Tuesday, January 26, 2021

Botswana’s grey listing gives Bank Governor sleepless nights

BY KABELO SEITSHIRO

The Bank of Botswana (BoB) Governor – Moses Pelaelo called on the country’s key financial stakeholders that deal with issues relating to money laundering to join hands  and map a way forward  to address what he calls “strategic deficiencies”.

Botswana’s anti money laundering campaigns are led by the Financial Intelligence Agency (FIA) and the Ministry of Finance and Economic Development Planning.

The country’s laws have been classified as lacking certain aspects regarding the anti-money laundering and countering Financing of Terrorism acts.

In addition, Pelaelo said to ameliorate Botswana from the grey listing, Bank of Botswana is expected to setup a unit within the central bank specifically for anti-money laundering issues and also to come up with a risk based examination manual specifically for AML/CFT.  He added that there is need to capacity building in form of training employees.

“We accept that this assessment is a cause for concern as a country and the leadership of the country is taking action,” said Pelaelo.

Pelaelo said the grey listing can affect foreign direct investment and also Botswana’s relationship with external financial sectors, as some can take business decisions on the basis of such issues.

He is of the view that it is an urgent matter that needs to be attended to adding that next year April the deficiencies will be attended to. He spoke of the need for the central bank need to setup and independent unit with the BoB Banking Supervision Department for anti-money laundering and combating financing of terrorism. He added that the country is demonstrating political will to address the deficiencies. He spoke of the time frame to comply which is 2020.

“We seat on the National Coordinating Committee on Financial Intelligent together with other Pelaelo’s caution comes at a time when Botswana’s multibillion offshore investments are said to be at risk as the country has been grey listed by a French intergovernmental organization  –  the Financial Action Task Force (FATF) –  due to poor standards on anti-money laundering and combating financing of terrorism.

The business of FATF is to design and promote policies and standards to combat financial crime. FATF targets money laundering, terrorist financing, and other threats to the global financial system. It also seeks to counter the financing of proliferation of weapons of mass destruction. 

The Directorate on Corruption and Economic Crime defines money laundering as the process by which the proceeds derived from a criminal activity are disguised in an effort to conceal their illicit origins to legitimize their future use.

Last week a High Court Judge Zein Kebonang and his twin brother Sadique -a legislator-appeared in court to answer for criminal charges of money laundering running into millions of Pula.

It is feared that the grey listing by the French entity, is likely to have a knock-on effect on some P72 billion of offshore investments where the custodian of the investments is also a French regulated company.

Observers are of the view that Botswana has been discredited internationally as a result of not tightening security measures and poor structures and non-compliance on anti-money laundering as well as reported cases of multi millions of money involved including government funds.

The Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) completed its assessment of Botswana’s anti-money laundering and counter-terrorist (AML/CFT) system.  The assessment is to be a comprehensive review of the effectiveness of Botswana’s measures to combat money laundering and terrorist financing and its level of compliance with the FATF recommendations.

Stated in the report is that in October 2018, Botswana made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies. Stated is that Botswana is expected to work to implement its action plan to accomplish these objectives, including by assessing the risks associated with legal persons, legal arrangements, and NPOs, and developing and implementing a risk-based comprehensive national AML/CFT strategy. It is also expected to develop and implement risk-based AML/CFT supervisory manuals and improving its analysis and dissemination of financial intelligence by the FIU, and enhancing the use of financial intelligence among the relevant law enforcement agencies.

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