International Narcotics Control Strategy Report -- Part II: Money Laundering and Financial Crimes

Morocco
March 2004 

Morocco is not a regional financial center and the extent of the money laundering problem in Morocco is not known. There have been reports of money laundering activities within the country related to international arms smuggling. Morocco remains an important producer and exporter of cannabis, with estimated revenues of $3 billion annually. Some of these proceeds may be laundered in Morocco and abroad. Large numbers of Moroccans have a strong economic dependence on the narcotics trade. There is no indication that international or domestic terrorist networks have engaged in widespread use of the narcotics trade to finance terrorist organizations and operations in Morocco. Morocco has a significant informal economic sector, including remittances from abroad and cash-based transactions. There are unverified reports of trade-based money laundering, including bulk cash smuggling, under-and over-invoicing, and the purchase of smuggled goods. Banking officials have indicated that the country’s system of unregulated money exchanges provides opportunities for launderers. Morocco has offshore banks.

The Moroccan financial sector is modelled after the French system and consists of 16 banks, five government-owned specialized financial institutions, approximately 30 credit agencies, and 12 leasing companies. The monetary authorities in Morocco are the Ministry of Finance and the Central Bank, Bank Al Maghrib (CBM), which monitors and regulates the banking system. A separate Foreign Exchange Office regulates international transactions. Morocco has used administrative instruments and procedures to freeze suspect accounts.

However, CBM issued Memorandum No. 36 in December 2003, in advance of passage of the AML, instructing banks and other financial institutions to conduct their own internal analysis/investigations.

Morocco has in effect: (a.) legislation prohibiting anonymous bank accounts; (b.) foreign currency controls that require declarations to be filed when transporting currency across the border, although not strictly enforced; and, (c.) internal bank controls designed to counter money laundering and other illegal/suspicious activities.

In June 2003, Morocco implemented a comprehensive antiterrorism bill that provided the legal basis for the freezing of suspect accounts and prosecution of terrorist finance related crimes. As of January 2004, Morocco is moving towards the enactment of two laws that will further strengthen Morocco’s anti-money laundering system: a banking/financial sector reform bill and an anti-money laundering bill. The AML bill reportedly includes, among other provisions, a suspicious transaction-reporting scheme and creation of a financial intelligence unit (FIU). The bills are based on the FATF Forty Recommendations and will help bring Morocco’s financial sector in-line with international standards. Together, the three bills will enhance the supervisory and enforcement authority of the Central Bank and outline investigative and prosecutorial procedures. In the interim, the Central Bank has already mandated “know your customer” requirements and the reporting of suspicious transactions by financial institutions. All money transfer activities that take place outside the realm of the official Moroccan banking system—as set by the CBM guidelines—are deemed illegal

Morocco has taken a proactive approach to anti-money laundering and has solicited USG and international technical assistance. Morocco is a party to the UN International Convention for the Suppression of Financing of Terrorism, and the UN Convention against Transnational Organized Crime.

Morocco should move expeditiously to pass the banking sector reform bill and the proposed anti-money laundering law. As part of its anti-money laundering program, Morocco should establish a centralized financial intelligence unit (FIU) that will receive and analyze suspicious transaction reports and disseminate them to appropriate law enforcement agencies for investigation. Moroccan law enforcement and customs should also focus its efforts on informal remittance systems and various forms of trade-based money laundering.