Financial Crime World

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International Institutions Warn of Consequences for Non-Compliance with Cross-Border Transactions Rules

In an effort to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) regime, Namibia’s Financial Intelligence Centre (FIC) has issued a directive aimed at ensuring that local financial institutions screen clients against international sanctions lists.

Directive Requirements

The directive, effective from March 2, 2022, requires institutions to have in place robust systems for screening clients and transactions against the following lists:

  • Office of Foreign Assets Control (OFAC)
  • European Union (EU) lists
  • Her Majesty’s Treasury (HMT) lists

Failure to comply with the directive could result in sanctions from these international bodies.

Testing and Assessment Requirements

The FIC has outlined specific requirements for testing and assessing the effectiveness of institutions’ sanctions screening systems. The tests will consist of two components:

  • Control Test: Assesses the system’s ability to detect sanctioned individuals or entities as they appear on the sanction source.
  • Manipulation Test: Evaluates the system’s ability to detect manipulated data.

Key Performance Indicators (KPIs)

The directive emphasizes the importance of institutions having in place key performance indicators (KPIs) to monitor the effectiveness of their sanctions screening systems. The KPIs should include metrics such as:

  • Number of alerts generated
  • Percentage of returns per input
  • Total number of hits and misses

Internal Controls and Reporting Procedures

Institutions are required to have clear internal controls and reporting procedures in place for dealing with positive matches, which must be investigated and reported promptly to relevant authorities.

Consequences of Non-Compliance

The FIC has warned that failure to comply with the directive could result in enforcement measures being taken against non-adhering institutions, including:

  • Fines
  • Revocation of licenses

Background and Context

This directive is part of Namibia’s efforts to strengthen its AML/CFT regime and meet its international obligations under the Financial Action Task Force (FATF) recommendations. The country has committed to implementing a comprehensive AML/CFT regime that meets international standards and best practices.

Source: Financial Intelligence Centre, Namibia Date: March 2, 2022