Mozambique is at risk of more financial restrictions by being added to the global list of countries not doing enough to prevent money laundering and terrorist funding.
The government is yet to comply with most recommendations of the Eastern and Southern Africa Anti-Money Laundering Group on what to do to avoid being placed on the Financial Action Task Force’s “gray list,” according to Amorim Bila, deputy director of the southeast African nation’s Financial Intelligence Unit.
The FATF, a global anti-money laundering body, will review the gas-rich nation’s progress at a meeting next month in Paris, he said in an interview in Maputo, the capital.
Mozambique joins several countries — including neighboring South Africa — facing the threat of penalties such as restrictions on its lenders accessing the worldwide financial system, and a delay in global transactions.
It would be a blow to one of the world’s poorest nations that’s been fighting a five-year war against an Islamic State-linked insurgency in the north of the country. The government is hoping that efforts to end the violence will result in the restart of liquefied natural-gas export projects worth more than $40 billion that have been delayed indefinitely.
Mozambique recently carried out a national risk assessment of money laundering and terrorist financing, which flagged a high risk of financial crimes, according to Bila. Corruption, drug trafficking, tax fraud, environmental crimes, and kidnapping for ransom are “all with a high level and an increasing trend,” he said.
Bila confirmed the findings of a United Nations Security Council report this year that the Islamic State group in Mozambique’s Cabo Delgado region was receiving financing from sponsors in Somalia and South Africa.
Mozambique is politically committed to prevent money laundering and terrorism funding, Finance Minister Max Tonela said in an interview last week. The government has bolstered the legal framework to prevent financial crimes and is working to speed up implementation of reforms, he said.