SIERRA LEONE REVISES MONEY LAUNDERING ACT

UNCLAS SECTION 01 OF 02 FREETOWN 000221

SIPDIS

DEPARTMENT FOR AF/W (JHUNTER)

E.O. 12958: N/A
TAGS: PGOV PREL KCRM SL
SUBJECT: SIERRA LEONE REVISES MONEY LAUNDERING ACT


1. Summary: On May 21, the Bank of Sierra Leone organized a
seminar to discuss a draft amendment to the 2005 Anti Money
Laundering Act. Since its introduction, the Act has failed to
effectively use advanced technology to prevent money
laundering or to counter the financing of terrorism in Sierra
Leone. Participants in the discussion, including government
ministers, parliamentarians, civil society and members of the
international community, came prepared with suggestions and
recommendations to produce a more effective piece of
legislation in addressing the changing techniques and methods
of sophisticated criminal entities. The amendment, which is
expected to wholly replace the 2005 Anti Money Laundering
Act, would not only broaden the scope and detail of the law,
it would also properly empower the appropriate enforcement
mechanisms. End Summary


2. Sierra Leone has been slow in adapting international
instruments to address offenses that have the potential to
assume international dimensions. A recent example of this
deficiency was the 2008 National Drugs Control Act: it was
hurriedly passed and made retroactive in response to a
significant narcotics case, though the legislation had been
drafted and pending since 2006. In 2005, Sierra Leone found
itself out of sequence with other countries with regards to
money laundering and terrorist financing legislation.
Parliament hurriedly passed the 2005 Anti-Money Laundering
Act (AMLA),but failed to include terrorism financing
provisions, therefore falling short of international
standards. This, and other shortcomings, created a need to
revisit the Act as quickly as possible.


3. On May 21, the Bank of Sierra Leone organized a seminar to
discuss a draft amendment to the AMLA, which will address its
deficiencies. The well attended seminar included statements
from the Ministers of Justice and Finance a representative
from the Inter-Governmental Action Group against Money
Laundering in West Africa, and several relevant individuals
from the Bank of Sierra Leone. Appeals Court Judge Nicholas
Browne-Mark, and representatives from the World Bank and the
United Nations Office for Drugs and Crime also made
statements on the need for an amendment, areas to be
maintained and strengthened, and areas needing to be repealed
altogether.


4. The draft amendment, expected to be presented to
Parliament in the near future, is considerably larger in
scope and detail than the existing AMLA. The 2005 Act
consists of only 6 parts and 47 Sections, while the draft
amendment has 12 parts covering 111 Sections, including
provisions related to financing of terrorist activities. The
amendment also criminalizes money laundering and terrorism
financing, and imposes penalties of at least 12 months
imprisonment for offenders (Note: Support was given at the
seminar to increase the penalties substantially. End note.).
The amendment will also extend the duration for freezing
assets or property of suspicious individuals or entities from
three to ten days, and mandate the Financial Intelligence
Unit (FIU) to cooperate with friendly states in sharing
information/intelligence, requesting property seizures on the
GoSL's behalf, and extraditions. The new amendment also
proposes that a competent investigating authority can apply
for a restraining order prohibiting the use of any property
under investigation, as well as enforce the forfeiture of
such property upon conviction. The distribution of proceeds
from the disposed assets will be divided amongst the
cooperating institutions/agencies.


5. The Bank of Sierra Leone's FIU was created by the AMLA,
but the legislation failed to empower it sufficiently to
carry out effective investigations. The proposed amendment
makes the FIU the sole institution charged with receiving and
analyzing reports about suspicious unlawful activities from
financial institutions, government institutions, or by an
agency of another country. If the FIU determines that a
transaction merits further investigation, the case is
disseminated to law enforcement agencies and other
stakeholders. The FIU is also obligated to provide operating
guidelines to financial institutions, provide periodic
training to appropriate staff of licensed financial
institutions, and provide adequate monitoring and supervision
for compliance.


6. Comment: Though revising the AMLA has been a lengthy
process, the inclusion of stakeholders ranging from
Parliament to the World Bank has helped to ensure that this
amendment will adequately address significant problems
inherent in the original legislation. Whether or not this
will have a major impact on improving implementation,
however, is another matter. Despite intelligence supporting
several cases, the 2005 Act yielded no criminal charges. Many
of the indicators for money laundering, including the rapid

FREETOWN 00000221 002 OF 002


influx of private banks, unfinished construction projects,
and a proliferation of "resort construction" for a limited
tourist market, are obvious. While the amended legislation is
a good first step, implementation of the law in a
cash-strapped country will likely be problematic. The
political will to prevent Sierra Leone from becoming a haven
for money launderers exist, but the operational ability to
support that will does not. End Comment.
FEDZER