Botswana to exit FATF grey list in October
Positive signs show FATF is impressed thus far
Botswana government remains hopeful and confident that the country will exit from the Financial Action Task Force ( FATF) grey list and the EU black list.
However, it is still too early for the fat lady to dance because that will be determined by the outcome of the on- site assessment, which will be discussed at the FATF Plenary in October 2021.
So far Botswana has shown political commitment by meeting some of the shortfalls through passing a total of 31 pieces of legislation, all related to the AML/ CFT/ CFP during her 11th session of parliament, as well as passing the Financial Intelligence ( Amendment) Act to address the definition of beneficial ownership. Cabinet also approved the National AML/ CFT/ CFP Strategy of 2019- 2024 in October 2019. Briefing the nation on Botswana’s progress in AML/ CFT/ CFP following financial action task force grey listing and related issues, Minister of Finance and Economic Development, Peggy Serame said Botswana delegation attended the Eastern and Southern Africa Anti- Money Laundering Group ( ESAAMLG) 42nd Task Force of senior officials meeting from the 26th August to 6th September 2021, which was followed by the Council of Ministers on the 7th September 2021. “At these meetings Botswana was commended for making progress in complying with the FATF standards by addressing deficiencies in her AML/ CFT/ CFP framework”.
Serame said Botswana is making all these efforts of complying with the FATF standards to guard against the country’s financial system being used for money laundering, terrorism financing and proliferation financing. “We are hopeful that at the October 2021 FATF Plenary meetings, the outcome of the on- site visit undertaken by the FATF in August 2021 will bear positive results, leading to Botswana being de- listed from the FATF grey listing”. Serame said as government continues its efforts of putting in place the necessary legislative and institutional framework, due diligence must be exercised by all institutions, including the ordinary Motswana, so that no one is found dealing with financiers whose credibility is wanting. She highlighted that it is important that where unsolicited funds are offered, individuals or entities receiving the offer must ensure that the funds are not associated with unlawful acts. She warned that if all are not diligent, criminals may use unsuspecting people and entities to launder proceeds of crime. She said government is committed to doing all within its power to have the country removed from the FATF “grey list” and
EU “black list”. However, there is need for cooperation and assistance of financial institutions designated non- financial businesses and professions and individuals to ensure full compliance with AML/ CFT/ CFP rules and regulations.
These efforts will not only assist Botswana to be removed from these lists, but will also benefit the country by maintaining a high standard of financial prudence and an economy which genuine investors can have confidence to invest in.
Serame revealed that in view of a surge in the number of unsolicited financiers offering Botswana loans and grants, government wishes to offer guidance in assessing and or facilitating such.
According to Serame, requirements to be addressed to proposers of unsolicited financing proposals and projects for initial screening include full information on the identity of the proposer, including individuals and companies.
In the case of the latter, details of directors and beneficial owners must be identified, full and verifiable details must be provided of company registration or incorporation, including registration number, date and country. The information should also include address of a functioning website in the name of the proposer, details of social media profiles of the proposers, company directors, including LinkedIn, Facebook and others. Full information on any local representatives or associates in Botswana, full information on the source( s) of the proposed funding, motivation for the funder’s proposal, information on previous or similar projects or financing operations and details of traceable references must be provided in all cases. Serame said Botswana is a founding member of ESAAMLG, a regional body that subscribes to international standards of FATF to combat money laundering and financing of terrorism and proliferation.
One of the membership obligations to ESAAMLG is for Botswana to be peer- reviewed by other Member States and or by other international bodies like the World Bank, IMF or FATF. The most recent assessment for Botswana to gauge compliance with the FATF standards was conducted by ESAAMLG in 2016 and culminated with the publishing of the Mutual Evaluation Report ( MER) in 2017. She said following the discussion and adoption by the Task Force and approval of the MER by the Council of Ministers, the country was placed under enhanced follow up. This led to a one- year observation period in which the country was expected to improve its technical compliance that is, legislative framework by correcting the deficiencies identified in the MER. After the one year period, in October 2018 the Task Force made a determination that the country was not taking sufficient steps to implement the recommendations made by the assessors in the MER.
The Task Force recommended to council that Botswana be referred to International Cooperation Review Group ( ICRG), for monitoring and potential listing which is often referred to as the ‘ FATF grey listing”. Following the FATF grey listing, the EU placed Botswana on its list of high risk third countries, often referred to as the ‘ black list.’
Serame explained that in 2018 Botswana and FATF agreed to an Action Plan that had six items with several timelines. Firstly, among the six broad areas where the action plan was anchored is Risk and Coordination. Botswana was expected to develop and implement a risk- based comprehensive national AML/ CFT strategy, assess the risks associated with legal persons, legal arrangements, and NPOs, and operationalise the modernised company registry to obtain and maintain basic information and Ultimate Beneficial Ownership information.
Under the Supervision and Enforcement, the country had to enhance the capacity of the supervisory staff, including by developing risk- based supervision manuals and providing adequate training, implement risk- based AML/ CFT supervision and impose sanctions against violations.
Within the Analysis and Dissemination of Financial Intelligence, and Use of financial intelligence: Botswana needed to improve analysis and dissemination of financial intelligence by the Financial Intelligence Unit, including by operational zing online Suspicious Transactions Report filing platform and prioritizing high- risk predicate crimes, and enhance the use of financial intelligence among the relevant law enforcement agencies. Under the Terrorism Financing Investigation, Botswana was expected to develop and implement Counter Financing of Terrorism Strategy, operationalise the Counter- Terrorism Analysis and Fusion Centre, and ensure the Terrorism Financing investigation capacity of the law enforcement agencies. Within the United Nations Security Council Resolutions ( UNSCRS) on targeted financial sanctions on the terrorist property - Botswana needed to implement TF- related TFS measures without delay, and operational zing the National Counter- Terrorism Committee and the Counter- Terrorism Analysis and Fusion Centre.
Lastly, under the UNSCRs on targeted financial sanctions ( TFS) related to proliferation financing, the country was expected to implement Proliferation Financing ( PF)- related TFS measures without delay, and operationalise the Chemical, Biological, Nuclear and Radiological Weapons Management Authority and sensitise Financial Institutions and Designated Non- Financial Businesses and Professions to the PF obligations.
Serame said the PIC- FORCE, a forum of Permanent Secretaries chaired by the Permanent Secretary to the President, made the ICRG Action Plan a standing agenda item at their meetings, and a National Coordinating Office for coordination of AML/ CFT/ CFP matters has been established at the Ministry of Finance and Economic Development. Botswana makes regular progress updates to the FATF’s International Compliance Review Group ( ICRG) since being greylisted in 2018. She said at the June 2021 FATF Plenary meetings, the FATF made the initial determination that Botswana had substantially addressed the Action Plan and that this warranted an on- site assessment to verify on the ground that, implementation of Botswana’s AML/ CFT/ CFP reforms is in place and is being sustained. She f said necessary political commitments remain in place to sustain implementation in the future.