Can Botswana become part of a huge global terrorism financing network? An expert report has warned that this may already happening under the nose of Botswana’s intelligence and law enforcement agencies.
The report by Eastern and Southern Africa Anti-Money Laundering Group has revealed how Botswana authourities are failing to act on suspicions that the country’s second hand car dealerships, drug trafficking and construction companies may be used as a conduit to finance international terrorism.
Although law enforcement agencies and some financial institutions are aware of the risks posed by these operations, authourities have not taken any action to determine the money laundering/terrorism financing threats posed by the business , the report has revealed.
The situation is not helped by the fact that Botswana does not even have the capacity to detect terrorism financing because the country’s anti terrorism financing strategy is muddled and disorganised.
The report by Eastern and Southern Africa Anti-Money Laundering Group is supported by another report by Tax Injustice Network that there may be limited information on the way Botswana is being used for illicit and criminal practice, however, without a developed anti-money laundering and counter-terrorist financing regime, the country is vulnerable and at risk of being used as a conduit.
Directorate of Intelligence and Security Services (DIS) may be missing terrorism financing happening under its nose. Botswana does not have a terrorism financing risk analysis and authourities cannot even explain how they go about conducting their National Threat Assessment (NTA) states the report. As a result, Botswana cannot determine whether the absence of any terrorism financing prosecution reflect the country’s actual terrorism risk profile.
The report observes that that while there has not been any prosecution in Botswana for terrorism or terrorism financing activities, “There have only been two suspected terrorism financing cases which were identified between 2011 and 2012 which were disrupted with no ensuing prosecution.”
The report says the Directorate of Security Service (DIS) utilizes the existing intelligence and information gathering machinery as well as information from foreign partner agencies to identify potential terrorism financing cases.
“Although the assessors were of the view that with the measures explained by the DIS(such as categorising the sectors of the economy which they consider vulnerable to TF risks and imposing stringent visa) it might be possible to identify terrorism cases in Botswana, they also noted the weaknesses in identifying such cases created by the lack of a legal framework to implement the UNSCRs, despite the UNSC sanctions lists being circulated by their supervisors and FIA, and voluntarily implemented by some of the FIs(financial institutions and DNFBPs( Designated Non-Financial Businesses and Professions),” says the report.
The assessors noted that in the absence of terrorism financing risk analysis, or a clear explanation as to how the authorities go about conducting their National Threat Assessment (NTA), they could not determine whether the absence of any terrorism financing prosecution is in line with the country’s terrorism risk profile.
They identified most areas through which proceeds could be laundered to be dealers in second hand motor vehicles, and the other Designated Non-Financial Businesses and Professions (DNFBPs) (e.g. lawyers) which are not being monitored for Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT).
“Through information gathered from the authorities, the following Anti-money laundering and counter ÔÇôterrorist financing measures in Botswana ÔÇô 2017, 22 crimes appear to pose high ML risks: obtaining by false pretences, stealing by person employed in public service (stealing by servant), corruption in the construction industry involving contractors of megaÔÇôprojects and theft of motor vehicles.”
The report states that Botswana authorities did not have the same level of understanding of the money laundering or terrorism financing risks facing Botswana as well as the same understanding of the areas which were vulnerable to money laundering/terrorism financing risks.
The report says concerns were raised on the vulnerability of the second hand motor vehicle importation business to abuse for trafficking of drugs and other contraband forbidden in Botswana at the time when the cars are being brought into Botswana.
Although, the law enforcement agencies and some of the Financial Institutions FIs, particularly banks are aware of the risks associated with this sector, no action has yet been taken by the authorities to determine the money laundering/terrorism financing threats posed by the business.
“Added to this, most of the transactions are largely carried out in cash and that there is a degree of informal trading, create opportunities of illicit proceeds being directly or mingled with legitimate proceeds and channelled into the formal sector,” the report says.
It notes that the possibility of legal persons (companies) posing money laundering/financial risks in Botswana might be high since it has a reasonable number of foreign companies (131) incorporated. Information on legal persons (companies) convicted of any criminal offences, including tax related as well as sanctions which might have been applied, was not provided by the authorities.
Whereas some of the sectors were not aware of the money laundering terrorism risks in general, those like the Botswana Police Service (BPS) Botswana Unified Service Revenue (BURS) and the Directorate on Corruption and Economic Crime (DCEC) and Directorate for Public Prosecution had a limited understanding of some of the risks, though at different levels.
“The DPP, DCEC and the BPS, also had varying predicate offences which they viewed as being a money laundering risk and did not appear to meet frequently to discuss and coordinate ML cases as well as prioritisation of the cases which could have enabled them to have the same understanding of the money laundering/ terrorism financing risks,” the report says.
With respect to Terrorism Financing, the explanations provided by the Directorate of Intelligence (DIS) led the assessors to conclude that it understands the country’s terrorism financing risks and that its operations to mitigate the risks are informed and guided by that understanding.
“However, this understanding was not shared at national level. 105. Based on the analysis of the STRs that it receives, Financial Intelligence Agency (FIA)has a general understanding of the money laundering risks existing in Botswana. However, FIA’s understanding of some of these money laundering /terrorism financing risks at national level has not been shared or used to influence the understanding of the money laundering/terrorism finance risks by the other members of the National Coordinating Committee on Financial Intelligence(NCCFI), the report says.
Also the regulated entities supervised by FIA for anti-money laundering/counter-terrorism financing were not filing Suspicious Transaction Reporting (STRs) with FIA and as FIA had also not started compliance monitoring of these entities, it had no understanding of the specific money laundering /terrorism financing risks existing in these sectors.
The assessors noted that the FI Act and its regulations has broadened the scope of the AML/CFT requirements and the list of FIs and DNFBPs compared to the first mutual evaluation.
However, the assessors have also Anti-money laundering and counter ÔÇôterrorist financing measures in Botswana, they identified that there are a number of AML/CFT requirements which are not covered as required by the Financial Action Task Force (FATF) Standard.
“These include beneficial ownership information, cross-border wire transfers, Politically Exposed Persons (PEPs), correspondent banking and new technologies,” reads the report.
It says Botswana has not demonstrated a clear understanding of terrorism financing risks which the country might be facing.
Though terrorism financial risk is rated low by the authorities, there has not been a comprehensive terrorism financing risk assessment, the report says.
“As a result, the country lacks a clear terrorism financing strategy and institutional arrangements that are able to detect, investigate and prosecute terrorism financing related offences,” the report says.
It states that the absence of a legal framework to implement United Nations Security Council Resolutions (UNSCRs) significantly undermines efforts to combat terrorism financing. The assessors recommended that efforts should be made to understand terrorism financing risks so as to develop strategies to combat terrorism financing. Further, the authorities should as a matter of priority develop proper legal mechanisms to implement UNSCRs.