Botswana has made progress to address the technical compliance deficiencies identified in the mutual evaluation report (MER) in relation to anti-money laundering and counter-terrorist measures but it is not out of the woods yet.
According to the latest follow up report by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) of which Botswana is a member, Botswana has not addressed key deficiencies highlighted in the MER such as development of national Anti-money laundering/ counter-terrorist financing (AML/CFT) policies informed by risks identified in the National Risk Assessment (NRA) report.
The mutual evaluation of Botswana was conducted by the ESAAMLG and the mutual evaluation report (MER) was approved by the ESAAMLG Council of Ministers in May 2017.
The latest follow up report analysed the progress of Botswana in addressing the technical compliance (TC) deficiencies identified in its MER.
The new report also found that Botswana does not have procedures and mechanisms in place for identifying targets for designation, based on the designation criteria set out in the relevant United Nations Security Council Resolutions (UNSCRs) relating to the prevention and suppression of terrorism and terrorist financing.
The report also states that Botswana does not have procedures for informing designated persons or entities of the availability of the UN Office of Ombudsman in relation to the Al-Qaida Sanctions List.
Botswana also did address the identified technical deficiencies covered in the 2017 ESAAMLG report which stated that all the measures regulating the activities of Non Profiting Organisation (NPOs) in Botswana under the Societies Act are not for purposes of dealing with the possible exposure of the NPO sector to abuse for Terrorism Financing (TF) activities and identification of which NPOs are at risk to be exposed to TF and the kind of measures which can be taken to mitigate the TF risks faced by such NPOs.
“Also, the requirements under the Societies Act were not being used to understand the possible exposure of the sector to the TF risk. Further, no awareness was being done on TF risks to the NPO sector,” the report says.
Another deficiency that was discovered in the 2017 report was that information in possession of the banks about their clients was not easily accessible to other competent authorities (other than the DCEC) due to provisions of s. 43 of the Banking Act.
For this reason, ESAAMLG Assessors concluded that it was not possible for the FIA and other competent authorities (other than the DCEC) to exchange information which they do not have access to.
According to the new report, Botswana has since amended S.43(2) of the Banking Act to remove the secrecy obligations placed on directors, principal officers, officers, employees or agents of a bank or any other person having access to records of a bank.
The Section provides that the duty of confidentiality imposed on a banker in accordance with subsection (1) shall not apply in the following circumstances (selected): (i) the information is required by the Agency, in accordance with the provisions of the Financial Intelligence Act; (k) the bank is required to provide additional information to the Agency on a suspicious transaction report that it has filed with the Agency, in accordance with the provisions of the Financial Intelligence Act; and, (n) the disclosure of the information is required by this Act or by any other law.”
It says Financial Institutions (FIs) are expected to disseminate an suspicious transaction reporting (STR) either spontaneously or upon request.
“The language of the foregoing provisions seems to be limited to situations where the information has been requested by the FIA. Secondly, in terms of sub-section (k), FIA does not have legal mandate to request information from any other FI apart from the one which submitted an suspicious transaction reporting (STR),” the report says.
The report also found that Botswana does not apply countermeasures proportionate to Money Laundering/Terrorism Financing (ML/TF) risks when called upon to do so by the he (Financial Action Task Force) FATF or independently of any call by the FATF to do so and no mechanism in place to ensure that FIs are advised of concerns about the weaknesses in the AML/CFT systems of other countries.
The report says one of the functions of the Financial Intelligence Agency (FIA) is to communicate the list of high-risk countries to specified parties, accountable institutions and supervisory authorities.
“The definition of high-risk jurisdictions includes those which have weak AML/CFT systems and those identified by the FATF as a high-risk jurisdiction. However, authorities have not described the mechanisms they use to communicate the concerns to reporting entities. On this basis, the rating of NC has been retained,” the report says.
The report says FIA has not provided guidance on ML/TF risk assessment, feedback to entities which have not been subjected to an onsite visit, guidance on detection of unusual and suspicious transactions and has not sensitized Designated Non-Financial Businesses and Professions (DNFBP) supervisory authorities on their obligations.