West African Anti-money Laundering Body Flags Extractive Sector’s Illicit Financial Flows

The Inter Governmental Action Group against Money Laundering in West Africa (GIABA) has pointed out the extractive sector as a major source of illicit financial flows in the region, warning that high level corruption, misuse of virtual assets, drug trafficking and weak regulatory oversight are worsening money laundering risks.

Director General of GIABA, Mam Cherno Jallow, speaking at a regional training of journalists on investigative reporting of economic and financial crimes in Ghana said the West Africa region continues to face evolving threats linked to money laundering, terrorist financing and proliferation financing, with the extractive sector among the key areas of vulnerability.

Jallow who was represented by the acting Principal Officer, Communications and Advocacy, GIABA, Mr Timothy Melaye, noted that “our region continues to face evolving threats related to Money Laundering (ML), Terrorist Financing (TF), and Proliferation Financing (PF).”

The GIABA director general linked illicit financial flows to corruption in the extractive industry, saying, “Key vulnerabilities include high-level corruption resulting in illicit financial flows, largely from the extractive sector, the rise of terrorism-related activities, the misuse of virtual assets, drug trafficking, and the weak regulatory oversight of Designated Non-Financial Businesses and Professions (DNFBPs), among others.”

The disclosure places the extractive sector alongside emerging financial crime channels such as virtual assets and drug trafficking, while also highlighting regulatory gaps outside the traditional financial system.

On virtual assets, Jallow identified their misuse as part of the evolving threats confronting the region, while drug trafficking was also listed among activities contributing to the financial crime challenge.

He also raised concern over weak regulatory oversight of Designated Non Financial Businesses and Professions, identifying the sector as another area of vulnerability in the fight against money laundering.

Jallow said GIABA had been supporting member states to strengthen their legal and institutional frameworks, including bringing regulatory frameworks in line with Financial Action Task Force (FATF) standards.

“In the area of legal and institutional frameworks, GIABA has helped in bringing regulatory frameworks in line with FATF standards and the creation of Financial Intelligence Units in almost all Member States, most of which were non-existent at GIABA’s inception,” he said.

He added that GIABA had championed beneficial ownership disclosure and followed up with countries to establish public registers of ultimate beneficial owners of companies to reduce the areas that could be exploited by criminals.

“In terms of financial transparency, we have championed beneficial ownership disclosure, followed up with countries to establish a public register of ultimate beneficial owners of companies in order to reduce grey areas exploited by criminals,” Jallow said.

The GIABA chief said the organisation had completed the first and second rounds of mutual evaluations of its member states and had commenced the preliminary component of the third round.