ANALYSIS: Instant payments outpace Central Africa’s anti-money laundering controls

Sending money from N’Djamena to Nairobi has long meant routing it through banks in Europe or the United States, converting it twice, and waiting weeks for it to arrive. A new African payment system promises to do it in seconds. However, speed brings opportunities not only for trade but also for financial crime.

On 9 July, the Bank of Central African States (BEAC) joined the Pan-African Payment and Settlement System (PAPSS), launched in 2022. The system activates the African Continental Free Trade Area (AfCFTA) by connecting the continent’s various financial systems, including 41 currencies.

The benefits for trade are clear, but can the immediacy of payments be aligned with effective controls to prevent PAPSS from becoming a conduit for crime?

Economic and Monetary Community of Central Africa (CEMAC) countries already have a common currency and a shared payment infrastructure that connects banks, financial institutions and mobile money operators in the region. But PAPSS offers an innovative opportunity for trade with the rest of Africa by enabling instant cross-border payments in local currency.

In 2026, PAPSS transaction volumes increased by 1,000 per cent, with transaction values rising by 120 per cent. With Central Africa now included, the system covers 30 African countries and 200 banks and fintechs.

PAPSS could reduce the risk of international correspondent banks withdrawing from CEMAC. It also provides a fast, inexpensive and traceable alternative to cross-border currency transport and informal hawala-type remittances. PAPSS also facilitates imports and exports and private transfers by reducing payment costs.

The speed of the system is, however, its main risk. PAPSS delivers instant, irrevocable credit and subsequent clearing, whereas CEMAC foreign exchange regulations vary according to the nature of the operation. These regulations may require supporting documentation, domiciliation, declaration, authorisation, repatriation commitments and compliance with deadlines.

The problem is not that PAPSS and CEMAC rules conflict, but that PAPSS finalises payments in seconds, while CEMAC requires the paperwork to be filed first. The risk is that by the time a fraudulent transfer is detected, funds may already have been withdrawn or transferred, reducing the ability to intervene after settlement.

Central African countries already struggle to contain financial crime. CEMAC’s regulations on preventing and suppressing money laundering, terrorist financing and the proliferation of weapons of mass destruction align with Financial Action Task Force (FATF) standards, but implementation is uneven.

Cameroon, the region’s economic leader, has remained under enhanced FATF surveillance since June 2023. While it has made progress, FATF still requires improvements in risk-based supervision, financial intelligence, cooperation among authorities and measures to combat terrorist financing and the proliferation of weapons of mass destruction.

Another challenge is that the region’s financial risk profile warrants consideration of small transactions that may escape traditional supervisory mechanisms. False or over-invoicing, splitting transactions (‘smurfing’), transit (‘mule’) accounts, shell companies and capital flight pose risks. Concealment of the ultimate beneficiary, use of insufficiently controlled payment providers, or rapid movement of funds between several jurisdictions also require attention.

Another issue is that fewer than 13 per cent of adults in Central Africa have access to and use formal financial services, such as bank accounts, mobile money accounts or credit. Cash collected through informal networks is deposited in banks or fintechs without appropriate ‘know-your-customer’ processes. Transactions of dubious origin could benefit from the legitimacy attached to a formal payment infrastructure like PAPSS.

Without robust identification, monitoring and inter-authority cooperation mechanisms, PAPSS could become a vector for the rapid movement of criminal funds across multiple jurisdictions.

The system needs to interface with anti-money laundering and counter-terrorist financing institutions to optimise controls. A payment could be identified, executed and traced even though it constitutes a fictitious commercial transaction with false invoices that conceal the money’s real origin or destination.

Compliance control will be key to processing larger volumes of cross-border transactions. Supervisory and financial intelligence capacities within PAPSS should be bolstered to strengthen upstream detection and enhance the authorities’ ability to quickly exploit transaction data.

FATF promotes risk-based controls, which means accurately identifying higher-risk transactions, processes, actors and channels. That requires at least three levels of control: the payment itself, the customer and the underlying economic transaction. It is at this third level that compliance may not be sufficient to establish the transaction’s legality.

A common set of compliance standards should accompany the mutual recognition of payments between countries that have joined PAPSS. These are minimum know-your-customer requirements, beneficiary identification, common due diligence rules, filtering mechanisms and secure information-sharing methods. Without this, the interconnection of systems could create gaps that criminal operators exploit.

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The challenge is to avoid slowing PAPSS down through local regulations in Central Africa. Instead, controls should reflect a payment infrastructure whose speed, interoperability and irrevocability alter traditional supervisory methods.

The success of PAPSS in Central Africa will depend less on moving money faster than on ensuring the traceability, legality and security of financial flows. If organised crime networks use CEMAC as a soft entry point into a 30-country network, the cost would be continental, not only regional.

Raoul Sumo Tayo is a Senior Researcher in the Central Africa Observatory at the Institute for Security Studies (ISS).

(This article was first published by ISS Today, a Premium Times syndication partner. We have their permission to republish).