Risk management is not a precise science, yet many organisations and governments place complete reliance on it.
As risk consultants we realise that every risk management system has flaws and when it is in place it does not guarantee that identified risks will not occur and if they do, will have the level of impact that was assessed.
Unfortunately, some risks are impossible to predict, and a few are extremely difficult to foresee. Perhaps an example of the latter is a terrorist attack. We know that various terrorist groups exist, but due to the covert nature of their operations, we know little if anything about their intentions, capability, their targets and when they will strike.
Despite these difficulties, government agencies and the private sector must be vigilant and work in close cooperation to identify and prevent a terrorist attack. Implementation of international standards designed to combat the financing of terrorism and enshrined in the Financial Intelligence Act and Regulations of Botswana, are meant to operate in collaboration with the private sector.
The anti-money laundering and counter-financing of terrorism (AML/CFT) frameworks are not intended to be a contest between regulators and specified parties and accountable institutions, but a collaborative arrangement and a culture of cooperation built on trust and the mutual exchange of information. While specified parties and accountable institutions are legally required to provide various reports to the Financial Intelligence Agency (FIA), timely and comprehensive feedback from the FIA is required to ensure that the reports are beneficial. The FIA is required to provide a specified party or accountable institution feedback on a report made to it within 14 working days. In addition to that feedback, the FIA and other regulatory authorities should also provide strategic information that might assist specified parties and accountable institutions discharge their responsibilities under the AML/CFT framework of Botswana.
The threat of terrorism in Botswana is a risk that our firm finds is often neglected or the least understood while undertaking a risk assessment for a client. Apathy, arising from a view that the country does not have a terrorist threat or that it could not happen in Botswana, is one major cause. The fact that Botswana has never experienced a terror attack may also make us complacent or we may believe that the risk of other countries being attacked is far greater than our own.
The other is the lack of available information in a consolidated format provided by the FIA and regulatory authorities, identifying the potential terrorism risks in Botswana, and of relevance to specified parties and accountable institutions, the financial indicators peculiar to them. This information is vital, as it would enable specified parties and accountable institutions to prepare better risk management assessments, strengthen suspicious transaction reporting and enhance the monitoring of transactions and events.
An act of terrorism can occur unexpectedly at any time. A recent example is the terror attack in New Zealand on March 15, 2019, when a 28-year-old man from Australia murdered 51 people and wounded another 40 during Friday prayers at two Mosques in Christchurch. Prior to this incident, the terrorist risk rating in New Zealand, a relatively peaceful country, was low. It immediately went to high following the attacks and is now rated at medium.
In Western Europe
Closer to home in Botswana, we are witnessing the rise of Islamic Terrorism. Once confined to Northern and West Africa, it has spread down the horn of Africa and has taken root in Mozambique. These terrorism groups survive by being involved in criminal activities primarily heroin trafficking, theft and the sale of illegal ivory. Other forms of funding, particularly from local and international supporters cannot be ruled out.
Following the terrible terror attacks on the United States in 2001, the 9/11 Commission identified that authorities failed to understand the gravity of the threat posed by al-Qaeda leading up to the attacks and that there was a failure in imagination by authorities and a mindset that dismissed the possible intentions of the group. It is therefore not beyond possibility that local and international supporters of terror groups in South Africa might exist and use Botswana’s recently acquired reputation, thanks to the Financial Action Task Force and the European Union, that it is a country of high money laundering and terrorism financing risk, to hide and move terror funds.
To ensure that Botswana does not repeat the mistakes of the past made by other countries in the fight against terrorism, law enforcement and security agencies in the country need timely and accurate information, particularly financial information. Specified parties and accountable institutions are required to prepare an assessment of the financial crime risks their businesses face, with terrorism financing one of those risks. An entity cannot complete a useful risk assessment without relevant and timely information. This is one area where the FIA and regulators can assist specified parties and accountable institutions – by publishing information on the latest terrorism trends not only occurring in Southern Africa, but throughout the world.
It is often said that during this current COVID-19 pandemic that we are all in this together. With terrorism in our region increasing, the government and people of Botswana cannot be complacent. The authorities and the private sector need to work more closely together to ensure that Botswana does not become a victim of a major terrorist attack.
MICHAELA POWELL-REES & CHRIS DOUGLAS*
*Michaela Powell-Rees & Chris Douglas write on behalf of Merero Partners, a boutique advisory firm based in Botswana offering Corporate Finance, Management Consulting and Risk Advisory Services. Through Merero’s joint venture partner, terrorism financing training has been delivered to government and private entities in countries with a high terrorism risk including Indonesia, Nigeria, Pakistan, and Sri Lanka. Contact Merero via email firstname.lastname@example.org for more information on its AML/CFT training and consultancy services in Botswana