Wednesday, May 22, 2024

FinCEN cautions US Banks on Botswana’s anti-money laundering deficiencies


The United States Financial Crimes Enforcement Network (FinCEN) has issued an advisory to banks in the United States of America regarding the screening of transactions from two African countries ÔÇô Botswana and Ghana.

FinCEN is a bureau of the US department of the Treasury which was established to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

Last week, the American financial crime enforcement network issued an advisory to inform financial institutions in the US of updates to the Financial Action Task Force (FATF) list of jurisdictions with strategic Anti Money Laundering deficiencies. The list included Botswana which has been added to the list of countries that have developed an action plan with the FATF to improve on their anti-money laundering deficiencies.

“Financial institutions should be aware of these changes, which may affect their obligations and risk-based approaches with respect to these jurisdictions. The advisory also reminds financial institutions of the status and obligations involving these jurisdictions”, reads part of the advisory issued to US banks by FinCEN on Thursday.

FinCEN advisory comes a few weeks after the Financial Action Task Force (FATF) made it very clear that Botswana’s strategy on Anti-money laundering and counter terrorism financing still has some deficiencies.

The global anti-money laundering watchdog says Botswana has however made commitments to close the loopholes.

The FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in two FATF public documents that are issued three times a year. The FATF’s process to publicly list countries with weak AML/CFT regimes has proved. As of October 2018, the FATF has reviewed over 80 countries and publicly identified 68 of them. Of these 68, 55 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process.

In the second report of the year, FATF has identified several jurisdictions with strategic deficiencies, including Botswana, The Bahamas, Ethiopia, Ghana, Pakistan, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.

“A number of jurisdictions have not yet been reviewed by the FAFT. The FAFT continues to identify additional jurisdictions, on an ongoing basis, that pose a risk to the international financial system,” the inter-governmental body tasked with combating money laundering, terrorist financing and other related threats to the integrity of the financial system, said in the most recent statement.

In response to the identified deficiencies, the FAFT says Botswana earlier this month made a high-level political commitment to work with the FATF and Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies. Botswana will work to implement its action plan to accomplish these objectives, including assessing the risks associated with legal persons, legal arrangements, and NPOs, and developing and implementing a risk-based comprehensive national AML/CFT strategy as well as developing and implementing risk-based AML/CFT supervisory manual.

Furthermore the diamond producing country intends to improve its analysis and dissemination of financial intelligence by the FIU, and enhancing the use of financial intelligence among the relevant law enforcement agencies while also developing and implementing CFT strategy, and ensuring the TF investigation capacity of the law enforcement agencies. Other undertakings include ensuring the implementation without delay of targeted financial sanctions measures related to terrorist financing and proliferation financing, and applying a risk-based approach to monitoring non-profit organisations.

In fact, Botswana has already started to implement some of the recommendations as outlined by FAFT. In September, Sunday Standard reported that the country’s parliament moved and passed a raft of Bills as a matter of urgency due to the country’s non-compliance with the FATF recommendations on AML/CFT.

Bank of Botswana’s 2017 banking supervision report revealed that technical assessment rating showed that Botswana- out of the 40 FAFT recommendations – was not compliant with 23 recommendations, while partially compliant with 14, largely compliant with two and compliant with none. Moreover, the ratings indicated that the country had major and moderate shortcomings.

With about ten bills passed which were centred on anti-money laundering and terrorist financing, Botswana will likely get favourable ratings during the next review of its compliance with the FAFT recommendations.

The FATF says together with FATF-style regional bodies (FSRBs) will continue to work with the identified jurisdictions and to report on the progress made in addressing the identified deficiencies.

“The FATF calls on these jurisdictions to complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members to consider the information presented below,” FAFT said.


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