Financial Crime World

Botswana’s Anti-Money Laundering and Combating Financing of Terrorism Efforts Under Scrutiny

In its latest report, Botswana’s anti-money laundering (AML) and combating financing of terrorism (CFT) efforts have been put under scrutiny by international reviewers. The country has made significant progress in addressing deficiencies identified in previous reviews, but still faces some challenges.

Recommendation 15: New Technologies and Products

Botswana has amended its Financial Intelligence Act to comprehensively deal with new technologies and products introduced by financial institutions. Additionally, the country has enacted the Virtual Assets Act 2022 to address virtual assets and service providers. However:

  • The legal and institutional frameworks for virtual asset service providers (VASPs) are still in their early stages.
  • No VASPs have been identified or sanctioned.

Recommendation 19: Higher Risk Countries

Botswana had previously failed to enable counter-measures proportionate to risks when called upon by the Financial Action Task Force (FATF). However:

  • Subsequent to its fourth Follow-Up Report (FUR), Botswana has enacted a new Financial Intelligence Act, 2022, which empowers the Financial Intelligence Agency to advise specified parties and accountable institutions on concerns about weaknesses in AML/CFT systems of other countries.
  • While this is a significant step forward, Botswana still needs to prescribe the manner in which this advice shall be relayed.

Botswana had not conducted an ML/TF risk assessment to determine the kind of risks associated with legal persons. The country’s lack of transparency in beneficial ownership information has been a major concern. While Botswana has made some progress, it still faces significant challenges in this area.

Conclusion

Despite some shortcomings, Botswana has made positive developments in addressing deficiencies identified in previous reviews. However, the country still needs to address several issues, including:

  • The risk-based approach for VASPs.
  • Transparency in beneficial ownership information.

In light of these findings, reviewers have recommended that Botswana’s rating for Recommendation 15 be retained at a “Partially Compliant” (PC) level, while upgrading its rating for Recommendation 19 from PC to “Largely Compliant” (LC).