CHAD
Summary

Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

 

Compliance with FATF 40 + 9 Recommendations

Weakness in Government Legislation to combat Money Laundering

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Chad is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

Chad has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.

 

US Department of State Money Laundering assessment (INCSR)

Chad was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

Chad’s financial services sector is small and relatively underdeveloped. Chad’s economy is predominately cash-based, with relatively few transactions passing through formal financial institutions. Despite measures to process public servant salaries through local banks, only 5 percent of the Chadian population uses formal banking services.

On January 16, 2015, the Parliament approved sending troops to the northern regions of Cameroon to counter Boko Haram. This decision, which received popular support, came amid rising concerns about the economic impact of the siege on the Chadian economy. Chad depends heavily on the import of goods that transit through Nigeria and northern Cameroon. As a result of the August border closure and the continued attacks, the prices of imported goods have increased in the local market. Increased border security significantly reduced incidences of contraband and goods smuggled across the Sahel and borders with Nigeria and Cameroon.

Instability in the Central African Republic (CAR) and the subsequent return of displaced Chadians and the arrival of CAR refugees facilitate trafficking of goods between the two countries. Across Chad’s northern desert and along the Sudan/Chad border in the east, smuggled items include drugs and weapons. Drugs, mainly cannabis and cocaine, are transported via Chad and Sudan to the Arabian Peninsula.

Wildlife poaching in Chad and the related illicit trade in ivory and other wildlife products finance transnational criminal networks and armed rebel groups across Africa. There is no indication that illegally smuggled household goods are related to narcotics trafficking or other illegal activities. However, the trafficking of weapons, wildlife products, and drugs may be linked to organized criminal groups, some of which have links to terrorist groups. Illicit proceeds do not appear to enter Chad’s formal financial system.

Chad’s banking system is supervised by the Bank of Central African States (BEAC), the central bank that serves six Central African countries. BEAC’s Economic Intervention Service harmonizes the regulation of currency exchanges in the six member states of the Central African Economic and Monetary Community (CEMAC).

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

20

World Governance Indicator – Control of Corruption

7

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Chad is one of Africa’s largest countries, with a land area of 1,284,000 square kilometers that encompasses three agro-climatic zones. Chad is a landlocked country bordering Libya to the north, Sudan to the east, the Central African Republic (CAR) to the south, and Cameroon, Niger, and Nigeria on the west (with which it shares Lake Chad). The nearest port, Douala, is 1,700 km from the capital, N’Djamena. Chad is one of six countries that comprise the Central African Economic and Monetary Community (CEMAC), a common market.

Chad’s human development is very low, according to the Human Development Index (HDI), and poverty continues to afflict a large proportion of the population. The oil sector dominates economic activity, despite a declining trend in the medium term. Agriculture and livestock breeding are important economic activities that employ the great majority of the population, but generate just over 10 percent of official GDP. Manufacturing makes only a minor contribution to GDP (less than 2%), while the services sector accounts for 30% of GDP on average.

Chad is currently enjoying a period of political and economic stability, and the government of Chad (GOC) is focused on improving internal economic and social conditions. The government of Chad is favorably disposed to foreign investment, with a particular goal of attracting North American companies. There are opportunities for foreign investment in Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Architecture & Engineering; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Industrial Equipment & Supplies; Information & Communication; and Services.

Chad’s business and investment climate remain challenging. Private sector development is hindered by corruption, poor transport infrastructure, lack of skilled labor, unreliable energy, weak contract enforcement, and high tax burdens. Chad has expressed willingness to address these issues, and in 2013 created an inter-ministerial committee to address business climate concerns.

 

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FURTHER REPORTS

IMF Report: Chad: 2016 Article IV Consultation (August 2016)

As a member of CEMAC, Chad is subject to the regional legal framework on AML/CFT and the implementing regulations issued for banks by the Commission bancaire de l’Afrique centrale (COBAC). The supervision of banks’ action to combat money laundering and the financing of terrorism falls within the competence of the COBAC, assisted by the BEAC. As indicated in the April 2016 FSSA on the CEMAC, the AML/CFT framework needs to be rapidly strengthened both at the national and regional levels. In that respect, the FSSA called for the allocation of appropriate financial, technical and human resources to regional and national supervisors of the financial and nonfinancial sectors, for gradual and effective implementation of AML/CFT risk-based supervision. The FSSA identified as a key recommended action the need to better implement and enforce the existing AML/CFT regulations. In 2014, the Groupe d’Action Contre le Blanchiment d’Argent en Afrique Centrale (GABAC) has assessed Chad’s AML/CFT framework against the 2003 Standard set by the Financial Action Task Force. A number of strategic deficiencies were identified and an action plan to address the gaps was laid out.

Read Full Report

 

21 May 2013  -  IMF Report: Chad: 2012 Article IV Consultation  -  extract: -

"The recapitalization of state-owned banks improved financial stability indicators but the concentrated exposure of banks to the public sector remains a source of risk. In the short term, to mitigate this risk, banks are encouraged to continue holding capital buffers in excess of the required minimum 8 percent. Looking forward, a durable solution to this problem would come from greater private sector participation, which should be encouraged, including by setting incentives for informal sector enterprises to migrate to the formal sector. Further, the strengthening of the centralized credit registry would help contain credit risk, and the implementation of the anti-money laundering framework would help strengthen governance. "

Read Full Report (pdf file)

 

 

 

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