The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) in conjunction with the Financial Intelligence Agency (FIA) has issued guidance notes to the country’s financial institutions on fraud and corruption relating to money laundering observed during the period of the COVID-19 pandemic.
The guidance notes contain descriptions of the observed trends relating to fraud and associated red flag indicators. The paper is also informed by information and reports shared by other countries, open-source research, information from suspicious transaction reports, and feedback from law enforcement partners. The indicators contained herein are likely to evolve as the crisis further develops.
As no single financial red flag indicator is necessarily indicative of illicit or suspicious activity, financial institutions have been encouraged to consider all surrounding facts and circumstances to determine if a transaction is suspicious or indicative of potentially fraudulent activities related to COVID-19. In line with a risk-based approach to compliance, specified parties also are encouraged to perform additional inquiries and investigations where appropriate.
According to the guidance notes, in most cases, government resources have been reprioritized towards responding to COVID-19 by implementing measures ranging from social assistance, financial support and tax relief initiatives, to enforce confinement measures and travel restrictions. In Botswana measures include distribution of food baskets, wage support and subsidy schemes, tax relief measures and post corona economic stimulus package. When left unintended these measures provided new opportunities for criminals to generate and launder illicit proceeds.
Law enforcement authorities around the world have detected a wide range of COVID-19-related fraud and theft involving a variety of criminal actors, such as corruption by Public officials suspected to have misallocated COVID-19 relief funds.
The public officials misdirected contracts to businesses that do not exist or have no reasonable business purpose, which ultimately benefit their own interests and financial gain. This includes government contracts for Personal Protective Equipment (PPE) and other healthcare supplies.
Other instances include abuse of Public Procurement Processes, Wage subsidy fraud some governments provided financial support to employees in sectors of the economy, who became technically unemployed on a temporary basis due to the impact of the COVID-19.
NOT ABOUT FINANCES…
In the past former Member of Parliament, Ndaba Gaolatlhe cautioned that corruption is not always purely about finances.
“As long as the Executive (through the President) appoints, without any process checks, the executive Head of our Electoral Secretariat, or of the Directorate of Corruption and Economic Crime, we keep our prospects for fairness or progress under the clutch of a constitutionally legitimate authoritarian ruler. It is our responsibility to change these circumstances.”
Furthermore, he said “they decide who should be investigated for corruption and who cannot be investigated. They decide who should win lucrative Government tenders and who can’t qualify regardless of the capacity, or capability or ingenuity of those who compete. A Government that is designed this way cannot be expected to correct itself, such a government cannot be expected to clean corruption at the highest echelons.”
