Botswana’s vulnerability to terrorism financing

The devastating effects of terrorism and terrorist financing have provoked strong interest among the authorities and national governments across Africa on countering the threat, based on a clear understanding of the modus operandi of terrorist groups and their financiers. In the Southern African region, the threat of terrorism and its associated financing continues to be of strategic importance to tackle, while support related counter-measures and efforts of national forces and the international community is needed. It is very important to know that terrorist organisations need money to sustain their network and their operations affecting societies through violence and coercion.

The financing of terrorism takes many forms and exploits different vulnerabilities of the financial system in many African countries. It is a complex crime and normally transitional by nature. Some countries such as Botswana have never suffered any terrorist attack but they are vulnerable to infiltration by a host of terrorist groups and their sympathisers who in most cases manipulate the often weak anti- money laundering regimes to channel finance to terrorist groups such as al-Qaeda, ISIS and others that are operating across the continent. On February 13, 2020, Botswana, along with 23 other jurisdictions, was included on an updated list of high-risk third jurisdictions with strategic deficiencies in their anti-money laundering/counter financing of terrorism (AML/CFT) regimes published by the European Commission of the European Union.

In addition to the classification of Botswana as a high-risk third country, the EU grey-listed Botswana with effect from October 2020. Botswana was only removed from the grey listing in 2021 after the intergovernmental body concerned with money laundering, terrorism financing and other illicit money flows cited improvements in Botswana’s handling of its anti-money laundering (AML) and counter-terrorist financing (CTF) regimes. Even though Botswana was removed from the grey-listing, that is a very clear testimony of the vulnerability of Botswana to infiltration by terrorist groups and use the country as a hub of terrorism financing. There are some loopholes which need to be closed as a way of countering money laundering and possible terrorism financing in Botswana. For example, Botswana has many foreign owned businesses that are involved in selling imported second hand cars from Asia who usually over-emphasise on the use of cash instead of electronic money transfer when purchasing cars from their businesses.

The use of cash-based transactions in such kind of businesses, which involve large amounts of money, is very risky as the phenomenon open avenues for possible money laundering and the laundered money can end up being used to fund terrorists activities elsewhere.

Majority of the expatriate community who own these car dealerships come from West Africa where Boko Haram and ISIS are actively operating, East Africa where there is a heavy presence of alShabaab, Asia and the Middle where many violent extremist groups are active. It would be very naïve of any security analyst not to rule out any possibility of some terrorist sleeper cells using such kind of businesses to raise funds to finance terrorism in other parts of Africa, which has caused political instability of magnanimous proportions. This is not to say that Botswana should profile or treat those involved in car dealership businesses negatively but it is important for anti-money laundering regime to be more firm and limit the large scale cash based transactions that involve such kind of business. This will be purely based on nothing but national security of Botswana and contributing to global efforts in counter-terrorism and terrorism financing. Batswana must also remember that in 2009 there were reports of ‘scores of suspected al-Qaeda terrorists’ that were detained by security agents, some awaiting deportation while others were under investigation for money laundering and attempting to establish various forms of terrorist structures in Botswana. A number of suspects were foreigners involved in second-hand car dealerships, an area already identified by various security analysts as a key money-laundering vulnerability.

Furthermore, a study conducted by the Institute of Security Studies some few years back shows that there were some al-Qaeda agents in Botswana who were believed to have used the country’s boom in imported second hand cars as a cover for their activities and some investigations have linked company directorships to the Horn of Africa and Nigeria, where terrorism-related activities are understood to be taking place and Botswana is believed to be a soft target because of its relatively weak finance and company regulatory regimes.

Vulnerability might also be related to the rise in transnational crime, which has caused some security problems in Botswana. Some organised criminal organisations mostly involved in poaching are suspected to have some links with some terrorist organisations especially in East Africa and some parts of the Middle East. Botswana’s long porous borders have many ungoverned spaces coupled with weak border security management.

These security deficiencies make it easier for organised criminals some with links to terrorist organisations to sneak into Botswana and poach rhino horns and elephant tusks, which are then sold in lucrative markets overseas and some of the proceeds are used to finance terrorism in other African regions. Transnational crime is a serious national security threat to Botswana, which also exposes Botswana’s vulnerability to terrorism financing.

Botswana should work very hard to close all the loopholes that may provide a window of opportunity for terrorist organisations to use the country as a hub for terrorism financing. The grey listing by the EU should serve as a clear lesson on the possible repercussions of not having strong counterterrorism financing regimes especially when it comes to anti-money laundering.

In general, Botswana must understand that addressing terrorism and terrorism financing requires a number of strict measures, including reinforcing regulations and their implementation, developing technical and operational skills to detect, investigate and prosecute these crimes, enhancing international cooperation on the matter, in line with international standards. Without taking these measures seriously Botswana might continue to be vulnerable thus attracting possible blacklisting. Being on the EU AML/CFT list of blacklisted jurisdictions has several implications for Botswana. Firstly, EU obliged entities, such as financial institutions and certain professionals, will be required to conduct enhanced customer due diligence, on transactions involving Botswana clients and those involving Botswana intermediaries.

This enhanced due diligence entails enhanced examination of the background and purpose of the transactions connected to Botswana and increasing the degree and nature of the monitoring of business relationships where the parties involved are linked to Botswana, to determine whether the transaction or business relationship is suspicious. Secondly, the blacklisting will have attendant implications for the ease of doing business - potentially constraining the Botswana Investment and Trade Centre’s efforts of attracting foreign business into Botswana, cross-border transactions and financial transactions flows. With all transactions linked to Botswana requiring extra scrutiny, the listing will have implications for the country’s foreign investment environment. Cross-border transactions will also be impacted, with foreign businesses needing to consider the risks of working with Botswana banks and other businesses.