Financial Crime World

Botswana’s Anti-Money Laundering and Counter-Terrorist Financing Regime Lacking

Botswana’s legal framework for combating money laundering and terrorist financing has been found wanting in several areas, according to a recent assessment.

The report highlights that Botswana’s Financial Intelligence Act (FI Act) lacks provisions for identifying and verifying legal persons and arrangements. Additionally, it does not require information on beneficial ownership, which makes it challenging to apply and implement mitigating controls effectively.

Capacity Building and Supervision

Despite designating Anti-Money Laundering (AML)/Counter-Terrorist Financing (CFT) supervisors for financial institutions and designated non-financial businesses and professions, most supervisors are still developing their capacity to ensure compliance with AML/CFT obligations. This lack of capacity is a major concern.

Understanding of ML/TF Risks

The report notes that there is a low understanding of money laundering and terrorist financing risks in Botswana. Reporting entities and their supervisors are still familiarizing themselves with the requirements of the FI Act, which hinders effective implementation of AML/CFT measures.

Investigations and Prosecution

Despite some officers having received training on money laundering investigations, they do not pursue ML cases. This lack of action is a major concern, as it suggests that there may be inadequate resources or support for investigating and prosecuting ML cases.

High-Risk Sector

The International Financial Services Centre (IFSC), which is regulated by the Botswana Investment and Trade Centre (BITC), is considered high-risk for money laundering. However, there is a lack of AML/CFT supervision in this sector, which increases the risk of financial crimes.

Recommendations

To address these deficiencies, Botswana has implemented some recommended actions, including setting up an operational financial intelligence unit. However, more needs to be done to improve technical compliance and effectiveness of its AML/CFT regime. The following recommendations have been made:

  • Strengthen legal framework to provide for identification and verification of legal persons and arrangements
  • Enhance capacity building for supervisors to ensure compliance with AML/CFT obligations
  • Improve understanding of ML/TF risks among reporting entities and their supervisors
  • Increase AML/CFT supervision in the financial sector, particularly in the IFSC
  • Provide more specialized training on ML investigations and prosecution

Conclusion

Botswana’s anti-money laundering and counter-terrorist financing regime is lacking in several areas. To address these deficiencies, Botswana must implement the recommended actions to improve technical compliance and effectiveness of its AML/CFT regime. This will help to reduce the risk of financial crimes and protect the country’s financial system.