Suspected Money Laundering: Charities and Terrorist Financing

A recent investigation by law enforcement agencies has revealed a pattern of suspicious transactions involving non-profit organizations (NPOs) in Namibia. The Financial Intelligence Centre (FIC) has identified several cases where NPOs have been involved in money laundering and terrorist financing.

Case Studies

Suspected Money Laundering

• Case 1: A residential child facility, not registered as a company, was found to be operating under false pretenses. The suspect solicited NAD 80,000 from the American Embassy under false pretenses and deposited the funds into their personal account. The case is currently on the court roll.
• Case 2: A Zimbabwean national in Namibia received an unknown amount of money and then transferred NAD 104,000 to Prophetic Healing and Deliverance Ministries in South Africa. The FIC is investigating this transaction to determine if it is linked to terrorism or other criminal activities.
• Case 3: A mosque’s account has been suspected of being used to finance terrorist activities in the Middle East. The FIC is working with international authorities to investigate this case and prevent further financial support for terrorism.

Risk Rating System

The FIC has developed a risk rating system to categorize NPOs based on their level of vulnerability to money laundering and terrorist financing. The categories include:

• Low Risk: Donors have explicit charitable purposes, disclose how funds are used with specificity, and have written grant agreements with effective safeguards.
• Medium Risk: Donors have general charitable purposes, disclose how funds are used with specificity, but lack written grant agreements or have limited safeguards.
• High Risk: Donors have no prior history of legitimate charitable activities, do not provide references, or have no written grant agreements.

Vulnerabilities and Threats

The FIC has identified several vulnerabilities and threats in the NPO sector, including:

• Lack of transparency and accountability in financial transactions
• Insufficient due diligence on donors and their sources of funds
• Inadequate safeguards in grant agreements
• Failure to disclose use of funds
• Use of unreliable banking systems or alternative methods for transferring funds

Mitigation Measures

To mitigate these risks, the FIC recommends that NPOs implement the following measures:

• Conduct thorough due diligence on donors and their sources of funds
• Establish written grant agreements with effective safeguards
• Disclose use of funds through regular reporting and audits
• Use reliable banking systems or alternative methods for transferring funds
• Monitor transactions regularly to detect suspicious activity

Conclusion

The FIC is committed to working with NPOs to prevent money laundering and terrorist financing. We urge all NPOs to take steps to ensure transparency, accountability, and compliance with anti-money laundering regulations.