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Home / Dirty money in spotlight… as FIC red flags N$17bn potential proceeds of crime

Dirty money in spotlight… as FIC red flags N$17bn potential proceeds of crime

2020-09-10  Edgar Brandt

Dirty money in spotlight… as FIC red flags N$17bn potential proceeds of crime
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An astronomical N$10 billion in Fishrot-linked funds have been red-flagged by one of the country’s top financial watchdogs as suspected proceeds of illegal activities. 
The Fishrot scandal has led to the arrest and incarceration of former ministers Sacky Shanghala and Bernhard Esau, former Investec Asset Management Namibia managing director James Hatuikulipi, former Fischor CEO Mike Nghipunya as well as Tamson Hatuikulipi and Pius Mwatelulo.  Another person implicated in the scandal is former senior manager at Investec Asset Management Namibia Ricardo Gustavo. 

The scandal has been classified by some as economic sabotage due to the snowballing nature of the alleged corruption. 
During yesterday’s presentation of the Financial Intelligence Centre’s Annual Report, its Director, Leonie Dunn, confirmed this when announcing that the N$10 billion makes up at least N$17 billion suspected to be the proceeds of crime in Namibia during the 2019/20 financial year.  

“The potential proceeds of crime so identified is under investigation by Law Enforcement Authorities and other identified FIA competent authorities,” reads the report.  
The FIC red flags all domestic and international Electronic Funds Transfers above a certain threshold amount. 
All accountable financial institutions must report the details of these payment instructions, providing full details where and from whom the transfers are made. 
The FIC document also pointed out that it takes a financial investigation analyst approximately 90 working days to conduct effective analyses on one case received. 

The FIC, which has the statutory mandate to assist in effective identification, assessment and mitigation of national money laundering (ML), terrorist financing (TF) and proliferation financing (PF) risks, is tasked to ensure Namibia has a reliable, safe and responsive financial system. During the 2019/20 financial year, the FIC also significantly expanded its regulatory footprint to more than 2000 institutions. As such, the FIC, in collaboration with law enforcement and competent authorities, continued to make inroads to disrupt criminal activities reflected as high risks in the country’s national risk and threat assessment. “The FIC’s continuous engagement with AML/CFT/CPF stakeholders ensured a significant turn-over being recorded in the delivery of actionable intelligence products to competent authorities. A combined total of 344 spontaneous disclosures and responses to requests for information to the Anti-Corruption Commission; Ministry of Finance, Namibian Police Force; office of the prosecutor general; and foreign FIUs, was made during the period under review,” stated Dunn.  The FIC operationally reports on delivery of its statutory mandate to the minister of finance and the Anti-Money Laundering and Combating the Financing of Terrorist and Proliferation (AML/CFT/CPF) Council. The council is government’s main financial crime policy advisory. Administratively, the FIC is housed by the Bank of Namibia but operates independently from the central bank. In a statement, Dunn further noted that the FIC also contributed to 84 investigations conducted by competent authorities. These investigations were carried out by the Namibian Police and the Anti-Corruption Commission.  Said Dunn: “The top five underlying predicate offenses investigated include fraud, corruption, poaching, dealing in drugs, illegal deposit taking/pyramid schemes and money laundering.

Furthermore, investigations by these law enforcement agencies with assistance of the office of the prosecutor general secured 15 money laundering convictions and criminal sanctions applied. Furthermore, there are 50 other cases with elements of money laundering offences currently pending before various courts.” Additionally, the FIC contributed through Spontaneous Disclosures and Responses to Request for Information amounting to millions of dollars in tax assessments issued by the Receiver of Revenue against individuals and businesses.  However, Dunn added that the FIC’s efforts remain hampered by a limited understanding of its statutory mandate by some stakeholders and the public. She expressed concern that an insufficient understanding of Namibia’s global prevention and combatting obligations (as mandated under applicable United Nations Conventions, mandatory UN Security Council resolutions embodied in the Financial Action Task Force (FATF) recommendations) may amongst others, negatively impede government’s efforts in ensuring that the integrity and stability of the country’s financial system and the broader economy is protected from the risks and threats of financial crimes. “Further challenges experienced are, amongst others, a tough economic climate, the impacts of Covid-19 and a continuous imbalance between the FIC’s extensive mandate and the available human, technological and financial resources. This imbalance contributes to delays in timeous removal of proceeds of crime from the financial system and/or disrupting the flow of financial resources to those involved in the criminal activities. To overcome identified challenges, a Public Private Partnership and Integrated Investigative Task Force platforms was established. The platforms enable the pooling together of critical and needed resources to fast-track investigations, evidence collection, asset identification seizing, freezing etc. in priority cases involving national interest,” Dunn explained. 

In the year ahead, the FIC is expected to work closely with all stakeholders to identify and address vulnerabilities across Namibia’s financial system by sharing knowledge, raising awareness of criminal methodologies, and influencing compliance behaviours. “This will ultimately safeguard Namibia’s financial system and ensure it contributes to economic development and the general welfare of Namibians,” Dunn concluded. 

2020-09-10  Edgar Brandt

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