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Cameroon: Armed groups transferred XAF160 bln illegally using cryptocurrencies in 2018, the national risk assessment report indicates

Cameroon: Armed groups transferred XAF160 bln illegally using cryptocurrencies in 2018, the national risk assessment report indicates
  • Comments   -   Thursday, 04 February 2021 00:43

(Business in Cameroon) - In 2018, terrorists illegally transferred about XAF160 billion using cryptocurrencies in Cameroon. This is revealed in the first National Money Laundering and Terrorist Financing Risk Assessment published by Cameroon through the World Bank’s technical support.

Cryptocurrencies are dematerialized, decentralized, and encrypted payment instruments with no physical payment. They are not issued by monetary authorities or institutions and operate without a central controlling body. Their values are encrypted and are essentially determined by a technology called "blockchain" (a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system).

"Because of the lack of exhaustive reports on the number of actions and the volume of transactions, there is no complete information about cryptocurrency activities in Cameroon. However, intelligence reports show that armed anglophone secessionist groups whose bank accounts were frozen following legal proceedings against them for terrorism financing now use the cryptocurrency ‘ambacoin’ to support their members (31,000 units of that crypto coin were purchased by the end of September 2018). Therefore, the possibility of other criminal groups like Boko Haram using such financing mechanisms cannot be ruled out, " the report suggests. 

It adds that the most popular cryptocurrency in Cameroon is Bitcoin. It also points out the presence of several local exchange bureaus dedicated to cryptocurrencies and user networks while companies and individuals are showing a growing interest in the virtual currency. Some commercial spaces even accept Bitcoin payments, the report indicates.

Cryptocurrencies: Conducive for terrorists’ funding operations

According to the report, cryptocurrencies offer a favorable environment for terrorists’ funding. Paragraph 6 of the CEMAC regulation of April 11, 2016, states that "AML/CFT obligations apply to any natural or legal person who, in the course of his profession, carries out, controls or advises on operations involving deposits, exchanges, investments, conversions or any other movement of capital...," the risk assessment reminds.

As Bitcoin (virtual security) allows investments anywhere in the world, cryptocurrency exchange offices or platform managers are ipso facto subjected to AML/CFT obligations. This is not often the case, however. 

Also, given that this new product involves new players, the regulatory framework is very limited. For instance, there is no framework setting out the technical, financial, and integrity terms and conditions to be respected by cryptocurrency bureaus to be authorized to offer related services.

The risk assessment, therefore, suggests that local cryptocurrency dealers should be informed about the  AML/CFT due diligence, particularly the  "know your customer" obligations and the origin of the funds used to purchase Bitcoins.

Sylvain Andzongo

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