Money Laundering a Modern Bane

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By Catherine Sasman

WINDHOEK

Combating money laundering and terrorist financing is a moral imperative as it saves lives, said Acting Governor of the Bank of Namibia (BoN) Ipumbi Shiimi, at the opening of a three-day workshop where industry players would be brought on par with the Financial Intelligence Act passed last year.

Although Namibia is not a financial capital of the world, Eric Benjaminson of the US Embassy in Namibia – the sponsoring agent of the workshop – said financial institutions in the country should strengthen its intelligence capacity not to be vulnerable to financial crimes.

Money laundering is viewed as the practice of concealing the source of criminally derived property intended to be used for criminal purposes.

It is usually driven by criminal activities and conceals the true source, ownership or use of funds or property.

The International Monetary Fund estimates money laundering worldwide to be in the region of two to five percent of the world’s gross domestic product (GDP).

It is not limited to cash or currency, said the BoN, but can be linked to stocks and bonds, insurance policies and real estate.

Money laundering activities may be entered into to increase profits, appear legitimate, as a measure to evade tax or to avoid prosecution, or to avoid seizure of accumulated wealth, BoN said.

Terrorist financing, the BoN said, uses money-laundering practices to access funds.

Financing of terrorists may originate from legitimate or criminal sources, or both.

Such sources may be concealed.

Here, terrorism is defined using the UN Convention for the Suppression of Financing Terrorism, those activities that are meant to cause death or serious bodily harm to a civilian; or to any other person not actively taking part in hostilities in a situation of armed conflict; or to intimidate a population, or compel a government or international organisation to do or to abstain from doing something.

Terrorism, it said, is usually financed through State sponsorship, charitable organisations, or legitimate or illegitimate business activities.

According to one of three US experts on money laundering and terrorism financing flown in for the event, James Wright at the Office of Technical Assistance in the US Department of Treasury, the African Union estimated that in 2004 Africa lost US$148 billion (25 percent) of its GDP to corruption.

He said money laundering damages financial institutions that are critical to economic growth, reduces productivity, and distorts the economy’s trade and capital flows.

“It takes away funds that could be used to alleviate health and social problems,” said Wright.

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