Evaluation of Money Laundering Regulations in Ghana

Abstract: Purpose: The purpose of this thesis is to identify and appraise within the Ghanaian environment the level of regulations in combat of money laundering and terrorism financing, the extent of the regulation and the effectiveness of the regulations or laws. Method: Research methodology will be based on qualitative data collection and analysis approach which will consider the gathering of information personally by the researcher including interviews based on structured or semi-structures questions to potential respondents Theory: The theory considered various concepts of money laundering that exist. The chosen concepts identified the various typologies of the money laundering, the negative effects and the regulations adopted in the fight against money laundering in the light of internationally accepted standards. Analysis: The analysis was modeled around four set of issue as a means of evaluating the money laundering regulations in Ghana. They include extent of nation’s vulnerability to Money Laundering; existing Laws or Regulations; the Conformity of Laws or regulations to international standards and an overview of the new anti-money laundering law. Conclusion: Research and analysis revealed that the nation is susceptible to money laundering though it has existing regulations to combat the menace. The forms of money laundering are many and there seems to be very little public knowledge about money laundering. Financial sector of the economy is expanding and there is a need for a more rigorous means for the combat of laundering as its effect on the sector could be disastrous. The New Anti – Money Laundering law, Anti – Money Laundering Act 2008, Act 749 is timely but it has not been operational, the Financial Intelligence Center is yet to be set up since the enactment of the act in January in 2008; as at the time of writing this conclusion there is a new government in power and this government is yet to constitute a full cabinet of ministers or substantive ministers of state hence it is quite impossible to estimate when the Financial Intelligence Centre; according to France (BoG) during my interview with her, she mentioned that the Center is to be formed under the supervision of Ministry of Finance. Not withstanding, the yet to be formed Center, there has been some exiting laws or regulations from Bank of Ghana for the financial institutions in combat of money laundering and terrorism financing. 83% respondents agreed that there are existing regulations and Laws but only one respondent representing 17% indicted that those laws can best be cosmetic. The forms of existing regulations identified are as follows: The (KYC) Know Your Client or Know Your Customer Policy; (PEP) Politically Exposed Persons Policy; (CDD) Customer Due Diligence; (EDD) Enhanced Due Diligence and also regulations for banks to adopted a policy of setting threshold for which any cash or cheque deposit into an account should register to an investigate unit of the bank, such that any amount above the threshold raises an alarm for further investigation and so is any huge withdrawal request. In evaluating the existing regulations, two main assessment points were use as yardstick. They are conformity to international standards and effectiveness of the laws or regulations. Ghana is a member of the Inter-Governmental Action Group against Money Laundering and Terrorism Financing in West Africa (GIABA) which has formulated some for steps member countries to follow in their design of their internal policies in combat of Money Laundering. These steps are based on the 40 recommendation and the 9 special recommendations. Clearly it is noted that the few regulations or directives from Bank of Ghana conform to the FATF recommendations. For example • The (KYC) Know Your Customer directive, (CDD) Customer Due Diligence directive and (EDD) Enhanced Due Diligence directive that Bank of Ghana issued to the banks conform with Recommendations 4 to 12 of FATF. • The (PEP) Politically Exposed Persons directive which enables the banks deal with political figures of other countries is an international co-operation and a need for mutual legal assistance, these two conforms with the FAFT Recommendation 35 and FAFT recommendations 36 to 39 and again of FATF Recommendation 40. • The policies on threshold level also conforms to FAFT recommendations 17 to 21 as depicted in the literature review. From the examples given above there are clear indications that the regulations conform to international standards. The effectiveness of the regulation was set to detail or show how wide enough the regulation is in tackling the menace a stake, it should equally involve the institutions that will regulate, implement and enforce the regulations and finally the regulations should be enforced or to be seen a such. However the general picture is that the Laws or Regulations prior to the new Act 749 hasn’t been too effective. The respondents who agreed that there are existing laws or regulations once again agreed there are some lax in the enforcement of the regulations. Roi (SFO) believes that if there is any regulation at all, they can only be said to be just cosmetic.