Financial Crime World

Namibia’s Threatened Financial System: A Growing Concern

A recent report by the Namibian Reserve Agency (NRA) has revealed a significant increase in financial risks posed by terrorist financing (TF) threats. The report highlights the country’s vulnerability to TF attacks and emphasizes the need for enhanced vigilance to combat this growing menace.

Assessing Risks: A New Approach

The NRA’s methodology for assessing TF risks considers both vulnerability and threats in arriving at risk positions. This approach is explained in sections 3 and 4 of the 2020 NRA report, which provides a comprehensive framework for understanding the dynamics of TF threats.

Key Factors Considered

  • Vulnerability: The likelihood that an entity or activity may be targeted by terrorists.
  • Threats: The potential harm or danger posed by terrorist activities.

Vulnerability Levels: A Growing Concern

According to the report, Namibia’s domestic TF vulnerability has increased significantly, with a rating of Medium High (70%-80%). This is attributed to the country’s national combating effectiveness, which stands at only 20%-30%. The increasing vulnerability is a cause for concern, as it leaves the financial system open to abuse and exploitation.

Key Concerns

  • National combating effectiveness: Only 20%-30% effective in combating TF threats.
  • Domestic TF vulnerability: Rated Medium High (70%-80%).

Threats: A Growing Concern

The NRA’s report identifies several threats that could undermine Namibia’s financial system. Domestic TF threats were rated Low (30%), while foreign TF threats were rated Medium (50%). The cross-border threat posed by neighboring countries with active terrorist activities is of particular concern.

Key Threats

  • Foreign TF threats: Rated Medium (50%).
  • Cross-border threats: Neighboring countries with active terrorist activities pose a significant challenge.

Raising Funds and Moving Money

The report highlights the importance of understanding the various stages involved in TF, including:

  • Raising funds through legitimate means or criminal activity
  • Moving funds to individuals or groups
  • Storing funds
  • Using them for terrorist activities

Key Stages

  • Fundraising: Through legitimate means or criminal activity.
  • Money movement: To individuals or groups.
  • Storage: Funds are stored before use.
  • Use: Funds are used for terrorist activities.

Conclusion

Namibia’s financial system is at risk from growing TF threats. The country’s vulnerability has increased significantly, and foreign TF threats pose a significant challenge. It is essential that financial institutions, DNFBPs, LEAs, and other stakeholders remain vigilant and take proactive measures to combat these threats.

Call to Action

  • Financial institutions should enhance their due diligence and monitoring procedures.
  • DNFBPs should improve their reporting mechanisms.
  • LEAs should increase their surveillance and intelligence gathering efforts.
  • The government should establish a comprehensive TF risk assessment framework.

Recommendations

  1. Enhance Due Diligence: Financial institutions should improve their due diligence and monitoring procedures to detect and prevent TF transactions.
  2. Improve Reporting Mechanisms: DNFBPs should enhance their reporting mechanisms to identify suspicious transactions and activities.
  3. Increase Surveillance Efforts: LEAs should increase their surveillance and intelligence gathering efforts to combat TF threats.
  4. Establish Comprehensive Framework: The government should establish a comprehensive TF risk assessment framework to guide financial institutions and other stakeholders in their anti-TF efforts.

By working together, Namibia can effectively address the growing threat of terrorist financing and maintain a stable and secure financial system.