The Beninese government has updated its National Risk Assessment, which was adopted in February 2026 and presented on September 10 in Cotonou. This assessment categorizes virtual assets and their providers as "very high" risk for money laundering and terrorism financing. This classification is based on the inherent vulnerabilities of virtual assets and the inadequacy of current regulatory measures.
According to the assessment, virtual assets top the list of sectors evaluated, followed by fintechs, which are classified as "high" risk. In contrast, banks, decentralized financial systems, and electronic money establishments are considered "medium" risk. The evaluation highlights significant vulnerabilities in the virtual asset sector, including a lack of effective regulation, supervision, and sanctions.
The assessment also identifies gaps in the regulatory framework for virtual asset service providers, particularly regarding licensing, registration, supervision, and sanctions. These gaps hinder the monitoring of activities and transactions, especially when they cross national borders. To mitigate these risks, the report recommends strengthening the regulatory framework and enhancing supervisory capacities.
The fintech sector also presents vulnerabilities due to the diversity of technological models, fragmented payment solutions, and insufficient supervision. The assessment notes that the Beninese financial landscape has evolved since 2018, with the residual risk of money laundering decreasing from high to medium. However, the risk of terrorism financing has increased from low to medium.
For the first time, the assessment also evaluated the risk of proliferation financing, categorizing it as medium. This updated evaluation is crucial ahead of Benin's next mutual evaluation by the Intergovernmental Action Group against Money Laundering in West Africa (GIABA) in 2028. The authorities must now translate these findings into concrete measures within the National Strategy to Combat Money Laundering, Terrorism Financing, and Proliferation Financing for 2026-2030.
The National Risk Assessment's findings emphasize the need for enhanced regulation and supervision of virtual assets and fintechs. By addressing these vulnerabilities, Benin aims to strengthen its anti-money laundering and combating the financing of terrorism framework. Effective implementation of these recommendations will be critical in mitigating the risks associated with virtual assets and ensuring the country's financial stability.
The updated National Risk Assessment demonstrates Benin's commitment to combating financial crimes. By prioritizing the regulation of virtual assets and fintechs, the country can reduce its vulnerability to money laundering and terrorism financing. The success of these efforts will depend on the effective translation of the assessment's recommendations into actionable measures.
Key points
- Virtual assets and their providers are classified as "very high" risk for money laundering and terrorism financing in Benin's National Risk Assessment.
- The assessment recommends strengthening the regulatory framework and enhancing supervisory capacities to mitigate the risks associated with virtual assets.
- Benin's financial landscape has evolved since 2018, with the residual risk of money laundering decreasing from high to medium and the risk of terrorism financing increasing from low to medium.
