Liberia’s FIA Slaps LBDI With L$18.5 Million Fine Over AML Lapses

Liberia’s Financial Intelligence Agency (FIA) has imposed a fine of L$18.5 million on the Liberian Bank for Development and Investment (LBDI) after uncovering what it described as a “structural compliance collapse” in the bank’s anti-money-laundering and counter-terrorism-financing (AML/CFT) framework. The sanction follows a compliance inspection conducted in December 2024, which exposed a series of failures that regulators say turned one of the country’s leading domestic banks into a potential conduit for illicit finance.

The inspection concluded that LBDI did not meet critical obligations under the Liberia Anti-Money Laundering and Countering the Financing of Terrorism Act of 2021. According to the FIA’s findings, the bank failed to demonstrate board-level oversight of compliance responsibilities, lacked effective monitoring mechanisms, and did not secure policy approvals from senior management. “These weaknesses were not isolated technical errors but a structural compliance collapse,” the FIA stressed in its report.

Investigators noted that LBDI operated without a comprehensive risk assessment framework for money laundering, leaving it blind to customer, product, and geographic exposure. This absence of a structured risk program meant that all clients were effectively treated the same, with no distinction between low-risk and high-risk categories. As a result, politically exposed persons and customers linked to offshore structures were able to conduct transactions without the enhanced scrutiny required under law.

The FIA further identified major flaws in customer due diligence and beneficial ownership verification. The bank accepted declarations at face value without corroborating information from independent or credible sources, exposing it to shell companies and proxy ownership arrangements that could be used to obscure the true source of funds.

Perhaps the most alarming discovery was the bank’s failure to report suspicious transactions. Even though LBDI had invested in automated monitoring software, no reports were filed with the FIA as mandated by Section 15.3.20 of the 2021 Act. Compliance staff, lacking proper training, were unable to interpret system alerts, leaving a dangerous gap between the technology deployed and its practical use.

Liberia’s regulatory framework places heavy responsibility on banks to mitigate financial crime risks. The AML/CFT Act of 2021, together with Central Bank Regulations No. CBL/RSD/002/2017, requires financial institutions to implement risk-based approaches, verify beneficial ownership, monitor transactions continuously, and report suspicious activity. In addition, the Corporate Governance Regulations No. CBL/RSD/001/2012 assign ultimate responsibility for oversight to boards and senior executives. LBDI’s conduct, the FIA said, amounted to a breach of fiduciary duty under these rules.

As part of its enforcement action, the FIA directed the bank to deposit the L$18.5 million fine into the Government of Liberia’s account at the Central Bank within ten working days and provide proof of payment. LBDI has also been ordered to prepare a remediation plan by October 20, 2025, with full corrective measures to be in place by December 1, 2025.

This move marks the most forceful AML enforcement action since the 2021 Act came into effect. Regulators emphasized that such sanctions signal to the financial sector that compliance failures will no longer be treated as mere administrative oversights, but rather as systemic risk events requiring public accountability. At the same time, the FIA suggested that the penalty demonstrates Liberia’s commitment to aligning with the expectations of the Financial Action Task Force (FATF) and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), a step intended to bolster confidence among international investors and correspondent banking partners.

The vulnerabilities identified at LBDI mirror global patterns that enable money laundering schemes. When governance structures are weak and reporting obligations ignored, illicit funds can move freely through legitimate channels. In the placement stage, unverified accounts can absorb large deposits or cross-border transfers linked to corruption or smuggling. During layering, those funds are shuffled between multiple accounts and jurisdictions in ways that appear legitimate in the absence of effective monitoring. At the integration stage, proceeds re-enter the economy through real estate deals, loans, or investments, and without rigorous beneficial-ownership checks, the true origins remain hidden.

In Liberia’s banking landscape, the FIA warned, a combination of under-trained compliance staff, poor data validation practices, and limited board accountability creates conditions ripe for abuse. These weaknesses extend beyond money laundering to cover terrorist financing and sanctions evasion, heightening systemic risks. The case, the FIA concluded, shows that “technology alone cannot ensure compliance. Real effectiveness lies in governance culture, analytical capability, and regulatory pressure.”

For LBDI, the path forward involves transforming this sanction into a roadmap for reform. Experts say the bank must take several urgent steps, including reinforcing governance accountability by ensuring that AML oversight is a permanent agenda item at the board level, supported by metrics and escalation procedures. Senior executives must directly review and approve risk assessments and policies. In addition, customer risk scoring should be made data-driven and dynamic, updating continuously as transaction patterns shift.

On beneficial ownership, banks will need to move away from reliance on client declarations and instead verify information through registries and independent documentation. Compliance staff should undergo continuous training, with annual certification and performance evaluations tied to the quality and timeliness of suspicious transaction reporting. Every alert review must be documented in an auditable trail, clearly showing who reviewed the case, what decision was made, and why. To strengthen internal integrity, whistleblower protections must be embedded so that employees can anonymously report non-compliance or collusion.

If implemented effectively, such reforms could allow LBDI to turn a regulatory setback into a showcase of institutional resilience. For Liberia’s financial regulators, however, the challenge will be to ensure that deadlines are met and that public follow-ups maintain pressure on the sector.

By fLEXI tEAM