The Botswana Unified Revenue Services (BURS) this week pounced on Mogoditshane second hand vehicle import dealers in what is said to be a countrywide operation to clamp down on illegal activities committed by some of the dealerships.
BURS officials closed down some of the dealerships this past week. The tax man has also impounded tens of second hand import vehicles.According to information the raid on the dealerships is part of the BURS’ investigations on allegations of various forms of crime ranging from money laundering, terrorism financing, tax evasion, and drug dealing among others.The second hand motor vehicle businesses, mostly owned by Nigerians, Sri Lankans, and other foreign nationalities, have been seen as a haven of especially money laundering activities and drug dealing.The BURS have refused to divulge details of their investigations.“I can only confirm to you that we are currently in the process of closing down the car dealerships pending investigations. I cannot divulge any more information regarding our operations because it may jeopardize our investigations,” says Kaone Molapo (General Manager-Investigations, Commpliance, and Enforcement).
In 2017 the Financial Action Task Force (FATF) raised concerns about 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. The report said although relevant authorities were aware of the risks associated with the sector, no action had yet been taken to determine the Money Laundering and Terrorist Financing threats posed by the business. What makes the import second hand vehicle businesses even more vulnerable was the fact that most of the transactions are largely carried out in cash and that there is a degree of informal trading, creating opportunities of illicit proceeds being directly or mingled with legitimate proceeds and channeled into the formal sector.
While the enactment of the Financial Intelligence Agency (FIA) Act in 2009, Counter Terrorism Act (CTA) and the Proceeds and Instruments of Crime Act (PICA) in 2014 has strengthened the anti-Money Laundering and Terrorist Financing regime of Botswana, the report said, the institutional framework had not been sufficiently capacitated to complement the effective implementation of the new laws.“There are still limited skills to ensure that Money Laundering cases are properly identified, investigated and prosecuted, and illicit proceeds are identified, traced and confiscated. In some cases where parallel financial investigations would have been warranted, such investigations were not undertaken leaving the possibility of the proceeds of crime involved not being traced, identified and confiscated.”FATF said the organized crime linked to second hand import car dealership –Second hand car dealership, particularly imported cars from Asian countries, as it has become with most countries in the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) Region, is big business in Botswana.
Although, car dealership is designated as a reporting entity for Anti-Money Laundering/Combating Financing of Terrorism purposes in Botswana, cash is used for most of the transactions making it vulnerable to ML risks as illegitimate funds may easily be mixed with legitimate funds. The report wanted to determine the extent to which the authorities understood this sector’s exposure to Money Laundering and Terrorist Financing risks and whether there was effective anti- Money Laundering and Terrorist Financing monitoring and supervision.” The report also aimed to determine whether importation of second hand vehicles for resale in Botswana was not associated with other crimes inherent with cross-border businesses, such as drug and wildlife trafficking.
The assessors mostly based their assessment of the Money Laundering and Terrorist Financing risks of Botswana on the major crimes identified to be
Anti-money laundering and counter –terrorist financing measures in Botswana.“The crimes identified included: obtaining by false pretenses, stealing by persons in public service, corruption in the construction industry involving contractors of mega–projects (with the bulk of the offences committed by public officials), theft of motor vehicles, and dealing in imported second hand vehicles and real estate.”