Global watchdog removes Senegal from dirty money 'gray-list'

Senegal has been removed from a global dirty-money list, a move likely to boost investor confidence after a spate of negative news led to a selloff of its eurobonds this month.

The Paris-based Financial Action Task Force on Friday removed the West African nation from its so-called gray list for increased monitoring after it fortified its mechanisms for tackling money laundering and terrorist financing, Senegal’s Finance Ministry said. Bloomberg earlier this month reported that FATF was poised to remove the nation from its list.

Since Senegal was added to the list in 2021, the government has strengthened its targeted financial sanctions regime and put in place regulations on the nature of financing. In February, its parliament adopted a bill against money laundering and the financing of terrorism. Now any financial institution that doesn’t respect these rules may be subject to administrative or criminal sanctions.

Senegal’s eurobonds have been among the worst performers in emerging markets this month after the International Monetary Fund said it’s weighing the impact of underreported financial data on the country’s $1.5 billion program with the Washington-based lender, and S&P Global Ratings changed its credit outlook to negative from stable.

An audit instituted by newly elected President Bassirou Diomaye Faye and another by the IMF showed the West African country’s public debt and fiscal deficit were higher than previously reported.

IMF research has found that gray-listed countries experience “a large and statistically significant reduction in capital inflows.”