Rwanda's responses to money laundering

1.7 Why Rwanda Needs Strong Anti-Money Laundering Laws

1.7.1 Operational Reasons

Given Rwanda's fragile economy and its dependence on foreign aid, it needs strong AML/CFT laws and regulations to enhance the integrity of its financial sector in order to be regarded internationally as a reliable and predictable country with which to do business.³⁹

37 Twizeyimana F `765 senior officials convicted over embezzlement in the last 7 years' Igihe Newspaper 25

October 2014, available at http://www.igihe.com/amakuru/u-rwanda/article/abayobozi-765-bahamijwe-kurigisa (accessed on 27 October 2014).

38 Musoni E `Gov't to drag nearly 300 to Court over Embezzlement' The New Times 16 September 2014 6.

39 International Monetary Fund Money Laundering and Financing of Terrorism: a multi-donor Trust Fund

(2009) 2, available at http://www.imf.org/external/np/otm/2009/anti-money.pdf (accessed on 16 June 2014).

13

1.7.2 Reputational Reasons

A clean record and financial reputation are requisite ingredients for a country to grow and prosper. A country that does not have impeccable and honest financial institutions, equipped with anti-money laundering and anti-terrorist financing measures, is likely to fall prey to these crimes, thus making it a risky destination for foreign investments.⁴⁰ In other words, whenever a country is suspected of acting contrary to international standards, its reputation is affected adversely, causing an overall decline in trust and openness. For instance, refusal to comply may lead to loss of profitable business as well as financial problems through withdrawal of funds and termination of development partnerships. Since Rwanda depends hugely on foreign aid and investments, it is in its best interests to have strong AML mechanisms in place and to be serious about implementing them.

1.7.3 Regional Integration Reasons

Among the benefits attached to being a member of the East African Community (EAC)⁴¹ is the right of citizens of this community of states to move and to settle freely in each of the member states.⁴² Therefore, strong AML laws are required to strengthen the state's capacity to respond to any ML risk that may be associated with the free movement of people and capital. When ordinary people cross borders, so, too, do criminals who explore opportunities to commit crimes.

40 International Federation of Accountants Anti-Money Laundering 2nd Ed (2004) 13, available at

https://www.ifac.org/sites/default/files/publications/files/anti-money-laundering-2n.pdf (accessed on 13 October 2014).

41 The Member states of the East African Community are Rwanda, Burundi, Uganda Kenya and Tanzania.

42 Article 1-6 of the East African Community Free Movement of Person Regulations, adopted in Moshi on 20

June 2009.

14

It is worth mentioning that the domestic laws of the EAC member states have not yet been harmonised. Apart from the cooperation framework signed amongst them, very little has been done so far by member states to enact congruent laws to curb cross-border criminality.