- A new project in 16 sub-Saharan African countries producing and dealing in diamonds, gold, and precious minerals is to strengthen their defences against money laundering, smuggling, and terrorist financing.
Africa produces an estimated US$ 19 billion in gold per year and US$ 6 billion in diamonds. But an unknown amount is laundered or siphoned each year for criminal purposes.
Therefore, the International Monetary Fund (IMF) has shouldered with 16 African nations to tackle the illicit diamond and gold trade. The project targets countries where precious mineral exports account for a high share of GDP or total exports and formal financial systems are underdeveloped.
"The trade in precious minerals has been linked to illicit financial flows, corruption, drug trafficking, arms smuggling and the financing of terrorism," explains Emmanuel Mathias, an IMF Senior Financial Sector Expert.
"Better regulation and oversight of the precious minerals sector will not only help these countries combat these phenomena, but also boost revenues and improve their fiscal situation," Mr Mathias added.
The project has two stages. For the first stage, awareness-raising regional workshops are being organised in Tunis, featuring representatives from relevant government departments of each country. This includes financial intelligence, customs, finance, and mining departments. 16 African countries have stated their interest.
For the second stage, the project aims at helping interested countries further develop their national strategies for improving anti-money laundering controls and policies combating the financing of terrorism related to precious minerals.
"By the third quarter of 2010, we expect countries to have prepared national strategies," Mr Mathias said. "We then expect a number of countries to engage in longer term technical assistance relationships with the IMF or with other relevant organisations."
A number of countries have faced issues such as corruption, internal and regional conflicts, arms smuggling and other similar problems, he added.
"Such issues often prey on and are fuelled by the unregulated trade in rough diamonds and gold," Mr Mathias said. "We have to consider that for some of these countries, diamonds or gold constitute their main economic resources. Improving the regulation and transparency of the precious minerals sector supports our core mandate of strengthening macroeconomic stability."
"The lack of transparency of transactions in the precious metals and stones sector has been identified as a major obstacle to tax collection," agrees Matthew Byrne, an IMF Senior Counsel. "The implementation of the Financial Action Task Force (FATF) standard enhances the transparency of transactions and should be beneficial to the general supervision of dealers in precious stones and metals, including for tax audit."
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