West Africa’s AML Progress Shows Promise but Reveals Fragile Effectiveness

Four recent enhanced follow-up reports covering Benin, Cabo Verde, Togo, and Burkina Faso provide a consolidated picture of how these countries are attempting to bring their regimes in line with FATF standards. The findings tell a nuanced story: while legislative progress is visible, operational weaknesses remain pronounced. The developments are not solely about upgrading compliance frameworks but also about confronting structural shortcomings that, if ignored, could damage both regional stability and investor confidence.

Benin’s fourth follow-up report highlights how much progress can be achieved when political will is applied to reshaping an AML framework in a relatively short span of time. A landmark reform came in February 2024 with the adoption of the Uniform AML/CFT Act No. 2024-01, which consolidated existing legislation and tackled key gaps. The law handed courts authority to order the freezing, seizure, and confiscation of assets linked to money laundering, terrorist financing, and proliferation financing. It also introduced stricter rules on beneficial ownership and established the National Agency for the Recovery of Confiscated and Seized Assets, charged with tracing, managing, and liquidating assets.

Beyond legislative work, Benin moved toward greater operational readiness. A beneficial ownership registry was launched, and risk assessments were conducted on legal entities and virtual assets. Authorities issued new rules on thresholds for due diligence, cash transport, and bearer negotiable instruments. Institutionally, a Directorate for Cooperation and Mutual Legal Assistance was created, signaling intent to strengthen cross-border cooperation.

Nevertheless, substantial gaps endure. Confiscation by equivalent value remains inconsistent for predicate offences, leaving opportunities for criminals to protect their wealth if direct proceeds are dissipated. Safeguards for bona fide third parties in confiscation processes are also incomplete. And while terrorist financing is now criminalized to international standards, the country still lacks depth in investigative capacity and prosecutorial expertise. The central takeaway is clear: legal reforms alone do not ensure operational efficiency. With its growing digital economy and porous borders, Benin’s challenge will be to extend compliance controls into sectors beyond banking, especially given the role of informal finance and trade-based laundering in the region. Unless regulatory supervision and enforcement are expanded, the country risks seeing its progress remain largely theoretical.

Cabo Verde’s sixth enhanced follow-up report illustrates the benefits of a coordinated national framework. The country approved a comprehensive National Strategy for preventing money laundering, terrorist financing, and proliferation financing (ENCAVE) in 2023, providing an operational roadmap through 2027. An Interministerial Commission was created to coordinate the strategy, with representatives from ministries, regulators, the FIU, and law enforcement meeting quarterly to shape policy. An Executive Committee meets monthly to implement decisions, supported by a technical secretariat ensuring continuity. This structure responds directly to FATF’s expectation that coordination be systematic rather than improvised.

But the strategy rests on shaky ground: it is anchored in a 2017 national risk assessment. Although ENCAVE aligns with deficiencies flagged in the 2019 evaluation, the absence of updated analysis risks obsolescence. The threats Cabo Verde faces today—real estate-linked laundering, cash-based smuggling routes, and emerging crypto channels—are not fully reflected in an assessment nearly a decade old. Without refreshed data, even the most sophisticated committees risk drifting into formalism. Cabo Verde’s strength lies in its institutional design, with robust laws on data protection, interagency cooperation, and policy coordination. Its weakness lies in agility. To remain credible, the country must urgently update its risk assessment and recalibrate ENCAVE’s goals to address today’s threats.

Togo’s third enhanced follow-up report depicts incremental improvement while vulnerabilities persist. When its mutual evaluation was completed in 2022, the country was deemed weak on effectiveness and technical compliance, with 24 recommendations rated partially or non-compliant, placing it under enhanced monitoring. By 2025, progress was evident: Recommendation 34, which relates to guidance and feedback to financial and non-financial institutions, was upgraded from partially compliant to largely compliant.

The shift reflects supervisory bodies’ expanded guidance to banks, insurers, and securities firms, particularly on suspicious transaction reporting and targeted financial sanctions. The FIU also enhanced feedback to reporting entities, offering workshops and feedback sessions with banks. Legal professionals such as notaries and lawyers, as well as casinos and gaming establishments, have received sector-specific guidance as well.

Yet the progress does not extend evenly across all sectors. Designated non-financial businesses and professions—real estate agents, company service providers, and precious metals dealers—remain outside the effective compliance net. These high-risk groups have not received tailored guidance, nor have they submitted suspicious transaction reports, revealing either a lack of awareness, inadequate supervision, or both. The FIU cannot provide feedback where reports do not exist. This structural deficiency highlights how gains in the banking sector mask deep vulnerabilities in DNFBPs. Unless regulators expand supervision and enforcement, laundering opportunities through real estate, gold, and corporate vehicles will persist.

Burkina Faso’s sixth follow-up report underscores determination but also fragility. Since its 2019 evaluation, the country has remained under enhanced monitoring. The 2025 review acknowledged progress, particularly in relation to targeted financial sanctions. Decrees created a consultative freezing commission and designated supervisors for DNFBPs. Authorities set up a National Authority for Sanctions and directed financial institutions to check UN sanction lists regularly. These moves strengthen compliance with FATF’s Recommendations 6 and 7.

Even so, problems endure. Burkina Faso still cannot implement UN Security Council sanctions under Resolutions 1267 and 1988 within the required 24-hour timeframe, since sanctions must be transposed into domestic law before being applied. The definition of assets subject to freezing is too narrow, and de-listing procedures remain incomplete. These delays leave the system exposed to potential abuse by sanctioned actors. The report also notes progress in beneficial ownership rules and DNFBP oversight. But broader constraints—security challenges, governance pressures, and limited enforcement resources—continue to undermine effective AML implementation. Risks linked to illicit mining and cross-border smuggling remain high.

Across these four reports, several regional lessons emerge. Legislative reform is advancing: Benin has modernized its AML Act, Cabo Verde has enshrined a national strategy, Togo has expanded supervisory guidance, and Burkina Faso has issued decrees on sanctions. Institutional structures are becoming more sophisticated, with new beneficial ownership registries, asset recovery agencies, interministerial commissions, and sanctioning authorities providing a stronger backbone. But operational effectiveness lags behind. Gaps remain in confiscation by equivalent value, DNFBP supervision, sanction timeliness, and risk assessment updates.

For compliance professionals, the warning is evident: the danger lies not in the absence of laws but in their incomplete execution. Financial institutions must adopt enhanced due diligence, particularly when dealing with real estate, precious metals, or other high-cash sectors in these jurisdictions. Cross-border cooperation will also be critical, given the transnational nature of illicit flows.

The broader picture suggests that West Africa is heading in the right direction, but progress remains fragile. Regional bodies like GIABA have been crucial in driving reforms, yet the decisive test will be whether these reforms translate into real-world prevention, detection, and prosecution of financial crime.

By fLEXI tEAM