Financial Crime Investigation Techniques Hampered in Namibia, Experts Say

The lack of coordination and inaction by key financial and law enforcement agencies in Namibia has hindered the country’s efforts to combat the flow of dirty money, according to experts.

Lack of Coordination and Inaction

A centralized government unit is needed to monitor illicit financial flows in Namibia. The police admit that they lack a centralized portal to track finalized cases, cases under investigation, or individuals and companies being prosecuted.

Financial Intelligence Centre (FIC) Fails to Provide Updates

The FIC flagged 254 potential financial crimes between January 2019 and February 2020, but authorities have failed to provide updates on what has been done to those red-flagged reports. The FIC received over 1,100 suspicious transaction reports and 236 suspicious activity reports from banks and other financial institutions during the same period. However, it remains unclear how these reports were acted upon or whether any cases went to court.

Authorities such as the Bank of Namibia’s FIC have been accused of turning a blind eye to the flow and transfer of dirty money in and out of Namibia. For example:

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.

Manual System Hampers Police Investigation

National police spokesperson Kauna Shikwambi explained that the police do not compile data on the use of FIC intelligence, as they rely on a manual system. This means they cannot track how much of the intelligence information was acted upon, or how many cases went to court or were litigated.

Tax Agency Failing to Spot Private Companies Dodging Taxes

Namibia’s tax agency has also been accused of failing to spot private companies dodging taxes and robbing the government of millions. Inland Revenue Commissioner Justus Mafongwe admitted that his agency receives actionable intelligence from the FIC and some audits result in FIC red flags showing potential tax evasion. However, he said they do not use all actionable intelligence from the FIC due to limited resources.

Call for Tighter Laws and Coordination

Two financial experts, Vijayakumar Kandaswamy and Samuel Nuugulu, have called for tighter laws and coordination between financial and law enforcement institutions. They emphasized that the direct economic impact of illicit flows cannot be underestimated, as it drains foreign reserves, causes high inflation, and reduces tax collections.

Experts Warn of Worrisome Situation

Experts warn that the lack of progress on FIC red-flagged cases is “worrisome” and advise the country to establish a unit specifically focused on tax-evasion and money-laundering matters. Strong institutions are necessary to compel individuals and companies to engage legally, deal honestly, and report and pay their taxes and dues in accordance with existing laws.

Recommendations

Establish a centralized government unit to monitor illicit financial flows.
Improve coordination between financial and law enforcement agencies.
Create a unit specifically focused on tax-evasion and money-laundering matters.