Ghana: 2009 International Narcotics Control

UNCLAS ACCRA 001475

FOR INL
FOR SCT
FOR EEB
FOR AF/W AKUNNA COOK
JUSTICE FOR AFMLS, OIA, AND OPDAT
TREASURY FOR FINCEN

E.O. 12958:N/A
TAGS: ECON EFIN SNAR KCRM KTFN GH
SUBJECT: Ghana: 2009 International Narcotics Control
Strategy Report, Vol. II

REF: STATE 103815


1. Ghana is not a regional financial center, but due
to continuing turmoil in the region, GhanaQs
financial sector is likely to become more important
regionally as it develops. Most of the money
laundering found in Ghana involves narcotics and
public corruption. Ghana is a significant
transshipment point for cocaine and heroin. Police
suspect that criminals use nonbank financial
institutions, such as foreign exchange bureaus, to
launder the proceeds of narcotics trafficking.
Criminals can also launder their illicit proceeds
through investment in banking, insurance, real
estate, automotive import, and general import
businesses. Reportedly, donations to religious
institutions have been used as a vehicle to launder
money. The number of Qadvance feeQ or 419 fraud
letters, known as Sakawa in Ghana, that originate
from Ghana continues to increase, as do other
related financial crimes, such as use of stolen
credit and ATM cards.


2. Informal activity accounts for about 45 percent
of the total Ghanaian economy. GhanaQs 2000 census
found that 80 percent of employment was in the
informal sector. Only a small percentage of the
informal economy, however, relies on the banking
sector. Because some traders smuggle goods to evade
tax and import counterfeit goods, black market
activity in smuggled goods is a concern. In most
cases the smugglers bring the goods into the country
in small quantities, and Ghanaian authorities have
no indication that these smugglers have links to
criminals who want to launder money gained through
narcotics or corruption.


3. Ghana has designated four free trade zone areas,
but the Tema Export Processing Zone is currently the
only active free trade zone. Ghana also licenses
factories outside the free zone area as free zone
companies. Free zone companies must export at least
70 percent of their output. Most of the companies
produce garment and processed foods. The Ghana Free
Zone Board and the immigration and customs
authorities monitor these companies. Immigration
and customs officials do not suspect that trade-
based money laundering (TBML) schemes are a major
problem in the free trade zones. Although the
Government of Ghana (GOG) has instituted
identification requirements for companies,
individuals, and their vehicles in the free zone,
monitoring and due diligence procedures are lax.


4. The GOG has developed new laws to stimulate
financial sector growth, including the revision of
the banking law to strengthen the operational
independence of the Central Bank (Bank of Ghana).
The government is promoting efforts to model GhanaQs
financial system on that of the regional financial
hub in Mauritius. In line with this, the GOG passed
the Banking (Amendment) Act, 2007 Act 738, on June
18, 2007. The law establishes the basis for the
provision of international banking services in Ghana
and requires the Bank of Ghana to authorize offshore
banks. Prior to this law, the Bank of Ghana
licensed only reputable and internationally active
banks. On September 7, 2007, Barclays Bank of Ghana
Ltd., a subsidiary of Barclays Bank PLC, UK became
the first to start operating as an offshore bank.
The Bank of Ghana is in the process of drafting
regulations for offshore banks. A Financial
Services bill, which will provide the legal
framework for the non-bank financial services
component of the international financial services
center, is before parliament and expected to be
passed before the end of December 2008. To reduce
the duplication in processes and information
exchange, the law will also establish a Financial
Services Authority which will absorb the functions
of the National Insurance Commission and the
Securities Exchange Commission. Ghana will
therefore have two regulators for the financial
services sector; Bank of Ghana will be responsible
for all banking and deposit taking business, and the
Financial Service Authority will handle all other
financial services. The bill stipulates that the
two institutions will establish a National Financial
Services Coordination Committee to exchange
information.


5. Nearly six years after drafting began, in
January 2008 the Parliament passed GhanaQs Anti-
Money Laundering (AML) law. Accompanying regulations
to the law have also been passed. The law covers
obliged institutions and their reporting and
disclosure requirements; the role of supervisory
authorities; preventive measures; customer
identification and record keeping requirements; and
rules for suspicious transaction reporting. Ghana
has bank secrecy laws, but allows the sharing of
information with relevant law enforcement agencies.
Law enforcement officials can compel disclosure of
bank records for drug-related offenses. Bank
officials have protection from liability when they
cooperate with law enforcement investigations. The
new AML law requires banks and individuals to report
suspicious transactions.


6. The banking sector lacks a strong regulatory
framework to prevent money laundering and report
suspicious transactions, although entities recognize
the importance of such a framework. The Bank of
Ghana allows two types of foreign currency bank
accounts: the foreign exchange (FE) account and the
foreign currency (FC) account. The FE account is
tailored to foreign currency sourced within Ghana
while the FC account targets transfers from abroad.
Bank of Ghana regulations instituted in December
2006 under the Foreign Exchange Act allow U.S.
$10,000 per year to be transferred from an FE
account without documentation and approval from the
Bank of Ghana. The regulations also allow import
transactions of up to $25,000 without initial
documentation for FE accounts. There are no limits
on the number of such transactions made on each
account or on the number of such accounts that an
individual can hold. The law does not permit foreign
exchange bureaus to make outward transfers. Local
banks strictly follow Qknow your customerQ rules.
Ghana has no effective system to obtain data on an
individualQs dealings with all the banks in Ghana.


