Finance and Development Minister, Baledzi Gaolathe, presented the Financial Intelligence Bill to parliament this week, pledging that the proposed law is aimed at forestalling increasing incidents of white-collar financial crimes that are threatening the very basics of the economy .
Tabling the bill for the second reading on Thursday, Gaolathe said the proposed law would not only provide a comprehensive legal framework that would address money laundering, but is also intended to establish a financial intelligence agency to receive, analyse and disseminate financial information to investigatory and supervisory authorities.
“This decision was taken after the realization that Botswana needed to strengthen the implementation of the various pieces of legislation dealing with money laundering in general and also needed to implement the financial action task force’s comprehensive plan that sets out a universal framework for anti-money laundering efforts,” he said.
An international body, the Financial Action Task Force’s objective is to develop and promote an international response to combating money laundering and financing of terrorism.
Although the finance of terrorism has not yet established itself, much more could be said about the escalating cases of money laundering in Botswana, the recent and interesting case being the one involving the notable lawyers in Lydon Mothusi and Herbert Sikhakhane, currently on bail pending appeal over both conviction and sentence.
They were found guilty of money laundering, convicted and sentenced.
As a member of the Eastern and Southern Africa Anti-money Group, whose objective is to develop and promote a regional response to combating money laundering and the financing of terrorism, Botswana finds herself compelled to join the bandwagon.
“As one of its mandate, the group is also encouraging member countries to come up with anti-money laundering and financing of terrorism legislation,” the Finance Minister said.
Besides establishing the financial intelligence agency which shall be the central agency for requesting, receiving, analyzing and disseminating financial information to any investigatory authority, supervisory authority or comparable body outside or inside Botswana , the bill is in line with Botswana’s commitment to contribute to international efforts of fighting money laundering and the financing of terrorism.
Gaolathe further argued: “The bill complements the proceeds of the serious crime Act, which provides for the establishment of the financial intelligence unit within the directorate on corruption and economic crime to receive and analyze suspicious transaction reports and other information regarding potential money laundering or terrorist financing.”
The DCEC, he said , has not been able to fully carry out the functions of a fully fledged financial intelligence unit because of the DCEC’s core mandate, which deals with issues of corruption and economic crime.
The financial intelligence agency is to deal with financial information which mainly comes from the financial sector and other institutions hence the international trend is to place it under the ambit of the Ministry of Finance, he said, adding that “this means that the proposed financial intelligence agency, once established, will take over the functions that have hitherto been carried out by the financial intelligence under the DCEC.”
Among the provisions of the bill, the financial intelligence agency would be headed by a director who will report directly to the minister responsible for finance.
The recruitment processes of officers of the agency, which includes, among others, processes for security screening of such officers, is also contained in the provisions.
Also contained in the provisions is the national financial intelligence committee whose main functions are to assess the effectiveness of policies and measures to combat financial crime.
Part IV of the provision deals with the duty and obligations of specified parties like financial institutions to identify customers and keep their records, officially dubbed “know your customer”, guidelines.
Through this provision, parties would be obliged to develop internal rules, policies and procedures to protect their systems from financial offences.
The specified parties are also expected to train officers within their institutions to implement the internal compliance processes, detect offences and report suspicious transaction to the agency.
“This part also contains fines and imprisonment terms that are imposed on specified parties that fail to identify their customers and keep proper records. For example, section 15(1) states that “a specified party that fails to keep records in accordance with section 11 and 12 shall be liable to a fine not exceeding P100 000 as may be imposed by the supervisory authority.”
The fines Gaolathe argued are made punitive in order to encourage specified parties to keep records pertaining to their customers transactions.
The debate on the bill continues on Monday.