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South Sudan’s Financial Intelligence Unit (FIU) has stepped up efforts to combat financial crimes such as money laundering, corruption, and tax evasion.

As the country’s national financial intelligence center, the FIU is working to align South Sudan’s financial system with international standards.

Dr. Abraham Tilar, Executive Director of the FIU, revealed that South Sudan remains on the Financial Action Task Force (FATF) grey list, where it was placed in 2021 due to weaknesses in its anti-money laundering and counter-terrorism financing measures.

Dr. Abraham said the country was initially given 29 requirements to meet, with 12 still outstanding.

“If these weaknesses are not addressed, South Sudan risks being blacklisted, which would be a severe blow to the financial sector.

Dr. Tilar warned. “We refer to this grey list as a ‘silent sanction’ because it restricts our financial transactions globally, negatively impacting economic growth.”

Dr. Tilar added that to address these concerns, South Sudan has enacted legal reforms, this is including amendments to the Anti-Money Laundering and Counteracting Financing of Terrorism Act (2012) in 2024.

Parliament has also ratified three international conventions, signalling the country’s commitment to compliance.

However, enforcement remains a major challenge. Dr. Tilar stressed that financial institutions must adhere to customer due diligence regulations.

He said Banks are required to report suspicious financial activities and large transactions to the FIU and failure to comply could result in administrative and criminal penalties.

“In the past two months, the FIU has analyzed 10 out of 100 ongoing financial crime cases, uncovering $7.5 million in illicit funds.”

Dr. Tilar revealed that; “These funds will be recovered and transferred to the national revenue authority.”

The Role of Financial Intelligence in Combating Corruption

According to Dr. Tilar, tax crimes account for 80% of reported financial offenses, involving both South Sudanese nationals and foreign entities, including some NGOs.

He emphasized that financial intelligence is now playing a key role in corruption investigations, as the FIU can track illicit funds both domestically and internationally.

“FIU was the missing link in South Sudan’s anti-corruption efforts,” he explained. “Unlike other institutions, we have the ability to follow money trails across borders by collaborating with financial intelligence units in Kenya, Uganda, the U.S., and other countries.”

Dr. Tilar also highlighted the importance of financial intelligence in detecting terrorist financing activities.

“Some believe that South Sudan does not face terrorist financing threats, but these activities exist in different forms. Our job is to uncover how these networks operate,” he stated.

Despite these challenges, the FIU remains committed to ensuring South Sudan meets international financial compliance standards. Authorities are calling for continued collaboration with Parliament to amend additional laws, including the Penal Code, to strengthen enforcement mechanisms.

With the threat of blacklisting looming, the government is racing against time to fulfill FATF requirements and restore international confidence in South Sudan’s financial system.

Samuel Loti, Deputy Chairman of the Parliamentary Specialized Committee on National Security and Public Order, has emphasized the urgent need for financial reforms in South Sudan.

Loti pointed out that since gaining independence in 2011, South Sudan has become part of the global financial system.

However, the country continues to struggle with illicit cash flows, tax evasion, and weak banking oversight.

“Our open economy has attracted foreign investment from across the world, but it also makes us vulnerable to financial crimes,” Loti stated.

One major concern he highlighted is cash smuggling, where illicit funds are funnelled into South Sudan’s economy and later laundered abroad.

In addition, terrorist financing has become a growing global issue, prompting the country to adopt stricter measures against illicit financial activities.

Loti noted that while South Sudan enacted the Anti-Money Laundering Act in 2012, it took over seven years to establish the Financial Intelligence Unit (FIU) the agency responsible for monitoring and investigating financial fraud.

Had the FIU been in place earlier, the country could have prevented significant financial losses due to tax evasion and fraud.

The government is now prioritizing stronger revenue collection and tighter financial oversight, ensuring that the FIU works closely with key institutions such as the Central Bank, Revenue Authority, and the Ministry of Finance.

Loti confirmed that South Sudan remains on the Financial Action Task Force (FATF) grey list, meaning its financial system is under heightened international scrutiny.

Loti says this classification has restricted South Sudanese banks, making international transactions more expensive and difficult.

“Our banks no longer have direct relationships with foreign financial institutions. For example, Nile Commercial Bank and Ivory Bank cannot transfer funds directly to Kenya. Instead, they must go through third-party institutions, leading to higher costs and delays,” he said.

