Botswana moves to end greylisting fear
Spira Tlhankane | Monday February 17, 2025 12:40
Botswana’s 2018 stain
Greylisting means that a country is under increased monitoring by the Financial Action Task Force (FATF) due to certain deficiencies in its anti-money laundering (AML), combating the financing of terrorism (CFT), and proliferation financing (CPF)??? framework. The FATF, the world’s leading multinational anti-money laundering agency, placed Botswana on its greylist in 2018 citing deficiencies in its money laundering structures, leading the European Union to place the country on a blacklist in 2019. An announcement was made in late 2021 that FATF had removed Botswana from the blacklist. The negative listing increased the cost of local financial institutions doing business with international banks and other organisations due to the higher due diligence that is applied to them. The listing by the global bodies has also dulled the country’s much-hailed investment climate. The decision by the Financial Action Task Force (FATF) to greylist Botswana raised fears over the country’s ability to fight money laundering, terrorism, and illicit financial flows.
The new government commits money
As the country moves swiftly to never return to the infamous blacklist, Finance minister and Vice President (VP), Ndaba Gaolathe, indicated during the Budget Speech on Monday that his ministry will take part of the P3.06 billion share to cover the Eastern & Southern Africa Anti-Money Laundering Group (ESAAMLG) activities in preparation for the next round of mutual evaluation, engagement and promotional activities by the ministry. “The activities will position Botswana as a regional hub for training on Anti-Money Laundering/Countering and the Financing of Terrorism (AML/CFT). In addition, the proposed budget allocation will maintain the country’s good standing, among others,” Gaolathe told Parliament this week.
The previous administration also feared a greylisting return
While Botswana’s removal from the greylisting offered renewed optimism, there have been fears that it might be short-lived. Former President Mokgweetsi Masisi last year disclosed that Botswana in making sure that its name never makes it back to the list, is linking up with some leading global companies, institutions, organisations, and countries such as The Bahamas. Speaking during the Global Citizen NOW 2024 Summit held in New York, USA, last year Masisi indicated that Botswana was exchanging notes with the Caribbean country. He said as a result they had resolved to never end up back on the greylist as they exchanged notes through their regulatory institutions, financial sectors, and ministries. Masisi emphasised that the two countries would make sure that they never regress.
The last evaluation identified Botswana’s shortcomings
With Gaolathe indicating that part of the money will be used to cover ESAAMLG activities in preparation for the next round of mutual evaluation, Botswana is a member and is committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism and proliferation, in particular the FATF Recommendations. A 2022 report set out Botswana’s progress in strengthening anti-money laundering and counter-terrorist financing measures since its 2017 assessment. The report came a year after Botswana was removed from the infamous greylist. The report indicated that since its 2017 mutual evaluation and April 2021 Follow-Up Report (FUR), Botswana has made progress in addressing deficiencies. Overall, the report said Botswana had made progress in addressing deficiencies in technical compliance identified in its Mutual Evaluation Report. The report, however, indicated that due to a lack of information provided by authorities in the analytical tool, reviewers could not determine whether Botswana has identified a subset of organisations that fall within the FATF’s definition of Non-Profit Organisation (NPO) and the extent to which they are likely to be at risk of terrorist financing abuse. The report concluded that Botswana will remain in enhanced follow-up and will continue to inform the ESAAMLG of the progress made in improving the implementation of its AML/CFT measures. “Submissions made by the authorities fall short of demonstrating that the Botswana police have investigative expertise and capability to examine those NPOs suspected of either being exploited by or actively supporting terrorist activities or organisations. Furthermore, the Registrar of Societies (NPO) has not been identified as one of the competent authorities to respond to international requests for information where a particular NPO is suspected of terrorist financing or involvement in other forms of terrorist support,” the report indicated.
Budget enforces UB, FIA 2024 MoU
Gaolathe’s announcement did not come as a surprise because last year in May, UB and the Financial Intelligence Agency (FIA) signed a Memorandum of Understanding (MoU) on the establishment of the institute for combating illicit financial flows. It is said that UB will assist in preparations for mutual evaluation under the ESAAMLG. It was revealed that Botswana was going onto the third of the mutual evaluation cycle in January 2027 under ESAAMLG hence the centre would be used to build the required capacity. The institute will emphasise training and capacity building, which are the yardstick used by the FATF to measure the effectiveness of the country’s anti-money laundering and combating the financing of terrorism regime in implementing the FATF standards. It was revealed during the MoU signing that FATF requires countries to have training and capacity-building policies aimed at increasing the capacity of a country to effectively implement the FATF standards. The institute is also envisaged to assist the country in closing gaps in anti-money laundering strategies.