Financial Crime World

Organized Crime and Money Laundering in Botswana: Challenges and Loopholes

Organized Crime Threatens National Security

  • Significant threat: Organized crime is a major concern for national security in Botswana, posing risks to the country’s stability and economic well-being.
  • Combating organized crime: The Directorate of Intelligence and Security (DIS) has been established to address this threat, with a broad mandate that includes combating organized crime.

Economic Diversification Challenges

  • Economic vulnerability: Botswana’s economy may decline by as much as a quarter after 2021 if it does not diversify its industries.
  • Attracting Foreign Direct Investment (FDI): To overcome this challenge, Botswana has relaxed restrictions on doing business and offers government subsidies, grants, loans, and tax breaks to attract FDI.

Loopholes in Money Laundering Control

  • Weak regulatory framework: The regulatory framework for registering companies is weak, allowing individuals with questionable motives and business credentials to establish businesses in Botswana.
  • Lack of verification: There are no requirements to verify the integrity of persons forming a company or registering a business name, nor to verify the accuracy of information provided by a person filing registration documents.

Examples of Abuse

  • Foreign nationals with criminal records: Foreign nationals with criminal records in other countries have been implicated in scandalous activities in Botswana without being questioned about their past.
  • Hyundai Motor Corporation case: The Hyundai Motor Corporation’s operations in Botswana were shut down after its managing director was implicated in theft, fraud, and corruption in South Africa.

The challenges faced by Botswana in attracting FDI while ensuring that it does not compromise on money laundering control are significant. The loopholes in the regulatory framework for registering companies create an opportunity for individuals of questionable motives to establish businesses in the country, which may be exploited for illicit activities such as organized crime and money laundering.