Ineffective implementation of compliance with international anti-money laundering (AML), combatting the financing of terrorism (CFT), and combatting proliferation financing (CPF) standards have led to Namibia being greylisted by the Financial Action Task Force (FATF).
Namibia is now placed under increased monitoring. This was confirmed by central bank (BoN) governor Johannes !Gawaxab last week.“Despite Namibia’s substantial progress, the FATF found Namibia wanting in AML/CFT/CPF effectiveness in six of the 11 immediate outcomes, assessed around effectiveness. Effectiveness compliance focus on a country’s ability to demonstrate an effective framework for protecting the financial system from AML/CTF/CPF abuse, considering the specific risks it faces,” said !Gawaxab in a statement last week. A country that is greylisted is an indication that FATF, an international financial watchdog, has identified strategic deficiencies in applicable systems to counter financial crimes. Greylisting means a country is under increased monitoring due to a lack of policies and procedures to deal with AML, CFT and CPF. !Gawaxab further stated that Namibia made significant strides in addressing all the technical compliance shortcomings through the amendment of existing laws and introduction of new legislation. Notably, nine existing laws were amended, two laws were repealed and replaced, and two new laws were introduced that were previously absent from the Namibian legislative framework.
Out of 72 recommended actions, Namibia made progress by addressing 59 action items. However, 13 action items within the domain of six national AML/CFT/CPF combatting stakeholders remain outstanding, requiring urgent attention. To ensure Namibia and the identified risk combatting stakeholders timeously address remaining identified shortcomings, the FATF prescribed an agreed-upon action plan, outlining specific measures to be implemented. Recognising the urgency of the situation, the national focal committee, comprising representatives from public and private sector stakeholders, will enable an execution plan and ensure timeous address of the outstanding action items.
!Gawaxab did not hesitate to highlight that the greylisting has various ramifications for Namibia, including potential negative effects on foreign direct investment, trade, and financial activities. According to IMF guidelines, an FATF greylisting has a negative impact on the GDP of a listed country by up to 6%. Entities doing business with Namibia may also be forced to do additional due diligence, which could result in higher expenses and scrutiny. “Despite the greylisting, Namibia’s financial system remains sound, stable, and well capitalised. With robust due diligence measures in place, transactions between Namibia and the global community will continue to be safeguarded. Businesses and citizens can proceed with confidence in conducting transactions internationally,” !Gawaxab added. According to the financial stability report for 2022 released by the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa), the financial system in Namibia remains sound and profitable overall.