The European Union (EU) has included Botswana in the list of high-risk third countries effective 1st October on account of having strategic deficiencies in its anti-money laundering and combating the financing of terrorism regime.
This follows a decision by the EU to add Botswana this year to the list of 22 countries that pose financial risks to the EU due to anti-money laundering and combating financing terrorism deficiencies alongside Ghana, Mauritius and Zimbabwe.
In a statement, Bank of Botswana spokesperson Dr. Seamogano Mosanako said the latest development has the potential to delay the processing of international payments, including imports and offshore placements by local entities.
According to EU, the new list of high-risk third countries takes effect on 1st October 2020, by which time affected companies are required to have appropriate policies and procedures in place. The new list of high-risk third countries aligns with the Financial Action Task Force.
Reports indicate that the move is a step by the EU towards greater focus on the eradication of anti-money laundering and terrorist financing from the bloc.
The EU’s revised list of high-risk third countries takes effect on 1 October 2020. On 7 May, the European Commission (EC) announced a revised list of high-risk third countries to align with the Financial Action Task Force (FATF). The new third countries listed by the EU have been identified as having strategic deficiencies in their AML/CFT regimes.
The amendments to the list are as follows; The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe.
Countries which have been delisted: Bosnia-Herzegovina, Ethiopia, Guyana, Lao People’s Democratic Republic, Sri Lanka and Tunisia.
Countries which remain on the list: Afghanistan, Iraq, Vanuatu, Pakistan, Syria, Yemen, Uganda, Trinidad and Tobago, Iran and North Korea.
Obliged entities in Member States must provide for enhanced customer due diligence (CDD) measures when dealing individual and entities from listed high-risk third countries.
Botswana has since made its efforts to address deficiencies to meet the FATF requirements known publicly.
“Concerted efforts are ongoing to implement the FATF required action plan to address the identified deficiencies.”
This was after the country’s Financial Stability Council (FSC) meeting which was held in Gaborone. The FSC was launched last with the aim of sharing and cooperating in the implementation of a macro-prudential policy framework for Botswana.
FSC comprises senior officials of the country’s Ministry of Finance and Economic Development, Bank of Botswana and Non-Bank Financial Institutions Regulatory Authority.
According Mosanako, the implication of the listing of Botswana as a high-risk third country is that EU banks and non-bank financial institutions are required to carry out enhanced customer due diligence, that is, requiring more information on financial transactions originating from Botswana clients for as long as Botswana remains grey-listed by FATF.
She added: “This has got the potential to delay the processing of international payments including for imports and offshore placements by local entities.”