Namibia Financial Intelligence Centre Issues Directive on Financial Institution Risk Assessment
The Namibia Financial Intelligence Centre (FIC) has issued a directive to all accountable and reporting institutions under the supervision of the Namibia Financial Institutions Supervisory Authority (NAMFISA) to assess their risk exposure to financial crimes such as money laundering, terrorism financing, and proliferation financing.
Identifying Vulnerabilities
The directive highlights that corporate vehicles, including micro-lending institutions and asset management companies, may be vulnerable to misuse for illicit purposes. The FIC has noted that control weaknesses exist in these entities, which can be exploited by criminals.
Mitigating Risk
To mitigate the risk of money laundering, terrorism financing, and proliferation financing, accountable and reporting institutions are required to take necessary action. This includes:
- Ensuring high standards of integrity among employees
- Evaluating their personal, employment, and financial history
Providing Information to Supervisory Body
The Financial Intelligence Centre has also directed all accountable and reporting institutions supervised by NAMFISA to provide information requested by the supervisory body to ensure that beneficial owners, management, and key personnel are fit and proper to contribute to combating money laundering and other financial crimes.
Definition of “Fit and Proper”
The directive defines “fit and proper” as having five main components:
- Identification
- Honesty and integrity
- Competence
- Operational ability
- Financial soundness
NAMFISA is entitled to consider these factors in determining whether a person is fit and proper and may request supporting documentation to satisfy itself of the fitness and propriety of a person or entity.
Effective Date and Consequences of Non-Compliance
The directive comes into effect on October 31, 2016. Non-compliance with its provisions may result in fines not exceeding N$10 million or imprisonment for up to 10 years.
By complying with this directive, financial institutions can ensure they are taking necessary steps to prevent and detect financial crimes, while also maintaining their reputation and integrity.