Consolidated assessment ratings – Kenya’s, Namibia’s, Suriname’s & Lithuania’s Mutual Evaluation Reports on progress in strengthening measures to tackle money laundering and terrorist financing

On 27 January 2023, the Financial Action Task Force (FATF) has published an update to its Consolidated assessment ratings together with Mutual Evaluation Reports for Kenya, Namibia, Suriname and Lithuania, addressing the progresses made in relation to tackle money laundering and terrorist financing.
CONSOLIDATED ASSESSMENT RATINGS
The updated Consolidated assessment ratings provide an up-to-date overview of all assessed countries concerning the effectiveness and technical compliance with the FATF Recommendations, using the FATF Methodology together with the FATF 4th Round Procedures. These ratings should be read in conjunction with the detailed Mutual Evaluations. All these documents are available on the FATF website.
This update of FATF’s Consolidated assessment ratings incorporates the findings of the Mutual Evaluation Report of Kenya’s, Namibia’s, Suriname’s and Lithuania’s progress in strengthening measures to tackle money laundering and terrorist financing (see national details below). Notable current characteristics and changes compared to previous reports on both effectiveness of Anti-Money Laundering/Combating Financial Terrorism (AML/CFT) systems as well as technical compliance with the FATF Recommendations are the following:
Kenya
R.3 (Money laundering offence) rated at C (Compliant)
R.37 (Mutual legal assistance [in general]) rated at LC (Largely compliant – There are only minor shortcomings)
R.38 (Mutual legal assistance: freezing and confiscation) rated at C (Compliant)
NOTE: All other ratings are either only PC (Partially compliant – There are moderate shortcomings) or NC (Non-compliant – There are major shortcomings). Please consult the corresponding Consolidated assessment ratings for more granular details.
Namibia
R.8 (Non-profit organisations) rated at NC (Non-compliant – There are major shortcomings)
R.9. (Financial institution secrecy laws) rated at C (Compliant)
R.12 (Politically exposed persons) rated at NC (Non-compliant – There are major shortcomings)
R.15 (New technologies) rated at NC (Non-compliant – There are major shortcomings)
R.21 (Tipping-off and confidentiality) rated at C (Compliant)
R.27 (Powers of supervisors) rated at C (Compliant)
R.30 (Responsibilities of law enforcement and investigative authorities) rated at C (Compliant)
R.36 (International instruments) rated at C (Compliant)
NOTE: All other ratings are either only PC (Partially compliant – There are moderate shortcomings) or LC (Largely compliant – There are only minor shortcomings). Please consult the corresponding Consolidated assessment ratings for more granular details.
Suriname
R.6 (Targeted financial sanctions related to terrorism & terrorist financing) rated at NC (Non-compliant – There are major shortcomings)
R.7 (Targeted financial sanctions related to proliferation) rated at NC (Non-compliant – There are major shortcomings)
R.8 (Non-profit organisations) rated at NC (Non-compliant – There are major shortcomings)
R.15 (New technologies) rated at NC (Non-compliant – There are major shortcomings)
R.24 (Transparency and beneficial ownership of legal persons) rated at NC (Non-compliant – There are major shortcomings)
R.25 (Transparency and beneficial ownership of legal arrangements) rated at NC (Non-compliant – There are major shortcomings)
R.34 (Guidance and feedback) rated at C (Compliant)
R.38 (Mutual legal assistance: freezing and confiscation) rated at NC (Non-compliant – There are major shortcomings)
NOTE: All other ratings are either only PC (Partially compliant – There are moderate shortcomings) or LC (Largely compliant – There are only minor shortcomings). Please consult the corresponding Consolidated assessment ratings for more granular details.
Lithuania
R.24 (Transparency and beneficial ownership of legal persons) rated at LC (Largely compliant – There are only minor shortcomings)
R.28 (Regulation and supervision of DNFBPs) rated unchanged at PC (Partially compliant – There are moderate shortcomings)
R.32 (Cash couriers) rated at LC (Largely compliant – There are only minor shortcomings)
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MUTUAL EVALUATION REPORT OF THE REPUBLIC OF KENYA
This report, dated September 2022, summarises the AML/CFT measures in place in the Republic of Kenya as at the date of the on-site visit which took place from 31 January to 11 February 2022. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Kenya’s AML/CFT system, and provides recommendations on how the system could be strengthened.
