Financial Crime World

Namibia at a Crossroads: Unresolved Money Laundering Challenges Threaten International Reputation

Strides Towards AML Compliance, Yet Challenges Remain

Namibia has made strides in addressing money laundering (ML) challenges by addressing 59 out of 72 action items set by the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) and the Financial Action Task Force (FATF). However, the remaining 13 unaddressed items pose a significant risk.

Pressing Dilemma and AML Progress

Minister of Finance and Public Enterprises Iipumbu Shiimi acknowledged Namibia’s pressing dilemma during a recent press conference, disclosing the country’s efforts to meet AML benchmarks since December 2022.

The FATF’s Mutual Evaluation Report (MER) issued in previous years identified weaknesses within Namibia’s financial and legal frameworks. These challenges were further exposed through high-profile corruption scandals:

  • Fishrot scandal
  • Value-Added Tax (VAT) scams
  • SME Bank fraud

Substantial Illicit Financial Flows

The MER noted that a substantial portion of illicit financial flows moved through banks, unit trusts, and asset management services (AMS). Certain sectors, including legal and real estate services, posed a high risk for ML activities.

Adopting New Laws and Policy Frameworks

To address FATF’s recommendations, Namibia enacted four new laws and amended nine existing ones by August 2023. This was in addition to forming a dedicated Project Team to oversee the implementation of these legal and policy frameworks.

Ongoing Engagement with FATF

Namibia’s final progress report was submitted to the FATF ICRG towards the end of 2023. Preliminary indications from the January 2024 engagement in Abu Dhabi suggested that Namibia had technically complied with the necessary requirements and made significant headway in addressing the effectiveness of its AML measures.

Remaining Challenges and Potential Blacklisting

The unresolved action items might still place Namibia on the FATF’s list of high-risk jurisdictions, pending the outcome of the FATF ICRG joint group meeting scheduled for the coming days. However, Minister Shiimi emphasized Namibia’s commitment to resolving these outstanding issues.

Fighting Against Money Laundering

Ongoing efforts to rectify the situation demonstrates Namibia’s determination to strengthen its financial integrity and combat money laundering amid challenges.