Botswana steps closer to exiting dirty money greylist

Driving seat: Serame is eager to shake off the dirty money tag PIC: THALEFANG CHARLES
Driving seat: Serame is eager to shake off the dirty money tag PIC: THALEFANG CHARLES

Botswana’s three-year stay on the global anti-money laundering greylist could be over soon, as the Financial Action Task Force (FATF) notes strong progress by the country in addressing deficiencies. BusinessWeek has learnt that the FATF, the world’s leading anti-money laundering agency founded by the world’s richest countries, is set to conduct an on-site visit to Botswana “at the earliest possible date” to assess the situation on the ground.

In 2019, the FATF’s adverse recommendations about the deficiencies in the country’s anti-money laundering structures resulted in the European Union (EU) blacklisting Botswana and 22 others, citing the weak systems. The EU at the time said it had to “make sure that dirty money from other countries does not find its way to our financial system”. This week, the FATF updated its assessment of Botswana’s Anti-Money Laundering and Combatting of Financing Terrorism (AML/CFT) environment and noted substantial progress, with the site visit required to finally clear the country.

“At its June 2021 plenary, the FATF has made the initial determination that Botswana has substantially completed its action plan and warrants an on-site assessment to verify that implementation of AML/CFT reforms has begun and is being sustained and that the necessary political commitment remains in place to sustain implementation in future,” FATF researchers said in a statement.

Since the adverse listing, Botswana fast-tracked more than 20 pieces of legislation to plug loopholes in the country’s financial services sector, combat money laundering and stamp out practices such as tax evasion. Botswana also formed an AML Task Force at the highest levels of governance that provides quarterly progress updates to the FATF.

Earlier this year, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), whose recommendations are used by the FATF, positively re-rated three key areas of concern previously noted.

The FATF this week confirmed the re-rating, which includes progress in developing risk-based supervision and monitoring programmes. One of the agencies championing the risk-based approach, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), noted the progress being made. “Progress has been ongoing,” NBFIRA CEO, Oduetse Motshidisi told BusinessWeek.

“All relevant agencies have worked hard on the issue.”

Botswana’s continued negative listing by the global bodies has dulled the country’s much-hailed investment climate and carefully curated brand as the Jewel of Africa, at a time when COVID-19 is already depressing the economy and countries’ competitiveness.

The listing increases the cost of local financial institutions doing business with international banks and other organisations due to the higher due diligence that will be applied to them. There are also delays in funds being transferred to and from Botswana, due to the need for greater due diligence.

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