Namibia under Scrutiny: International Cooperation Review Group Monitors AML/CFT Framework Deficiencies Amid Fishrot Scandal

By Nghiinomenwa-vali Erastus

Namibia is currently under the international microscope due to alleged deficiencies in its Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation (AML/CFT) framework. These deficiencies were highlighted in a Mutual Evaluation Report (MER) by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) following the Fishrot scandal.

Weak AML/CFT Framework and the Fishrot Scandal

According to the MER, Namibia’s weak AML/CFT framework was dominated by the Fishrot scandal, similar to how South Africa’s MER was tainted by the State Capture corruption case [1]. The primary organization tasked with setting AML/CFT global standards, the Financial Action Task Force (FATF), identified several strategic deficiencies that pose a risk to the international financial system [2].

Strategic Deficiencies and Enhanced Monitoring

Marlene Miller Compliance Practitioners, experts in the field, have confirmed that Namibia’s strategic deficiencies have resulted in enhanced monitoring by the International Cooperation Review Group (ICRG) [2]. Namibia has been given until October 2023 to implement the required remedial actions or risk being labeled as ‘grey-listed’ [3].

Money Laundering Risks in Namibia

The Namibian MER indicated that Fishrot scandal proceeds were mainly laundered through banks, unit trusts, and asset management financial services [3]. Several sectors, including companies, service providers, lawyers, real estate agents, and customs clearing and forwarding agents, were identified as having a high vulnerability to money laundering within the designated non-financial businesses and professions sector [3][4]. Moreover, misuse of legal persons and legal arrangements for money laundering purposes was found at a basic level [3].

Lack of Beneficial Ownership Information

The Fishrot scandal exposed a lack of beneficial ownership information relating to these legal persons, an issue also highlighted in the MER as a risk pertaining to legal persons [3].

Addressing the Issues

The committee advised Namibia to boost the Financial Intelligence Centre’s (FIC) analytical capability, enhance investigatory efforts into corruption and ML cases, and provide adequate funding to the Anti-Corruption Commission (ANCC) to improve its investigation and prosecution processes [3][5].

Resolving Fishrot Corruption and ML Investigations

In 2020, the ANCC received significant intelligence disclosures related to the Fishrot corruption and associated ML investigations. The assessors recommended that Namibia should resolve the matter urgently, as effective use of FIC intelligence would improve investigation of serious corruption and enable the combating of ML [3].

Money Laundering and Terrorist Financing Threats

Namibia’s AML/CFT system was found to face numerous money laundering and terrorism financing threats, with a surge in serious fraud, grand corruption, tax crimes, and wildlife crimes as the primary sources of significant proceeds [3]. High-profile individuals holding influential government positions in conjunction with the private sector commit these crimes and facilitate illicit funds flow beyond the country’s borders [3].

Terrorist Financing Mitigation Strategies

While the assessment did not find a substantial appreciation for the terrorist financing risk in Namibia, the country’s terrorist and proliferation financing mitigation strategies were deemed inadequate, primarily due to limited attention to the risks [3].

International Cooperation Review Group Process

The ICRG process is triggered when a country is identified to have strategic deficiencies in its framework, posing a potential risk to the international financial system [5]. South Africa is currently undergoing this process, and Namibia now shares this undesirable position with its neighbor [5].

Remediation and Collaboration

To address these deficiencies and maintain its position within the global economy, Namibia must collaborate institutionally and commit to implementing effective anti-money laundering and combating terrorist financing measures [6]. Furthermore, accountable institutions should acknowledge their role in combating financial crimes and work alongside governments and the private sector to mitigate the risks posed by these deficiencies.

Future Considerations

Going forward, institutions must revise their institutional risk assessments to reflect a sound understanding of the inherent ML/TF/PF risks affecting their organizations [6]. Preventative measures such as customer identification, risk assessment, and reporting of suspicious transactions should be revived to mitigate the risks and preserve international confidence in the country’s financial system [6].

[1] ESAAMLG (November 2022). Mutual Evaluation Report: Namibia. Retrieved from https://www.esaamlg.org/ [2] FATF (n.d.) ICRG. Retrieved from https://www.fatf-gafi.org/ [3] Erastus, N. (2023, February 2). Namibia under Scrutiny: International Cooperation Review Group Monitors AML/CFT Framework Deficiencies Amid Fishrot Scandal. Africa Global Village. Retrieved from https://www.africaglobalvillage.com/ [4] ESAAMLG (November 2022). Mutual Evaluation Report: Namibia. Retrieved from https://www.esaamlg.org/ [5] FATF (n.d.) ICRG. Retrieved from https://www.fatf-gafi.org/ [6] Marlene Miller Compliance Practitioners (n.d.). Financial Crime - Prevention & Compliance. Retrieved from https://www.marlenemiller.com/