Mohamed S Fofana: Tackling money laundering in Sierra Leone Statement by Mr Mohamed S Fofana, Deputy Governor of the Bank of Sierra Leone, at the official opening of the UNODC/GIABA/BSL training workshop on AML/CFT Strategy Development, Freetown, 10-13 July 2006. *  *  *  Distinguished Administrative Secretary of GIABA, Fellow Stakeholders, The Board and Management of the Bank of Sierra Leone, Participants, Distinguished Ladies & Gentlemen Let me on behalf of the Governor, Management and staff of the Bank of Sierra Leone welcome you all, especially those of you coming to Sierra Leone for the first time for this very important training workshop. May I also take this opportunity to congratulate you, Mr. Administrative Secretary of GIABA, on your recent appointment. I believe that your appointment is to underscore the fact that African problems require African solution. I also want to particularly welcome the facilitators from the UNODC and GIABA and proffer our gratitude to them for facilitating this workshop and for heeding to our call for help in the establishment of a Financial Intelligence Unit (FIU). In the past, emphasis has been placed on the drugs trade as the principal source of cash that is laundered. We now know that other activities such as terrorism, tax evasion, arms trafficking, smuggling, human trafficking and advance fee fraud (aka 419) are veritable fountains of cash for money laundering.
The trigger for the correction can vary – in the early 89–92 episode it was a sharp rise in interest rates as the UK sought to remain in the Exchange Rate Mechanism; in 2007–9 it was a sharp tightening in credit conditions amid a collapse in confidence in an over-levered banking system – but, unfortunately, there are more precedents in UK for periods of a rapidly growing housing market to end in this way. The question for the Financial Policy Committee, therefore, is whether the sustained momentum we are seeing in the housing market will continue and will lead to unsustainable growth in household indebtedness, undermining the resilience of the system. Our first thought must be to the direct exposure of the financial system to the housing market and its resilience to a major housing shock. Mortgage lending amounts to two-thirds of UK bank and building societies’ UK lending. Financial institutions are better placed now than they were before the financial crisis. The reinforcement of underwriting standards that I mentioned earlier, protects both borrowers from taking on unaffordable mortgages and lenders from bad debts. Since 2008, the amount of capital in the system has increased by £ with capital requirements against UK residential mortgages broadly trebling. We now have, for the first time, a new international liquidity standard, which should help to prevent long-term mortgage debt being funded from unstable short-term wholesale sources; since 2008, banks’ liquid assets have broadly trebled.