Anti-Money Laundering (AML) and Combating the Financing of Terrorism were included in the SADC Protocol on Finance and Investment (FIP) as Annex 12 in August 2011.
The inclusion, five years after the FIP was signed, indicates that the SADC FIP is a living document and not cast in stone. Moreover, it is also a testimony that AML is receiving much more attention in the region than previously.
The implementation of other SADC FIP objectives, such as the SADC Integrated Regional Electronic Settlement System (SIRESS) (see our June 12, 2015 article in New Era) poses challenges to anti-money laundering measures and necessitates much closer cooperation and coordination between SADC member states.
SIRESS enables the electronic and hence speedy transfer of funds from one jurisdiction to another. This mode of transaction could be used for the transfer of illicit funds out of the SADC region to other countries, where the funds are withdrawn, or further transferred, so that it becomes challenging to trace them.
The AML is not a completely new topic to the FIP. Annex 8 that deals with the supervision of banks encouraged central banks to establish and maintain close relationships with international bodies, such as the Financial Action Task Force (FATF).
One of the indicators for monitoring the implementation of the FIP referred consequently to countries’ membership of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG).
The current membership of ESAAMLG comprised a total of 18 member states of the East African Community (EAC), the Common Market of Eastern and Southern Africa (COMESA) and SADC. The ESAAMLG is a member of FATF, although individual SADC member states with the exception of one are not members of FATF.
The ESAAMLG and SADC Secretariats have signed a Memorandum of Understanding (MoU) to formalise the relationship between the two organisations in respect of Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT).
The Article 10 of the Annex 12 provides for the establishment of a SADC AML committee that would play an important role among others reviewing the implementation of the annex, preparing annual reports to the Council of Ministers of Finance and Investment and enhancing cooperation with the ESAAMLG.
Furthermore, the Annex stipulates that member states should ensure the compliance of domestic regulations with the 40 FATF recommendations and the nine special recommendations on combating financing of terrorism.
Non-compliance with FATF standards can result in corresponding banks in other countries terminating business relationships with banks of a non-compliant country, since they cannot be assured of not being involved in money laundering.
Namibia has made great strides in adhering to these international standards. The Financial Intelligence Centre was established and charged with responsibility of ensuring implementation of and compliance with the standards across the financial sector, but other institutions, such as the Namibia Financial Institutions Supervisory Authority (Namfisa), are involved as well.
Namibia was the first African country to undertake a National Money Laundering Assessment in 2012 that resulted in the development and implementation of laws and policies in line with international benchmarks.
Since Namibia carried out all required actions resulting from the assessment, at the beginning of 2015 the country was removed from the international targeted review process by FATF. While the country is now compliant with the 2012 standards, Namibia needs to adapt to new standards that place more emphasis on the effective implementation of laws and policies.
The next National Risk Assessment of Namibia is due in the second half of 2016. The assessment starts with a desk review that will be followed up by a country visit in the first half of 2017 by an ESAAMLG team.
* Festus Nghifenwa is the SADC FIP Implementation Coordinator at the Ministry of Finance. Email: firstname.lastname@example.org. This is the last in a series of 12 articles on the SADC Finance and Investment Protocol. Previous articles and relevant documents are available on the web site – www.sadc-fip.gov.na.