Morocco weighs amnesty period to ‘repatriate’ illegal funds

Those affected would be granted ten months, as of January, to declare their assets abroad and return them to Morocco.
Monday 16/12/2019
A currency dealer counts Moroccan dirhams at a currency exchange in Casablanca. (Reuters)
Stable despite challenges. A currency dealer counts Moroccan dirhams at a currency exchange in Casablanca. (Reuters)

TUNIS - There has been a growing debate between economists and politicians in Morocco since the government announced stimulus measures to recover money illegally taken out of the country.

With this move, which the government included in the 2020 draft budget, authorities sought to inject the funds into Morocco’s formal economy.

The draft budget included a clause stipulating that “proprietors of funds smuggled out of the country will be pardoned and exempted from fines if they repatriate those funds within a time period” of a few months.

The government said the measure concerns funds and real estate abroad that are owned by Moroccan citizens living in Morocco. The assets were acquired legally but their owners violated Moroccan exchange laws by not declaring the transfer of funds outside the country.

Those affected would be granted ten months, as of January, to declare their assets abroad and return them to Morocco. If they deposit 75% of the funds in foreign currency accounts and 25% in local currency, they would be exempted from paying 5% of the fees on entering funds.

Economists tried to explain the government plan covers illegal situations and has nothing to do with money smuggling.

“Talking about money smugglers is an inaccurate description (of the plan), since we are not dealing with a move to pardon money smugglers,” economist Mahdi Fagir told the Anatolia news agency. “To say that would suggest that the state is encouraging smuggling.

“We are dealing with cases of people owning real estate or liquidity but are in an illegal situation that they have to correct. Those funds have been transferred outside the country illegally.”

An amnesty campaign in 2014 enabled Morocco to recover $3 billion. The government said that included $923 million in cash, more than $1 billion in real estate and $1.1 billion in equity and bond investments.

Naoufel Naciri, an economist specialising in public policy, said the government exchange bureau began an investigation of illegal cross-border property holdings by Moroccans residing and paying taxes in Morocco.

Naciri, a member of the House of Representatives Finance and Economic Development Committee, said that, from 2014-19, 600 cases “pertaining to acquiring real estate abroad illegally were studied.”

He said Morocco’s exchange law clearly states that the acquisition without prior authorisation of real estate outside of Morocco by Moroccan citizens residing in Morocco is an offence requiring payment of fines that can be six times the value of the property.

“The proposed amnesty is the last chance for Moroccans who have broken the law. Because of the information exchange mechanisms provided for in regional and international cooperation agreements, we are going to be facing a new situation in a year and a few months.”

Morocco signed a cooperation agreement in 2013 involving 36 countries and it now has better means to monitor the acquisition of financial and real estate assets.

“The new measure puts trust in the targeted people and offers them one last chance,” Naciri said. He pointed out that the measure does not concern members of the Moroccan community living abroad.

However, he said the situation will become more complex in 2021 with legislation on the exchange of financial data with major international groups.

Rabat has often joined international conventions, engaged in ensuring transparency of capital transfers and enforced the rules of international transparency.

The fines for smuggling money outside Morocco were six times the amount smuggled, in addition to the penalty of imprisonment of up to 5 years.

Rafia al-Mansouri, a member of the House of Representatives Finance and Economic Development Committee, criticised the proposed amnesty.

“In all countries of the world, an amnesty occurs once every 15 or 20 years but, in Morocco, the first amnesty for money smugglers was only 5 years ago in 2014,” she said. “The truth is that this government has a budget deficit and its current obsession is to balance public finances, regardless of the means adopted.”

The new budget indicates the government expects a deficit of about 3.5% of the GDP. Factors affecting the deficit include salary increases in the public sector estimated at $630 million and allocating $2.6 billion for subsidies to the poor.