View Full Version : Money Laundering Booms

12th August 2011, 12:31 AM
DANQUAH INSTITUTE (DI), a public policy think-tank, has bemoaned what it calls government’s seemingly uninterested stance in the enforcement of the Anti Money Laundering Act of 2007.

According to DI, money laundering, through the activities of illegal money transfer operators in Ghana, was becoming a threat to the country’s economy.

Research conducted by the institute indicated that these illegal money transfer operators (MTOs) had become conduits for money launderers, attracting a negative attention to small, honest, Ghanaian businesses in Europe.

Briefing the media on a research it has undertaken on illegal money transfers to Ghana from the Diaspora and its effects on the Ghanaian economy in Accra yesterday, DI revealed that nearly 60 to 100 percent of total remittances were sent through illegal money transfer routes.


This, according to the public policy think-tank, translated into cash between $1.2 billion and $2.12 billion, including laundered money from crime proceeds which passed through the illegal money transfer channels to Ghana in 2010 alone.

This is about the total remittances to Ghana amounting to $2.12 billion, an increase of 18.4% from the 2009 amount of $1.79 billion.

The 2010 figure, according to DI, further constituted about 7 percent of Ghana’s GDP, 24.8 percent as a percentage of Ghana’s total export value of $7.9 billion and almost double of Ghana’s total foreign direct investment ($1.1 billion) for the same period.

According to DI, illegal transfers of money negatively affected the revenue that ultimately came to the Ghanaian economy.

“The growing phenomenon of the underground money transfer business represents a huge loss of revenue to the state in unpaid taxes from commissions collected by these illegal MTOs and even the capacity of the state to use these large incomes of foreign exchange to buy crude oil, address our balance of payment issues, enhance our creditworthiness and even use it as collateral for external loans,” it noted.

It warned that the crippling of genuine businesses of the formal MTOs was also imminent with the activities of the illegal MTOs.

“It is a very dangerous, growing industry that our authorities must throw their focus on. Unfortunately, the lack of proper attention has seen to the institutionalisation of this illegal money transfer business.”

It observed that a lot of shops in the major trading portions of Accra and Kumasi are steep into the business of illegal money transfer under the cloak of dealing in other legitimate businesses.

Presenting the research findings, Nana Attobrah Quaicoe, Head of Research at the institute, said the phenomenon was almost beyond redemption in countries such as Germany and the Netherlands, impacting negatively on the Ghanaian economy.

Among the things that attracted many Ghanaians living abroad to these illegal channels include, “no commissions charged, no personal identification documents required, no limits to amounts transferred, can pick up money in foreign currencies back in Ghana and the ability of the illegal operators to quote an exchange rate even better than the daily rate provided by the Bank of Ghana”, DI said.

The findings also revealed that the growing influence of the West African corridor in the illicit drug trade to Europe had a huge influence on the operations of the unlicensed money transfer channels.

“Indeed, in Germany, it was one such ‘Afro’ shop, which was a known unlicensed MTO, servicing the Ghanaian community that was caught up in the single largest drug bust in Germany for 15 years, with $37 million worth of marijuana hidden amongst seven tonnes of pineapples in Hamburg harbour in March 2009,” the institute pointed out.

The solution, according to the institute, was not to discourage genuine people abroad from transferring money to Ghana but rather to encourage them to use licensed channels of transfer of funds, which, by themselves guaranteed them and their funds protection and efficiency.

Clamping down on the illegal operators and relaxing the rules to pull in more money senders into the formal MTO sector, the institute believed, would lead to a healthier and more competitive environment to serve the needs of customers and national economies.

It was surprised that the Bank of Ghana (BoG), the country’s regulatory body, did not appear to be attaching the requisite relevance and urgency to this growing threat of unregistered foreign exchange transactions to the nation’s balance of payment and related financial implications.

“It seems obvious to us that the Bank of Ghana has no specific, active department or desk devoted to analysing the entrenched phenomenon of illegal money transfer and taking steps to clamp down on them,” it observed.

The institute pointed out that the growing patronage of the unlicensed MTOs, if not checked, might lead to the collapse of vibrant licensed, independent MTOs including Samba and Unity Link, owned by Ghanaians, within the next 10 years.

DI called for greater co-operation between the BoG and its counterparts in the other countries.

It also called for greater co-operation between the country’s security agencies and their foreign counterparts dedicated to anti-money laundering matters, focusing more on public education, especially through community radio stations both in Ghana and the host nations of Ghanaian emigrants.

In addition to this, the BoG should be seen to be proactively promoting the operations of formal transfer methods and act against illegal methods and should take positive enforcement action where appropriate, DI said.

It added that BoG should also consider allowing MTOs to transmit money out of Ghana as a solution to this growing menace.

The BoG currently does not allow MTOs to send funds out of Ghana as it intends to control foreign currency that is sent out of the country.

Danquah Institute came out with the findings after carrying out a 3-month long research to assess the extent of illegal money transfer operators, with regard to Ghana’s three largest Europe remittance corridors: the United Kingdom, Germany and The Netherlands.

The research looked at the Ghanaian regulatory environment as well as that of the three other sender nations, the products and services available on the market and the remittance patterns.

The institute interviewed money transfer operators, regulatory authorities, senders and recipients. It also spoke to law enforcement agencies regarding the aspect of money laundering, conducting an in-depth survey of 300 Ghanaians living in the UK and 103 Ghanaians living in Germany, and a similar number in the Netherlands, targeting all classes of community members.

The research revealed that despite the increasing numbers of licensed MTOs over the last two decades, the volume of cash transferred through illegal channels had been growing in the past few years.

“Beauty shops, food stores, spare parts shops, kiosks, churches, social groups, homes, have become regular channels for remitting cash to Ghana,” the research revealed.

It named the countries most affected by illegal money transfers as the Netherlands and Germany, where unlicensed shops and individuals operating from their homes had overwhelmed the licensed MTOs.

By Awudu Mahama

Source: Awudu Mahama