Gambia: A corridor of illicit financial activities

Gambia: A corridor of illicit financial activities

The Gambia is one of the leading tax havens in Africa, Financial Secrecy Index released on Friday last week by the Tax Justice Network has revealed.

The Gambia has a secrecy score of 76.63, which makes it the 9th most secretive African country and the 3rdmost secretive West African country.

The small country scores a ranking of 106 lowest havens out of 112 countries in the world.

According to the US State Department, in 2011, Gambia was linked to money laundering activities.

A Gambian-based bank, the Prime Bank, was reported to have participated in money laundering activities with its parent bank, the Lebanese Canadian Bank (LCB).

Both were identified as financial institutions of primary money laundering concern under Section 311 of the USA PATRIOT Act. The LCB, according to the report, facilitated money laundering activities involving international narcotics trafficking.

The country also has several Lebanese businesses people who are reportedly involved in money laundering. Reports show that Lebanese abroad who are involved in illicit trade repatriated huge sums of money to Lebanon amounting to about $7.6 billion annually.

At 76 the country becomes one of the top 15 countries in the world on the financial secrecy score, behind nations such as Vanuatu, Bahamas, Paraguay, Maldives and Bolivia which scored 88.6, 84.5, 84.3, 81.1 and 80.3 respectively.

Gambian blogger and analyst, Sidi Sanneh, said money laundering is a big problem in the Gambia and the mechanisms are not in place to combat the menace.

“Gambia boast of a dozen commercial banks for a population of under 2 million or one bank for every 150, 000 Gambians. The ratio becomes more inexplicable when the population that utilizes banking services are a fraction of the population,” Sanneh said.

“In addition to watertight financial/banking regulations and the strict enforcement of the banking laws, the Central Bank of the Gambia must beef up its banking supervision department. Money laundering is indeed a problem in the country due to lack of enforcement of existing laws and regulations.”

This means that the country is a corridor for illicit financial activities like tax evasion and money laundering, hurting its revenue collection targets.

Although Switzerland and USA led the world in overall Financial Secrecy Index Value (FSIV), scoring 1590 and 1398 respectively, Kenya was the only African country that appeared on top 30 list of 112 jurisdictions reviewed in the index

Kenya is ranked position 27 with FSIV of 337, followed by Liberia which scored 277 and ranked position 38 globally.

Other African countries ranked in the report include Mauritius at position 49, South Africa 50, Tanzania at 75 while Ghana, Botswana, and The Gambia came in at position 95, 103 and 106 respectively

However, the index ranks Kenya below South Africa in the share of the global market of offshore financial services. South Africa constitute 0.18 percent of global share while Kenya commands a paltry O.04. Mauritius and Liberia hold 0.02 percent each.

US is leading the world in concentration of international financial centers at 22.3 percent followed by UK and Germany at 17.37 and 5.13 percent respectively

According to the Tax Justice Network, the index is a result of over a year of research by a dedicated team using information on the legal, administrative, regulatory, and tax structures of the jurisdictions assessed.

Surveys were sent to the Ministries of Finance and the Financial Intelligence Units of all 112 reviewed jurisdictions which included targeted questions about the jurisdiction’s tax and regulatory system.

According to Africa Foresight report, Sub Sahara Africa loses at least $50 billion (Sh5 trillion) every year to illicit financial flows, mispricing and other forms of capital flight, with countries like Togo and Liberia losing 94.2 and 83 percent of total trade to illicit outflows. Generally, 5.3 to 9.9 percent of Sub Saharan Africa total trade is lost in illicit financial outflows

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