Financial Crime World

Authorities Warn of Loophole in Money Laundering Laws

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A Significant Flaw in Namibia’s Laws

In a shocking revelation, authorities have highlighted a significant flaw in Namibia’s laws regarding money laundering (ML). Currently, the Prevention of Organised Crime Act (POCA) allows individuals to launder their own illicit funds without facing criminal charges.

How POCA Falls Short

  • Only applies to individuals who commit predicate offenses
  • Does not cover cases where someone uses their own illegal proceeds

This means that someone who commits a crime and then uses their own illegal proceeds can avoid prosecution under the ML offense. Moreover, Namibia has yet to enact anti-terrorist financing laws, leaving the country vulnerable to abuse by criminals.

The country’s financial institutions are struggling with a weak legal framework. The Bank of Namibia (BoN) has issued general anti-money laundering determinations and circulars to address aspects of ML, but these do not meet international standards for anti-money laundering and combating the financing of terrorism (AML/CFT).

Consequences

  • Absence of POCA means BoN’s directives have a weak legal basis
  • Unlikely to be enforced

This is a significant concern, given the sophistication and developed nature of Namibia’s financial system.

Non-Bank Financial Institutions

The non-bank financial institutions sector, which includes pension funds, insurance companies, and asset managers, is also lacking in AML/CFT measures. The Namibia Financial Institutions Supervisory Authority (NAMFISA) has not issued any AML/CFT rules or guidelines to its supervised institutions.

Unregulated Sectors

  • There are currently no AML/CFT measures imposed on designated non-financial businesses and professions, such as car dealers or dealers in semi-precious stones.
  • Lack of regulation leaves these sectors vulnerable to abuse by criminals.

Designated Non-Financial Businesses and Professions

The authorities have not considered how these DNFBPs will be supervised with regard to their AML/CFT obligations. There is no staff expertise on this issue in NAMFISA.

Call for Reform

In light of these findings, experts are calling for reform of Namibia’s AML/CFT framework. The country must take immediate action to strengthen its laws and regulations to prevent the abuse of its financial system by criminals.

Failure to Act

  • Will undermine confidence in the country’s financial institutions and economy as a whole.
  • Failure to do so will only serve to exacerbate the problem.