The Gambia

Political situation

The Gambia has maintained its image as a peaceful and stable country in West Africa. It remains on a difficult democratic path, as shown by the absence of a strong political opposition. The parliamentary elections of March 2012, in which the ruling APRC won 47 of the 57 parliamentary seats, were boycotted by the opposition, the United Democratic Party, the National Alliance for Democracy and others. The formation of a government in exile, the National Transitional Council of The Gambia (NTCG), in neighbouring Senegal by a group of opponents in September 2012 is a further illustration of the democratic deficit in The Gambia.

According to the 2012 Mo Ibrahim Foundation Index (IIAG), The Gambia’s performance improved slightly, with a score of 52 out of 100 and a ranking of 27th out of 52 countries, compared with a score of 51 out of 100 in 2011 and 2010. However, it was poorly ranked on accountability and human rights, with only 32.7% and 28.6% respectively. Indeed, the execution of several foreign prisoners caused an international outcry and revived long-standing concerns about continued human rights violations in The Gambia. The absence – and in many cases the repression – of political opposition, as well as the country’s record on human rights, could undermine AML/CFT efforts, among other reasons because some groups and citizens, particularly journalists, may be reluctant to report cases involving public officials.

Economic and financial situation

The Gambian economy was expected to grow by 5.6% in 2012, compared with 5.5% in 2011. The International Monetary Fund had forecast a contraction of 1.2% in 2012 and an expansion of 9.7% in 2013.

As agriculture is the mainstay of the country’s economy, poor weather conditions affected agricultural production and economic activity during the first three quarters of 2012. Nevertheless, a strong rebound in agricultural production, growth in the tourism sector and international development aid helped mitigate the impact on farmers and vulnerable families. The reforms implemented by the government in agriculture will continue to stimulate the economy and support its growth.

As a result of fiscal adjustments, inflation was expected to move from 4.7% to just under 5% in 2012 and 2013. The budget deficit was expected to fall from 4.2% in 2011 to 3.8% in 2012 and 2.8% in 2013. In addition, the current account deficit declined slightly, from 17.5% in 2011 to 16.9% in 2012, mainly because imports were expected to decrease.

The pace of monetary growth remains modest. In September 2012, the money supply grew by 7%, less than the 11.5% recorded in 2011. Both components of the money supply increased, with narrow money growing at a slower rate of 4.7% and quasi-money by 8.9%. Reserve money contracted by 3.1%, a rate well below the growth rate of 13.0% a year earlier. Reserve money was expected to increase by 5.8% by the end of December 2012.

The Gambia’s bank-dominated financial sector has 14 deposit money banks, which account for 90% of the sector’s total assets, estimated at 47.2% of GDP in 2010. In 2012, remittances amounted to USD 91 million, or around 8.2% of GDP.

The government is seeking to pursue a comprehensive tax reform that broadens the tax base, simplifies procedures and reduces tax rates while protecting revenue. However, fuel subsidies continue to eat into potential tax revenue, as little progress has been made towards their elimination despite monthly price adjustments.

Growth in credit to the private sector and in deposits with commercial banks slowed considerably in 2012. In May, with lower inflationary pressures, the Central Bank of The Gambia (CBG) eased its monetary policy by reducing the deposit reserve requirement by two percentage points (to 10%). The CBG also continues to strengthen banking supervision. In anticipation of the forthcoming increase in minimum capital requirements at the end of 2012, the CBG reviewed the banks’ plans to meet the new requirements and is ready to apply the new measure strictly.

Prevalence of predicate offences

As a major tourist destination in West Africa, The Gambia is one of the targets of South American cartels moving narcotics to the United States and Europe, as shown by recent seizures. Another major challenge facing the country is the amount of cash involved in cross-border trade. The economy is cash-based, with an underdeveloped financial system. The financial sector faces supervisory and oversight challenges, in addition to a rudimentary payment system. The non-financial business sector is unregulated and poorly supervised. The State has limited means to fight crime, and its borders are very porous. In general, there are no reliable data on the size of the informal economy or on the prevalence and incidence of predicate offences relating to money laundering and terrorist financing. On governance, The Gambia’s score fell: it scored 34 out of 100 and ranked 105th out of 174 countries according to Transparency International in 2012, compared with 77th out of 182 countries in 2011. In response, the Government of The Gambia introduced an anti-corruption bill to combat malpractice.

AML/CFT situation

The mutual evaluation of The Gambia was carried out and adopted by the GIABA Plenary in 2008. Following the threat of a Public Statement against the country at the GIABA Plenary meeting in May 2012, The Gambia revised the 2003 bill and enacted a new AML/CFT law in July 2012. This law aims to address the deficiencies identified by the assessors during the mutual evaluation exercise. Before the law was adopted, the inter-ministerial committee was reactivated and its new members were made aware of AML/CFT issues. The Committee coordinated the process of adopting the new law and is currently examining the budgetary arrangements for the FIU. Meanwhile, a Director General of the FIU and National Correspondent to GIABA has been appointed.

This is good news that will help speed up the operationalisation of the FIU.

The FIU has remained only partly operational, as little is known about its staffing and budget. In addition, until independent managers are appointed, it will be difficult to rule out the possibility of influence by the Central Bank authorities, since most, if not all, staff members were recruited directly from that bank. In addition to the FIU not being operational and to persistent logistical and human resource constraints, the AML/CFT law has not been fully tested. For example, of the 14 suspicious transaction reports (STRs) received by the FIU in 2012, only five were forwarded for further investigation. Although the fourteen STRs represent a considerable increase over the 3 STRs filed in 2011, there is no information on what happened to the STRs concerned, and there is no record of any ML/TF prosecution in The Gambia.

Technical assistance

The Gambia was the first country to benefit from comprehensive GIABA technical assistance for the provision of IT resources to the FIUs of 13 countries. The equipment was installed and tested in The Gambia in July 2012, and more than two (2) weeks of training were organised for the staff who will manage the system. Nevertheless, The Gambia needs technical assistance to enable the authorities to put in place an effective AML/CFT system and to strengthen the fight against transnational organised crime. This assistance would consist of training and mentoring for the judicial authorities, law enforcement agencies and specialised investigative and prosecuting agencies dealing with AML/CFT issues. Specific needs include training and study visits to well-established FIUs; further support for the development of a national AML/CFT strategy; the acquisition of scanners for border posts; the establishment of an FIU office; and training on investigation and prosecution techniques for drug trafficking and other ML/TF-related offences.

Conclusion

Following the adoption of the new law, The Gambia is now working on implementation strategies, starting with the operational autonomy of the FIU. The Gambia needs to improve the supervision of financial and non-financial institutions, as well as DNFBPs. Efforts must be made to test the law by prosecuting the perpetrators of ML/TF, and the country needs to put in place an appropriate mechanism for the freezing and confiscation of criminal assets, as set out in FATF R6, among other things.