SA greylisting a wake up call for Namibia

Martin Endjala

The Institute for Public Policy Research (IPPR) Director Graham Hopwood has cautioned the Namibian government to use South Africa’s greylisting by the Financial Action Task Force (FATF) as a warning to relook its anti-money laundering systems, to align it with international laws and international standards. The FATF is the global money laundering and terrorist financial watchdog.

“Namibia also has to meet the same standards in terms of tackling anti-money laundering,while introducing effective systems and if we don’t we will also be grey-listed by the FATF”, said Hopwood in an interview.

He added that this is a warning sign for Namibia to look at its laws, regulatory frameworks, and systems put in place to counter anti-money laundering, in order to ensure that they are totally in line with international standards on anti-money laundering and job finances which the FATF looks at.

He further stated that although South Africa is greylisted, the country appears to be impacted minimally, questioning whether or not Namibia would also stand to be secure if it suffers the same fate.

Hopwood, however highlighted that there is a concern Namibia could face greylisting by the FATF since it is under the same review, hence the need to close the current loopholes. He has since called on the Financial Intelligence Center to do its job, especially after the multimillion fishing corruption scandal, now known as the Fishrot saga. Hopwood says Fishrot has sparked red flags.

Meanwhile, local Economist Theo Klein, from Simonis Storm Securities says South Africa was grey-listed due to significant weaknesses and vulnerabilities that the FATF identified in South Africa’s financial services industry.

Adding that the FATF is the global regulatory body that aims to combat money laundering, terrorist financing and proliferation spending amongst others, Klein reiterated that the identified weaknesses related to these themes.

“South Africans will now not be able to transfer money in and out of the country as easily as they did in the past. It will especially be more challenging for citizens to do offshore greylisting”, Klein said.

For foreigners Klein explained, greylisting essentially translates to “don’t do business in this country” and so it could be challenging for foreign investors to do business in the country.

With most local banks being South African franchises, it might be that we see enhanced due diligence measures being implemented in Namibia as well. This will likely also worsen the ease of doing business on a daily basis.

“It is difficult to say whether Namibia will also be greylisted, but it seems unlikely based on the last FATF investigation on Namibia that was done in 2021”, Klein opined.

According to the FATF’s report, “Namibia has to a large extent applied MLA and extradition and other forms of cooperation to pursue proceeds of predicate crimes; Money Laundering (ML) to some extent, and Terrorist Financing (TF) and Beneficial Ownership (BO) to a negligible extent.

Klein further noted that the Central Authority lacks adequate resources and an effective case management system tracking Mutual Legal Assistance (MLA) and extradition requests.

Furthermore, Gino Perini Director of Insight Wealth in South Africa, stated that the view is that the immediate impact on markets of the greylisting is likely to be muted, given that it has been largely priced in by the markets.

However, the effect over the longer term will depend on how diligently South Africa deals with the eight areas identified by the FATF.

Additionally, from a compliance perspective, Perini is of the view that jurisdictions will need to apply enhanced due diligence on financial transactions with South Africa, thereby increasing the requirements around FICA (including having up-to-date Beneficial Ownership Information) and proof of funds.

These requirements he said, will be much stricter, both from within our Business and from the various product providers.

“It is therefore important that Clients are aware of this particularly when it comes to Offshore business. It is important to factor in additional time to execute all transactions as due diligence will in all likelihood take longer. Clients will also be expected to provide stronger evidence”.

Meanwhile, the Central Bank of Namibia Spokesperson Kazembire Zemburuka said they would pronounce themselves on the matter tomorrow, in a hint, with statements expected from the Financial Intelligence Center.

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