Thursday, April 25, 2024

Banks unlawfully shared customer information with intelligence agency

Despite very clear prohibition against sharing customer information with third parties that is spelled out in the Banking Act, it has been revealed that Botswana’s commercial banks shared such information with the Financial Intelligence Agency.

“More than 99 percent of the total suspicious transaction reports filed with the Financial Intelligence Agency were from the financial institutions, with the majority coming from commercial banks with an average of 83 percent for the period under review. This is despite the provisions of Section 43 of the Banking Act which prohibits banks to exchange transaction information without seeking authorisation from the customer involved,” says a report from an inter-governmental financial action task force that Botswana is part of.

The relevant part of Section 43 reads in full: “Subject to the provisions of this Act, no director, principal officer, officer, employee or agent of a bank or any other person who by virtue of his professional relationship with a bank has access to the records of the bank (each such person being jointly hereinafter referred to as a “banker”) shall, during or after his relationship with the bank, directly or indirectly disclose any information he may acquire in the course of his duties as a banker concerning any customer’s deposits borrowings or transactions, or other personal, financial or business affairs, without the written and freely given permission of the customer concerned, or his personal representative.”

This discovery was made by assessors from the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) when they visited Botswana in 2016 to conduct an on-the-ground assessment of money laundering and terrorism financing risks in the country. In not sharing this confidential information with the Bank of Botswana, the banks were contravening another provision in the Act. The provision in question is Section 21(4) which states: “A bank shall notify the central bank of any transaction by any of its customers which it suspects to be money laundering.”

The law attaches liability to such infraction ÔÇô a P10 000 fine for each as well as imprisonment of three years in the case of contravening Section 43.

The rest of the suspicious transaction reports were contributed by insurance companies, bureaux de change, money value transfer services, with only one report filed by a casino.


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