representation from important AML/CFT stakeholders that were hitherto not represented. Similarly, the new act designates the FIU as the sole national central body responsible for the receipt, analysis, and dissemination of financial intelligence. Some strengths have been added to the sledgehammer as well. The Agency can now issue directives and guidelines to supervisory authorities as it may consider necessary for carrying out its functions under the Act. It can also impose and enforce administrative sanctions and penalties on reporting entities for compliance violations

The new advisory board is in compliance with Egmont’s requirements in ensuring the autonomy and operational independence of the Unit. The Egmont Group facilitates and prompts the exchange of information, knowledge, and cooperation amongst member FIUs. The Egmont Group provides FIUs with a platform to securely exchange expertise and financial intelligence to combat money laundering, terrorist financing, and associated predicate crimes. However, the Egmont Group does not conduct financial investigations. Instead, domestic law enforcement and investigative authorities manage such inquiries (The Egmont Group, 2024). The now expunged 2012 AML/CFT Act also failed to give a clear-cut demarcation when it comes to the operational independence of the director. Thus, there is no express provision in the Act that guarantees the operational independence of the director of the Unit. Unlike the old act, the new act protects the director general from arbitrary removal from office. These and hosts of other good provisions have been included in the legal instrument. This effort suggests that in whole, Sierra Leone takes the global effort to tackle the scourge of ML/TF/PF very seriously.

The job of the Financial Intelligence Agency to help coordinate the fight to keep the threats of ML/TF/PF at bay is as difficult as it is technical. It requires diverse cooperation with different AML/CFT stakeholders and other international players. This is the reason the Agency is fighting tooth and nail to gain the Egmont membership in order to expand it reach. Similarly, the FIA takes a lead in the process of risk assessment in the country. Even though the process requires the inputs of all stakeholders in the AML/CFT regime, but the Agency has the difficult task of putting data together and categorize them into various sectors with corresponding mitigating measures. This will eventually produce the national AML/CFT working plan that serves as a guide or torchbearer in the fight against AML/CFT/PF.

Money laundering and associated predicate offenses, as well as terrorist financing and the financing of the proliferation of weapons of mass destruction or proliferation financing are crimes that threaten the integrity and stability of a country’s financial sector and taint its international image. They can result in the complete destabilization of the economy. (IMF: Anti Money Laundering and Combating the Financing of Terrorism-AML/CFT)