IMF develops project to help Africa deal with illicit trade
PANA

The International Monetary Fund (IMF) has come up with a project to help 16 Sub-Saharan Africa countries that produce and deal in diamonds, gold, and precious minerals, to strengthen their defences against mone y laundering, smuggling, and terrorist financing, IMF press statement disclosed F r iday.

The technical assistance project -- the first by the IMF to tackle the issue -- targets countries where precious mineral exports account for a high share of the GDP or total exports and formal financial systems are underdeveloped.

Africa produces an estimated US$ 19 billion in gold per year and US$ 6 billion i n diamonds. But an unknown amount is laundered or siphoned each year for crimina l purposes.

â?The trade in precious minerals has been linked to illicit financial flows, co rruption, drug trafficking, arms smuggling and the financing of terrorism,â? exp lained Emmanuel Mathias, an IMF Senior Financial Sector Expert. â?Better regulat ion and oversight of the precious minerals sector will not only help these count r ies combat these phenomena, but also boost revenues and improve their fiscal sit u ation.â?

The two-stage project is funded by US$ 500,000 from the IMFâ?s anti-money laund ering (AML) and combating the financing of terrorism (CFT) Topical Trust Fund (T T F) that was launched early last year as the first in a series of topical trust f u nds at the Fund.

Twelve countries are providing financial support for the TTF. Over the next five years, a total of US$ 31 million will be spent, through this facility, on impro v ing AML/CFT systems around the globe.

For the first stage of the project, two awareness-raising regional workshops are being organized in Tunis, Tunisia, featuring representatives from the four rele v ant government departments (financial intelligence, customs, finance, and mining ) of each country.

The first workshop was on 8-12 March for eight French-speaking countries. The se cond is planned for 14â"18 June with participants from eight English-speaking co untries.

For the second stage, the project will help interested countries further develop their national strategies for improving AML/CFT controls related to precious mi n erals.

â?By the third quarter of 2010, we expect countries to have prepared national s trategies,â? Mathias said. â?We then expect a number of countries to engage in longer term technical assistance relationships with the IMF or with other releva n t organizations.â?

A number of countries have faced issues such as corruption, internal and regiona l conflicts, arms smuggling and other similar problems, he added.

â?Such issues often prey on and are fuelled by the unregulated trade in rough d iamonds and gold,â? Mathias said. â?We have to consider that for some of these countries, diamonds or gold constitute their main economic resources. Improving t he regulation and transparency of the precious minerals sector supports our core

mandate of strengthening macroeconomic stability.â?

Dealers in precious metals and stones are a relatively recent addition to the li st of designated professions to be incorporated into a countryâ?s AML/CFT regime , as crafted by the Financial Action Task Force (FATF).

FATF is an intergovernmental body created by the G-7 in 1989 and housed at the O rganization for Economic Cooperation and Development in Paris. FATF currently co m prises 33 member jurisdictions and two regional organizations, representing most

major financial centers in all parts of the globe.

The primary objective of implementing an AML/CFT framework is to detect and dete r the proceeds of predicate crimes such as fraud, drug trafficking, arms smuggli n g or corruption, according to the IMF press statement.

But better regulations and oversight of the precious metals sector should also r esult in revenue increases for governments and have a positive impact on their f i scal situation.

â?The lack of transparency of transactions in the precious metals and stones se ctor has been identified as a major obstacle to tax collection,â? said Matthew B yrne, an IMF Senior Counsel.

â?The implementation of the FATF standard enhances the transparency of transact ions and should be beneficial to the general supervision of dealers in precious s tones and metals, including for tax audit.â?

Meanwhile, IMF has signed a borrowing agreement with Canada which will provide t he Fundâ?s Poverty Reduction and Growth Trust (PRGT) with about US$ 769 million in new loan resources for low-income countries.

This agreement, signed on 5 March, 2010, expands the IMFâ?s capacity to help lo w-income countries hit hard by the current global crisis, and increases the loan

resources available for the recently reformed concessional lending facilities.

Following the Executive Boardâ?s approval of these reforms in July 2009, the Ma naging Director has launched a fund-raising campaign seeking about US$ 13 billio n in new bilateral loan resources and about US $0.5 billion in bilateral subsidy c ontributions. IMF is the Trustee of PRGT

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