Key anti-money laundering law takes effect
Mbongeni Mguni | Friday February 22, 2019 14:14
Last Wednesday, the European Union added Botswana to a list of 23 jurisdictions it intends to approve soon as a global blacklist for money laundering and terrorism financing. Other countries on the list include Nigeria, Iran, Pakistan and Panama.
The beneficial ownership law was passed last year and was expected to kick off in June 2019, to coincide with a countrywide company re-registration exercise, moving all entities to an online platform allowing public perusal of shareholding and beneficial shareholding.
On Tuesday, however, Companies and Intellectual Property Agency (CIPA)spokesperson, Marietta Magashula said starting from February 19, all new registrations would require the disclosure of beneficial ownership.
Companies already registered in Botswana will be required to disclose their beneficial ownership from June 30, when the broader re-registration exercise kicks off.
“Beneficial ownership registry is a key tool for increasing transparency of the companies register, curbing corruption and reducing instances of money laundering and terrorism financing through identifying the real owners of registered companies,” she said.
She noted that under the new law, non-compliance would attract a jail term not exceeding five years or a fine not exceeding P200, 000. Under the amended law, a beneficial owner of a company is defined as “any natural person who directly or indirectly through any contact, arrangement, understanding, relationship or otherwise, is the ultimate beneficiary of a share or other securities in a company”. In layman’s terms, a beneficial owner of a company enjoys the benefits or proceeds of a company or controls a company without being on record as the official owner.
The EU’s blacklisting of Botswana came as the country’s highest courts continue to wrestle with high profile money laundering cases, including one involving more than P230 million and a line up of prominent defendants including a former Minister, High Court Judge, top asset managers and senior government officials. Another case involves the disappearance of more than P500 million in public pensioners funds from the hands of an asset management firm.
“We have established the strongest anti-money laundering standards in the world, but we have to make sure that dirty money from other countries does not find its way to our financial system,” the EU’s commissioner for justice, consumers and gender equality, Věra Jourová said in a statement on Wednesday.
According to the EU, countries on the blacklist have weak anti-money laundering and terrorism-financing structures, while their economic relevance and ties to the EU make them a risk to Europe.
Botswana has in recent years attempted to tighten its money laundering loopholes, eliminating the ‘dormant’ status for companies and moving to dismantle a 15-year-old special tax incentives framework for offshore financial services companies known as the International Financial Services Centre.