Financial Crime World

Financial Institution Fraud Hampering Namibia’s Fight Against Dirty Money

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Namibia is struggling to combat the flow of dirty money due to a lack of coordination and inaction by key financial and law enforcement agencies. The Financial Intelligence Centre (FIC) has flagged 254 potential financial crimes between January 2019 and February 2020, but authorities have failed to provide updates on what was done to those red-flagged reports.

Lack of Coordination and Inaction

  • The police admit that they lack a centralized portal to track finalized cases, cases under investigation or individuals and companies being prosecuted.
  • The Bank of Namibia’s FIC has been accused of turning a blind eye to the flow and transfer of dirty money in and out of Namibia.

Examples of Financial Institution Fraud

  • Over N$300 million disappeared from the now-defunct SME Bank.
  • An unfolding fishing scandal involved the transfer of close to N$175 million from a national fishing company to politicians and their friends.

Inaction by Financial Institutions

  • The Inland Revenue commissioner, Justus Mafongwe, agreed that they receive actionable intelligence from the FIC and some of their audits result in FIC red flags showing potential tax evasion.
  • However, despite receiving this intelligence, the commission does not use all actionable intelligence from the FIC due to limited resources.

Call for Tighter Laws and Coordination

  • Two financial experts have called for tighter laws and coordination between financial and law enforcement institutions to combat financial institution fraud.
  • The Anti-Corruption Commission (ACC) director-general, Paulus Noa, said they do not have the mandate to investigate direct money laundering and tax evasion.

Expert Views

  • Professor Vijayakumar Kandaswamy, a financial mathematics expert at the University of Namibia, called for a unit that specifically looks at tax-evasion and money-laundering matters.
  • A risk management lecturer at the University of Namibia, Samuel Nuugulu, warned that the direct economic impact of illicit flows cannot be underestimated.

Consequences of Financial Institution Fraud

  • Illicit flows drain the country’s foreign reserves.
  • They cause high inflation and reduce tax collections.

Conclusion

The lack of coordination and inaction by key financial and law enforcement agencies is hampering efforts to combat financial institution fraud and protect the country’s economy. It is crucial that authorities work together to tighten laws and coordinate their efforts to prevent dirty money from flowing into Namibia.