Effective laws required to fight financial crime

AFRICAN governments have to spearhead the combating of money laundering and other organised economic crimes which pose a risk to developing economies.

This was the message during the Bank of Namibia’s (BoN) annual address delivered by Governor Tom Alweendo at a gala dinner in Windhoek on Wednesday. Alweendo said illicit financial dealings were no longer confined to the developed world but had also found their way into the poorer parts of the world, including southern Africa.”We are also aware of situations where governments in developing countries, desperate to attract foreign direct investments and foreign participation in their economies, have been duped into what appears to be irresistible investments, expect that the investments turned out to be highly sophisticated financial scams, where the aim was to launder money,” he said.According to statistics, the extent to which money is laundered globally is estimated to be between US$500 billion and US$1 trillion.Such situations, said Alweendo, could be attributed to globalisation of economic activities which, in spite of having ushered in positive economic advancements, had also introduced unintended risks.Alweendo said the challenge for African governments was to build up accurate statistics on money laundering and policies which are vital when putting in place mechanisms against illicit financial dealings.”Money may move from countries with good economic policies and higher rates of return to countries with poorer policies and lower rates of return …This implies, therefore, that because of money laundering the world capital could be invested less optimally than would be the case in the absence of money-laundering activities.”This kind of scenario and due to the wrong signals which could emerge from financial markets, added Alweendo, would sow confusion as to what policies governments should enforce, as effective laws are required.In Namibia’s case, the National Assembly has debated and passed the Financial Intelligence Bill – which has since been passed on to the National Council.A Financial Intelligence Centre had been established and will be hosted by BoN.Said Alweendo: “The combating of money laundering requires the drafting of appropriate laws and the creation of national and international capacity to implement such laws.”Last month the central bank, in conjunction with the US Embassy, held a one-week workshop to sensitise stakeholders on their roles in combating money laundering and the reporting of suspicious financial transactions.Alweendo said illicit financial dealings were no longer confined to the developed world but had also found their way into the poorer parts of the world, including southern Africa.”We are also aware of situations where governments in developing countries, desperate to attract foreign direct investments and foreign participation in their economies, have been duped into what appears to be irresistible investments, expect that the investments turned out to be highly sophisticated financial scams, where the aim was to launder money,” he said.According to statistics, the extent to which money is laundered globally is estimated to be between US$500 billion and US$1 trillion.Such situations, said Alweendo, could be attributed to globalisation of economic activities which, in spite of having ushered in positive economic advancements, had also introduced unintended risks.Alweendo said the challenge for African governments was to build up accurate statistics on money laundering and policies which are vital when putting in place mechanisms against illicit financial dealings.”Money may move from countries with good economic policies and higher rates of return to countries with poorer policies and lower rates of return …This implies, therefore, that because of money laundering the world capital could be invested less optimally than would be the case in the absence of money-laundering activities.”This kind of scenario and due to the wrong signals which could emerge from financial markets, added Alweendo, would sow confusion as to what policies governments should enforce, as effective laws are required.In Namibia’s case, the National Assembly has debated and passed the Financial Intelligence Bill – which has since been passed on to the National Council.A Financial Intelligence Centre had been established and will be hosted by BoN.Said Alweendo: “The combating of money laundering requires the drafting of appropriate laws and the creation of national and international capacity to implement such laws.”Last month the central bank, in conjunction with the US Embassy, held a one-week workshop to sensitise stakeholders on their roles in combating money laundering and the reporting of suspicious financial transactions.