NBFIRA warns of rise in cross border financial crimes

Boniface Keakabetse | Wednesday November 12, 2014 12:56

The call  was made by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) chairperson, Mmatlala Dube  during the 33 bi-annual Committee for Insurance, Securities and Non-Bank Financial Authorities (CISNA) conference  held in Maun recently.

CISNA promotes harmonisation of regulatory regimes, enhances communication and exchange of information, and promotes compliance with international standards in the industry within the SADC region.  Speaking at the conference, Dube warned about the increase of cross border financial crimes in the SADC area.  She said such schemes include fraudulent financial transactions, Ponzi schemes, charity fund scam, debt elimination claims, investment fraud, and the pyramid schemes. She said the Ponzi and pyramid schemes are the most common in the SADC area.

Dube said the problem calls for effective non-bank financial institutions regulators to understand the market comprehensively, identify trends in the markets, reconstruct market movement and identify malpractices. Dube however, noted that strong legal framework enforcement is not the only answer to rid the problem.  “We admit that a strong legal enforcement framework is necessary, but not sufficient to ensure adequate handling of the likes of Ponzi schemes as well as protection of investors.

“We call  for investment in training of staff to keep them abreast on how to conduct investigations to detect the malpractices,”  she  said.

Dube observed that in Botswana, the non-banking financial services sector is an important contributor to the economy in terms of the Gross Domestic Product (GDP), employment creation and linkages to other sectors in terms of investment facilitation.

The insurance sector recorded a phenomenal rate of 97 percent in gross written premiums from P1,9 million as at 31st March 2010 to P 3.74 million at 31 March 2014.  She said total assets for the sector were P 17.8 billion as of 31 March 2014. Dube said the growth warrants a stringent non-banking regulatory supervision to ensure that the conduct of the market is fair, efficient and complies with international best practices. The chairperson also noted that the non-banking financial sector promotes entrepreurnship through available business and funding opportunities which helps grow the economy.

CISNA was established in 1998 pursuant to Article 2 of Annexure10 of the financial and investments protocol of SADC as a committee of authorities responsible for supervision of insurance, securities and non-bank financial sector industries in SADC member states.