He said If South Sudan fails to meet FATF compliance standards, it risks being blacklisted, further isolating it from global financial markets.

“Right now, only Iran and North Korea are blacklisted. If South Sudan joins them, the economic consequences will be catastrophic,”

He believed that to avoid blacklisting, the government has outlined 12 key reforms aimed at bringing South Sudan’s financial system up to international standards.

These include strengthening border controls to combat cash smuggling, enhancing financial transparency to prevent illicit transactions and Strict enforcement of tax regulations to reduce revenue losses

The measure is improving collaboration between the FIU and other regulatory bodies

Loti also stressed the importance of public awareness in the fight against money laundering.

“If we are blacklisted, the entire country will suffer. The cost of doing business will skyrocket, and importing essential goods will become much more difficult,” he cautioned.

While the FIU does not have prosecuting powers, it is responsible for gathering intelligence on financial crimes and reporting cases to law enforcement agencies such as the Anti-Corruption Commission and the Judiciary.

As South Sudan continues its post-war economic recovery, financial transparency and regulatory compliance remain top priorities.

Loti concluded the government is urging both the public and lawmakers to support the FIU’s work and help restore international confidence in the country’s financial system.

“We cannot continue operating as if we don’t have a structured financial system. If we fail to act now, the consequences will be severe.”

South Sudan’s Fight Against Money Laundering and Terrorist Financing

Noel Rimasu Michael, Director of Internal and International Cooperation at the Financial Intelligence Unit (FIU), has outlined the challenges and measures South Sudan is implementing to combat money laundering and terrorist financing.

Michael provided a detailed explanation of the money laundering process and emphasized the crucial role of financial oversight institutions in preventing illicit financial activities.

According to Michael, money laundering occurs in three key stages as follow

The first stage is placement Illegally obtained money is introduced into the economy through cash-intensive businesses, often referred to as front businesses. In South Sudan, common examples include petrol stations, hardware stores, and restaurants.

The second stage is layering the origin of the money is disguised through complex transactions, such as fake invoices and inflated prices, making it difficult to trace.

And the third stage is Integration The laundered money is reintroduced into the economy through investments in real estate, luxury vehicles, and other assets, making it appear legitimate.

Michael stressed that financial institutions such as banks, foreign exchange bureaus, insurance companies, lawyers, and accountants must report suspicious transactions to the FIU. Once analysed, the cases are forwarded to the Revenue Authority for tax evasion cases or the Anti-Corruption Commission for corruption-related offenses.

However, Michael acknowledged that despite having legal frameworks and international commitments, South Sudan’s enforcement bodies—including police, prosecutors, and judges—require additional training to handle financial crimes effectively.

He emphasized the need for a comprehensive approach in combating financial crimes, which includes raising public awareness, strengthening institutional systems and strictly enforcing anti-money laundering laws

Michael noted that the FIU, established in 2021, is still in its developmental stage and is working to enhance its capacity and integrate with international financial intelligence networks.

Although South Sudan enacted the Anti-Money Laundering Act in 2012, its full implementation was delayed due to conflicts in 2013 and 2016. The recent amendments in 2024 aim to strengthen oversight mechanisms by imposing strict penalties on banks and financial institutions that fail to report suspicious transactions.

The Financial Action Task Force (FATF), a global organization that combats financial crimes, had previously placed South Sudan on the grey list due to concerns over money laundering risks.

However, Michael expressed confidence that ongoing reforms, including the digitization of government revenue collection through e-tax systems, would help address compliance gaps.

Michael highlighted that South Sudan’s FIU is actively working with global financial intelligence units to track illicit funds. Through international cooperation, FIUs can trace individuals’ financial activities across borders, making it more difficult for criminals to hide their assets.

“The FIU’s specialized intelligence-gathering capacity is a critical missing link in South Sudan’s anti-corruption efforts,” Michael stated.

As the country is looking ahead, Michael outlined several key priorities to effectively curb money laundering as increasing public awareness about the dangers of financial crimes, enhancing training and capacity building for law enforcement, judiciary, and regulatory bodies and strengthening reporting mechanisms to promote transparency and accountability

With these measures in place, Michael believes South Sudan can reinforce financial integrity and foster economic stability by eliminating illicit financial activities from its economy.