Kenya has made improvements to its AML/CFT legal and institutional frameworks since the 2011 MER such as establishment of the Asset Recovery Agency (ARA), enhancing the human and technical resources of the Financial Reporting Centre (FRC), conducting a national ML/TF risk assessment (NRA) and introduction of beneficial ownership (BO) information requirements to comply with international standards on AML/CFT/PF and address deficiencies identified in its 2011 MER. However, there are outstanding strategic gaps in its technical compliance and effectiveness which need to be addressed.
While Kenya has powers in place, it does not have a demonstrable strategic policy to prioritize investigation/ prosecution of ML. The Authorities prioritize predicate offences such as corruption over ML and do not carry out to a wider extent parallel investigations alongside predicate offence investigations, resulting in few ML investigations and no successful prosecutions. A poor understanding of ML risks, lack of collecting statistics on different ML types and the prioritisation of the prosecution of predicate offences, especially corruption, over ML has limited Kenya’s ability to effectively investigate and prosecute ML cases in line with its risk profile. It was not possible to determine the type of ML which is most prevalent as Kenya does not categorise ML into different types. It was also not possible to determine whether the sanctions being applied were proportionate and dissuasive due to the lack of ML prosecutions as none had happened on ML.
Kenya has not investigated, or prosecuted, legal or natural persons for terrorist financing offences in line with its risk profile. The lack of convictions resulting from a large number of parallel TF investigations suggests that improvements are required in the ability to investigate and prosecute TF. Terrorist financing is not integrated as a component of the wide-ranging efforts to tackle the severe and fatal terrorist risk suffered by Kenya. There are no strategic CFT policies or strategies to counter the threat.
The number of detected cases pertaining to non-declaration of cross-border movement of currency and BNIs (only two in the five-year review period) is not consistent with the risk profile of the country, being an economic, financial and transport hub in the eastern Africa region.
Risk-based AML/CFT supervision is relatively underdeveloped. Most supervisory activities occur for banks and microfinance banks. However, supervisions of other FIs or DNFBPs is not carried out on a risk sensitive basis. Inspections in other sectors are too infrequent and focus on the presence of basic controls rather than the soundness of AML/CFT programs.
Kenya Authorities have registered some success with regard to recovery of proceeds of crime, but this has been largely in cases related to corruption and theft or misuse of public resources which is not entirely consistent with the identified risk profile of the country, as the NRA Report concluded that it was fraud and forgery and drug related offences that form the greatest risk to the country. Recovery of instrumentalities of crime has been mainly limited to cases of trafficking in drugs, humans and wildlife trophies. Overall, the recoveries made are a small percentage of the recorded assets subject to recovery, mainly because of the lengthy processes of recovery.
Kenya has fairly comprehensive legislation for Mutual Legal Assistance (MLA) and extradition, and has provided both in the past. Kenya has sought and rendered other forms of international cooperation in criminal matters, but this was mainly for predicate offences and not ML/TF offences. Additionally, Kenya does not categorize the kind of cooperation sought or rendered, making it impossible to assess risk levels of predicate offences, modus operandi and jurisdictions.
Kenya has not carried out a risk assessment to identify and understand ML/ TF risks associated with or emerging from virtual assets (VAs) and virtual asset service providers (VASPs). VAs and VASPs are not prohibited and the country has not put in place relevant regulatory frameworks.
In sum, given the wide ranges of risks related to ML/TF, it is worth noting Kenya’s ranking of C (Compliant) in R.3 (Money laundering offence) and R.38 (Mutual legal assistance: freezing and confiscation), with R.37 (Mutual legal assistance [in general]) rated at LC (Largely compliant – There are only minor shortcomings). All other ratings are either PC (Partially compliant – There are moderate shortcomings) or NC (Non-compliant – There are major shortcomings). Please consult the corresponding Consolidated assessment ratings for more granular details.
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MUTUAL EVALUATION REPORT OF REPUBLIC OF NAMIBIA
This report, dated September 2022, summarises the AML/CFT measures in place in Namibia as at the date of the on-site visit conducted on 27 September to 8 October 2021. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Namibia’s AML/CFT system, and provides recommendations on how the system could be strengthened.