7. Ghana has a cross-border currency reporting
requirement. However, Ghanaian authorities have
difficulty monitoring cross-border movement of
currency. In an operation in 2008, the national
security office detected that millions of dollars
worth in foreign currencies have been entering Ghana
through the Togo-Aflao border, which is basically
repatriated money. The money is first transported
from Ghana across the border undeclared and then
returned through the same border but declared on the
Foreign Exchange Declaration Form. This then allows
the individual to take the money out of Ghana
legally. In a bid to curb this, the Bank of Ghana
directed that effective October 20, 2008, the
highest sum of money permitted to be carried by an
individual arriving in the country is $10,000 or its
equivalent. The directive was, however, ambiguous
on whether amounts in excess of the $10,000 should
only come through the bank or can still be
transported. This defeats the Foreign Exchange law
purpose of ensuring that all money transfers above
$10,000 go through the banks for traceability.


8. The AML law calls for the establishment of a
Financial Intelligence Unit (FIU),overseen by the
National Security Council. Ghana plans to fund the
FIU, which is yet to be formed, through government
grants and donations. The FIU will not investigate
crime but will gather and analyze intelligence to
help in identifying proceeds of unlawful activity
and the perpetrators of the crimes. The FIU will
have the authority to obtain information from other
government regulatory authorities and from financial
institutions. The GOG arrested, and is currently
prosecuting, a flight attendant and two accomplices
in August 2008 and are currently under prosecution
for attempting to launder #59,870. No arrests or
prosecutions related to terrorist finance were made
in 2008.


9. The Narcotic Drug Law of 1990 provides for the
forfeiture of assets upon conviction of a drug
trafficking offense. A February 2007 court order
compelled authorities to release seized assets in a
1991 landmark narcotics trafficking case which
resulted in a ten-year jail sentence of the convict,
and return the assets to the owners. The ex-convict
had appealed the seizure, arguing that the assets
did not belong to him. The draft Proceeds of Crime
Bill, pending since 2006, contains provisions
dealing with pre-emptive measures, confiscation and
pecuniary penalty orders, search and seizure, and
restraining orders and realization of property. The
draft Proceeds of Crime bill will merge with the
existing Serious Fraud Office Law, 1993 (Act 466).
The Serious Fraud Office, established by this law,
investigates corruption and crimes that have the
potential to cause economic loss to the state.


10. Ghana has criminalized the financing of
terrorism, as required by United Nations Security
Council Resolution 1373. The Anti-Terrorism Bill,
which came before Parliament in 2005, was passed on
July 18, 2008. The law addresses terrorist acts,
support for terrorist offenses, specific entities
associated with acts of terrorism, and search,
seizure, and forfeiture of property relating to acts
of terrorism. The law imposes a term of
imprisonment of between seven years and twenty-five
years for any offense under the law. The Bank of
Ghana has circulated the list of individuals and
entities on the UNSCR 1267 Sanctions CommitteeQs
consolidated list to local banks, but no Ghanaian
entities have identified assets belonging to any of
the designees.


11. Although current Ghanaian law does not allow
for the sharing of seized narcotics assets with
other governments, the Narcotic Drug Law of 1990
includes provisions for the sharing of information,
documents, and records with other governments. It
also provides for extradition between Ghana and
foreign countries for drug-related offenses. The
United States has not requested financial
investigative assistance from Ghanaian authorities.


12. Ghana is a member of the Inter-Governmental
Action Group Against Money Laundering and Terrorist
Financing in West Africa (GIABA),a regional body
modeled after the Financial Action Task Force (FATF).
Ghana has bilateral agreements for the exchange of
money laundering-related information with the United
Kingdom, Germany, Brazil, and Italy. Ghana is a
party to the twelve UN conventions on terrorism,
including the UN International Convention for the
Suppression of the Financing of Terrorism. Ghana is
a party to the 1988 UN Drug Convention, and the
African Union Convention on Preventing and Combating
Corruption. In June 2007, Ghana ratified the UN
Convention against Corruption. Ghana has not signed
the UN Convention against Transnational Organized
Crime. Ghana has endorsed the Basel Committee's
Core Principles for Effective Banking Supervision.


13. The GOG should move swiftly to implement the
AML Bill, and should expand the list of predicate
crimes to comply with international standards. The
GOG should improve capacity among the agencies
impacted, and establish its FIU. The GOG should
make every effort to pass asset seizure and
forfeiture legislation that comports with
international standards as soon as possible. Once
the laws are in place, Ghana should take the
necessary steps to promote public awareness and
understanding of financial crime, money laundering
and financing of terrorist activities. Ghana should
immediately release regulations and guidance for its
new offshore entities, and draft legislation to
ensure that offshore entities are treated
identically to the onshore sector under the AML law.
Additionally, the GOG should require that the true
names of all offshore entities are held in a
registry accessible to law enforcement. The GOG
should increase cooperation and information sharing
with other governments. Ghana should also become a
party to the UN Convention against Transnational
Organized Crime.


14. Post's POC for UNSCR is Economic Section Chief
Philip Cummings; email: cummingspm@state.gov.

TEITELBAUM