Morocco’s market economy expansion and its successful strategy in combatting money laundering and terrorist financing
| DOI | https://doi.org/10.1108/JMLC-06-2020-0068 |
| Published date | 12 August 2020 |
| Date | 12 August 2020 |
| Pages | 323-345 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Mohammed Ahmad Naheem |
Morocco’s market economy
expansion and its successful
strategy in combatting money
laundering and terrorist financing
Mohammed Ahmad Naheem
Mayfair Compliance, Frankfurt, Germany
Abstract
Purpose –Morocco is an expanding developing economy in North Africa with incr easing bilateral
trade relations with larger economies. This paper aims to examine the features of the e xpanding market
economy and the preceding structural reforms initiated by King Mohammed VI. The paper’s primary
focus is to study the systematic feature of anti-money laundering and combatting of terrorist financing
(AML/CTF). Morocco has emerged as a staunch opponent of terrorism and terrorist financing while
garnering joint-investigative operations with European countries against transnational organised crime
and money laundering.
Design/methodology/approach –The paper is divided into two primary series. The first is a view
of Morocco’s economy, with a qualitative analysis of significant economic, political and social structural
reforms. Second, a qualitative and quantitative analysis of Morocco’s AML and combating of terrorist
financing infrastructure is assessed. The qualitative analysis is conducted in two parts; first, by
studying the country’s AML/CTF legislation and regulation, and second, by examining the i ndependent
international evaluation of the legal structure and its implementation by authorities. The quantitative
analysis is conducted by investigating the available statistics relating to money laundering and
terrorist financing.
Findings –The paper finds Morocco to have accomplished essential economic reforms, especially
considering greater institutional management and autonomy. Other structural reforms include the
reformation ofthe constitution, a more comfortable business climate,social development projects focusing on
enhancing skill labourand connectivity and the development of strong trade capacity. The primaryobjective
discoveryconcerns the country’s AML/CTF structure, whichis found to comply with international standards.
Also, efforts enhancing the country’s regulatory environment with low corruption, low risk of money
laundering and low risk of terrorist financing have been taken in a series of legislative amendments and
programs. Thebanking sector and Morocco’s Customs agency have reflected the best improvementas per the
study in this paper.
The author acknowledges being the recipient of a research grant awarded by Princess Ālae as part of
Seven Foundation’s“2020 Banking Vision –building banks of the future”and he thanks her for the
continued support and motivation both to himself and other students who benefit through her
generosity. The author also thanks Professor Muhammad Jum`ah (a leading economist of this era
based in Damascus), who has continued to provide valuable input both through his teaching of the
science of economics and for his continued guidance.
Please note that this paper was composed and submitted for review to this journal in April 2019 –
All the content was current at that point in time. The banking, compliance and regulation industries
alongside governmental policymaking evolve over time, with new material from academic research
emerging. These points need to be taken into consideration when reading this paper.
The author is a specialist researcher and practitioner in contract with Mayfair Compliance. (www.
mayfaircompliance.com).
Morocco’s
market
economy
expansion
323
Journalof Money Laundering
Control
Vol.24 No. 2, 2021
pp. 323-345
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2020-0068
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
Practical implications –Morocco is witnessing high levelsof investment, with year-on-year growth in
most existing industrial sectors. The market is also providing for new skilled labour and better trade
incentives with the European Union.It is essential for investors, observers and policymakers to understand
the market economy reforms and systematic deficiencies in a developing economy. Morocco presents
observers with information about policiespre-reform, providing a guide for economic and AML/CTF policy
implementationelsewhere.
Originality/value –The paper concerns itself with two levelsof analysis concerning Morocco. The first,
broad study, is a review of market economy reforms, which are mostly structural and have assistedin the
expansion of the economy greatly. The second objective is specific to examining the country’s AML/CTF
structure, which has undergone significantdevelopment in legislation, regulation and implementation in the
past decade.The paper makes a specific attempt to discuss associate indicatorsto the AML/CTF network as a
part of this study.
Keywords Morocco, North Africa, Anti money laundering, King Mohammed VI
Paper type Research paper
Introduction: a brief history of Morocco’s economic and financial sectors
The Royal Kingdom of Morocco has become a pioneering success in the North African
region for pursuant growth towards several indicators. In 2011, the monarch, King
Mohammed VI made a historical resolution by declaring constitutional reforms that would
make the country a constitutional monarchy (Achy, 2011;The Economist,2016). The
announcement succeededa declaration by the European Union (EU) two years earlier, which
established an “advanced economic partnership”with the Kingdom of Morocco (European
Union, 2009;Martín, 2009). Moroccoeffectively became the first non-European country to be
given this recognition in bilateral agreements with the EU. The country, under the
leadership of King MohammedVI and the newly established legislature, has taken the path
towards significant economic and political reforms. Between 2009 and 2016, the country’s
exports, with the majority destined for the EU, increased by over 60% [1]. In the same
period, the country witnessed its most stable period of gross domestic growth at nominal
prices, with the highestnine-year average in the North African region[2].
The story of institutional autonomy and financial prudence is not an easy case for any
country to address. The global economytrends of the 1980s and 1990s with countries across
the world facing excessive public expenditure with bullish financial reforms, several of
which had been suggested by the World Bank (Vandendries, 1997), put great strains on
many countries. Most countries began the implementations of reform gradually, to achieve
stability, economic growth and reduction of income inequality. Under the economicreforms
carefully undertaken by King Hasan II (with the assistance of the World Bank and the
International Monetary Fund [IMF]),Morocco successfully prevailed over external debt and
structural deficiencies.
Since the World Bank’s assessment in 1997, the current leadership made significant
strides in resolving the structuralinefficiencies of Morocco’s economic and financial system.
First, the country followed through with making public sector costs more efficient and
effective, explicitly targeting growth in rural sectors. Second, the country fostered an
excellent private sector environment, which did not exist in the years preceding King
Muhammed VI’s coronation. Since 1999, the Kingdom has rapidlydiversified its public and
private sector economy, investing in numerous new projects bolstering its trade capacity
and being a financially secure environment, with a focus on enabling greater financial
inclusion (Sensenbrenner and Zhou, 2016: IMF –World Bank) [3]. Third, the country
invested heavily in resolving state-led investment towards poverty reduction which has
moved from 16.3% in 1998 to less than 5% at currentlevels (World Bank, 2018)[
4].
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