West African Economic and Monetary Union: Financial Sector Assessment Program-Technical Note on Anti-Money Laundering and Combating the Financing Terrorism (AML-CFT) Supervision of the Banking Sector

This technical note discusses anti-money laundering and combating the financing terrorism (AML-CFT) supervision of the banking sector in West African Economic and Monetary Union (WAEMU). The decision to focus on the AML/CFT supervision of the WAEMU banking sector was based on the remit of the regional authorities; the importance to the regional economy of a well-integrated and well-functioning banking sector; and the results of money laundering and terrorist financing national risk assessments conducted to date in West Africa, which identify banks as relatively high-risk financial institutions. The AML/CFT off-site supervision program feeds into the risk-rating process but is not itself risk-based and communication with supervised entities is insufficient. Feedback to banks as part of off-site supervision should be enhanced, the on-site inspection methodology should be sharpened, and the risk-based approach should be fully implemented. The observations and recommendations in this report are based on discussions with regional and national authorities and the private sector as well as a review of relevant templates.