Namibia has a good understanding of ML threats emanating largely from proceeds of serious fraud, tax crimes, wildlife crimes and corruption and bribery. Namibia faces domestic ML threat with the proceeds laundered within and outside of the country. The scale/magnitude of the proceeds are unknown. The most vulnerable sectors are mainly FIs and a few DNFBPs.
National AML/CFT policies and priorities addressed ML risks to some extent and TF risks to a limited extent due to resource constraints, RBA being at infancy stage and focus on predicate offences than ML and TF.
Namibia has a limited TF risk understanding except for the NISS (Namibia Intelligence and Security Service) and the FIC. Further, Namibia’s Counter Terrorism Strategy has limited TF focus and therefore mitigates TF risks to the extent it is understood.
The FIC produces fairly good quality financial intelligence, but LEAs use it more for predicate offences than ML and TF investigations and prosecutions owing to capacity issues. The focus on types of predicate offences is consistent with the country’s risk profile but less so for ML threats as only self-laundering is pursued.
Sanctions issued by the courts for predicate offences and ML are to a lesser extent proportionate, dissuasive and effective as most are non-custodial and suspended sentences. Provisional and confiscation measures are applied to some extent owing largely to LEAs not proactively pursuing ML cases.
Namibia does not implement TFS measures and does not use the UNSCRs freezing measures in its overall strategy to combat TF and PF. In addition, a review of the NPO sector to identify those NPOs that are vulnerable to TF abuse has not been done hence no risk-based supervision and monitoring of nor sanctions in the sector.
FIs and DNFBPs covered by the FATF Standards are present in Namibia (except for VASPs) and are subject to full AML/CFT obligations. In general, FIs and DNFBPs have a fairly good understanding of ML and AML/CFT obligations but are underdeveloped on TF.
Namibia does not keep BO information on transparency of legal persons and arrangements due to: (i) weak legal framework, (ii) poor resources availability and (iii) poor understanding of BO responsibilities by BIPA for companies and the Master of the High Court for trusts. Namibia has not assessed and taken mitigating measures on ML/TF risks associated with legal persons and arrangements.
In sum, given the heterogeneous ratings of Namibia for risks related to ML/TF, it is worth noting that R.8 (Non-profit organisations), R.12 (Politically exposed persons) and R.15 (New technologies) are rated at NC (Non-compliant – There are major shortcomings). On the other hand, R.9. (Financial institution secrecy laws), R.21 (Tipping-off and confidentiality), R.27 (Powers of supervisors), R.30 (Responsibilities of law enforcement and investigative authorities) and R.36 (International instruments) are rated at of C (Compliant). All other ratings are either only PC (Partially compliant – There are moderate shortcomings) or LC (Largely compliant – There are only minor shortcomings). Please consult the corresponding Consolidated assessment ratings for more granular details.
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MUTUAL EVALUATION REPORT OF SURINAME
This report, dated January 2023, summarises the AML/CFT measures in place in Suriname as at the date of the on-site visit (28 February – 11 March 2022). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Suriname’s AML/CFT system and provides recommendations on how the system could be strengthened.
Suriname has a fair but developing understanding of its main ML/TF risks. This understanding was developed through the completion of its first National Risk Assessment (NRA) in October 2021. No other risk assessments were done by the country (sectoral, thematic or otherwise). The NRA did not assess the ML/TF risks in several relevant areas covered under the FATF Methodology, particularly legal persons & arrangements; new technologies; and virtual asset service providers (VASPs).
Suriname’s investigative authorities have access to and use financial intelligence and other relevant information to identify investigative leads, develop evidence in support of investigations and trace criminal proceeds in relation to ML and associated predicate offences, but lack the resources to do so on a continuous basis.
There is no dedicated funding for the Financial Intelligence Unit of Suriname (FIUS). To obtain funding, increase in staffing and other needed resources, the Director of the FIUS submits a budget to the Minister of Justice and Police, however funding for the FIUS is not prioritised. Legislatively, the Procurator General has supervisory control over the FIUS without a clear demarcation of what those supervisory functions are. The Financial Investigations Team (FOT) is unable to properly identify and investigate ML cases.
