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Money Laundering Detection Tools in Namibia Under Scrutiny
The Financial Action Task Force (FATF), a global watchdog, has been reviewing Namibia’s compliance with its recommendations on anti-money laundering (AML), counter-terrorism financing (CFT), and proliferation financing (PF). The taskforce is expected to release its findings in the coming months.
What is Money Laundering?
Money laundering is a process of disguising the source of illegally obtained funds to make them appear “clean”. A significant amount of money is laundered through the financial system, with devastating consequences. The FATF, founded in 1989, aims to set standards and foster international action against money laundering.
Namibia’s Assessment
Namibia has undergone an on-site assessment by the FATF and ESAAMLG (Eastern and Southern Africa Anti-Money Laundering Group) between September 23 and October 13, 2021. The assessment aimed to review Namibia’s AML/CFT system, and its findings will be reported in the coming months.
Implications of Non-Compliance
Namibia is not a member of the FATF but is a member of ESAAMLG, established to combat money laundering by implementing the watchdog’s recommendations. If Namibia does not comply with the FATF’s recommendations, it may be placed on the grey list, which contains nations that are subject to more scrutiny but are actively collaborating with the watchdog to resolve strategic flaws in their regimes.
Consequences of Being Placed on the Grey List
The grey list serves as a warning of increased risks of money laundering and terrorism financing in a particular region and can be used to disparage nations on the international stage. If Namibia is placed on the grey list, it will be forced to improve its AML/CFT systems to be removed from the list.
What Can Be Done?
To achieve this, Namibia requires robust leveraging between public/private partnerships to combat money laundering and terrorist financing and to expedite the process of being removed from the grey list. Equally important is for all accountable institutions and reporting institutions to build a stronger AML/CFT compliance culture with their respective institutions.
Recommendations
- Accountable institutions and reporting institutions should continuously review and enhance their internal controls to detect, prevent, and correct both inherent and residual AML/CFT/PF risks that their businesses are exposed to.
- Public/private partnerships should be leveraged to combat money laundering and terrorist financing.
- All accountable institutions and reporting institutions should build a stronger AML/CFT compliance culture with their respective institutions.
By implementing these measures, Namibia can improve its AML/CFT systems and avoid being placed on the grey list.