Confiscation is not pursued as a policy objective. The laws of Suriname only permit conviction-based confiscation, seriously limiting the powers, scope and option of the investigations and prosecution authorities when going after the proceeds and instrumentalities of crime.
The Republic of Suriname is a signatory to the United Nations (UN) International Convention for the Suppression of the Financing of Terrorism”. However, there are various Articles within the Penal Code and other laws do not meet the requirements as the country has not included all elements of activity required under the FATF Standards.
Suriname has not implemented targeted financial sanctions (TFS) pursuant to UNSCR 1267 and 1373 because the Council on International Sanctions is in its formative stage of development. There are no laws or measures in place to ensure that persons or entities involved in the financing of Proliferation of Weapons of Mass Destruction (PF) are identified, deprived of resources and prevented from raising, moving and using funds for that purpose.
Most financial institutions (FIs) and some Designated Non-financial Businesses and Professions (DNFBPs) have implemented risk-based customer due diligence (CDD) and record keeping measures proportional to the nature, size and complexity of their business activities. FIs have demonstrated a varying understanding of their ML/TF risks and obligations. Most FIs have implemented measures to mitigate their ML risks.
While Suriname does not prevent or have legislative provisions for VASPs, there are no mechanisms to identify VASPs that may be operating in the jurisdiction and to apply appropriate preventive measures if VASPs are detected.
Suriname’s FIs and DNFBPs are not being supervised for compliance with targeted financial sanction obligations as the Council on International Sanctions has not yet commenced supervision activities. The risk-based supervisory framework for FIs is in the developmental stage.
There are deficiencies in the measures which are in place for ensuring transparency and accuracy of beneficial ownership information. Suriname has not conducted a risk assessment of legal persons and there are weaknesses in the mechanisms to record and obtain beneficial ownership information on legal persons and arrangements.
In sum, given the heterogenous ratings of Suriname for risks related to ML/TF, it is worth noting that R.6 (Targeted financial sanctions related to terrorism & terrorist financing), R.7 (Targeted financial sanctions related to proliferation), R.8 (Non-profit organisations), R.15 (New technologies), R.24 (Transparency and beneficial ownership of legal persons), R.25 (Transparency and beneficial ownership of legal arrangements) and R.38 (Mutual legal assistance: freezing and confiscation) are rated at NC (Non-compliant – There are major shortcomings). On the other hand, only R.34 (Guidance and feedback) is rated at C (Compliant) NOTE: All other ratings are either only PC (Partially compliant – There are moderate shortcomings) or LC (Largely compliant – There are only minor shortcomings). Please consult the corresponding Consolidated assessment ratings for more granular details.
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3RD ENHANCED FOLLOW-UP REPORT & TECHNICAL COMPLIANCE RE-RATING OF LITHUANIA
The mutual evaluation report (MER) of Lithuania was adopted in December 2018 and its 1st and 2nd Enhanced Follow-up Reports in June 2020 and November 2021 respectively. The reports analyse the progress of Lithuania in addressing the technical compliance (TC) deficiencies identified in its MER. Re-ratings are given where sufficient progress has been made. Overall, the expectation is that countries will have addressed most if not all TC deficiencies by the end of the third year from the adoption of their MER. This 3rd Enhanced Follow-up Report, dated December 2022, does not address what progress Lithuania has made to improve its effectiveness.
Lithuania has made some progress to address the technical compliance deficiencies identified in the MER and in subsequent Enhanced FURs. As a result of this progress, Lithuania has been re- rated on Recommendations 24 and 32. The country asked for a re-rating for R.28 which is also analysed, but no re-rating has been provided.
Overall, Lithuania has made some progress in addressing the TC deficiencies identified in its 5th Round MER and subsequent FURs and has been re-rated on two Recommendations (2 upgrades). Recommendations 24 and 32 initially rated as PC are re-rated as LC. Lithuania is encouraged to continue its efforts to address the remaining deficiencies. Lithuania will remain in enhanced follow-up and will continue to report back to MONEYVAL on progress to strengthen its implementation of AML/CFT measures. Lithuania is expected to report back in one year’s time.