Funds, skills needed to fight money laundering

NAMIBIA’S ability to stem the growing tide of global financial crime, and more specifically money laundering, will be seriously compromised by the inadequate capacity and resources of the country’s law-enforcement agencies and financial regulators.

This shortcoming, in particular at the law enforcement level, emerged at a breakfast meeting organised by the Namibia Economic Society in conjunction with the Friedrich Ebert Foundation. The meeting was addressed by the Governor of the Bank of Namibia, Tom Alweendo, and the CEO of the Namibia Financial Institutions Supervisory Authority (Namfisa), Rainer Ritter.Alweendo noted that one of the main challenges in combating money laundering was inadequate capacity and resources.The challenge, according to him, was experienced more by the law-enforcement agencies.”In many developing countries law-enforcement agencies lack the necessary capacity to enforce laws against financial crimes,” he said.Alweendo also revealed that the Bank of Namibia had proposed that the authorities set up a competent special police force to investigate financial crimes, where capacity can be built, but unfortunately this was not accepted.”We believe this [special police] is the way to go.”But it is not only the Police who face the capacity challenge.According to a February 2007 report of the International Monetary Fund (IMF), Namibia’s two financial supervisory authorities – Namfisa and the Bank of Namibia – are also hamstrung by the same capacity problems.The IMF report, titled ‘Namibia: Financial System Stability Assessment’, points to a “significant shortfall in implementation by the regulatory agencies”, especially insurance companies, asset managers and pension funds supervised by Namfisa.In the banking industry, the report says, too much emphasis is placed on compliance with regulations and too little on the analysis of banks’ risk profiles.These shortcomings in the regulatory authorities, the report said, were “caused by a lack of education and skills among supervisors and, to a lesser extent, by the inadequacy of their own risk-based supervision methodologies”.Money laundering involves the moving of illegally acquired money through financial systems to make it appear that it had been acquired legally.The issue of money laundering has become particularly worrisome with globalisation and the liberalisation of financial markets characterised by a cross-border flow of large volumes of money or capital.This month the Financial Intelligence Bill was passed into law in Namibia.The law is aimed at combating money laundering.The Act provides for the establishment of a Financial Intelligence Centre, which will be hosted by the Bank of Namibia.The centre would require institutions such as commercial banks, trust funds and real estate companies to report any suspicious financial transaction conducted by their clients.”The reports received from accountable institutions will be used to compile intelligence information that will be disseminated to law-enforcement authorities for investigation and possible prosecution,” Alweendo said.The meeting was addressed by the Governor of the Bank of Namibia, Tom Alweendo, and the CEO of the Namibia Financial Institutions Supervisory Authority (Namfisa), Rainer Ritter.Alweendo noted that one of the main challenges in combating money laundering was inadequate capacity and resources.The challenge, according to him, was experienced more by the law-enforcement agencies.”In many developing countries law-enforcement agencies lack the necessary capacity to enforce laws against financial crimes,” he said.Alweendo also revealed that the Bank of Namibia had proposed that the authorities set up a competent special police force to investigate financial crimes, where capacity can be built, but unfortunately this was not accepted.”We believe this [special police] is the way to go.”But it is not only the Police who face the capacity challenge.According to a February 2007 report of the International Monetary Fund (IMF), Namibia’s two financial supervisory authorities – Namfisa and the Bank of Namibia – are also hamstrung by the same capacity problems.The IMF report, titled ‘Namibia: Financial System Stability Assessment’, points to a “significant shortfall in implementation by the regulatory agencies”, especially insurance companies, asset managers and pension funds supervised by Namfisa.In the banking industry, the report says, too much emphasis is placed on compliance with regulations and too little on the analysis of banks’ risk profiles.These shortcomings in the regulatory authorities, the report said, were “caused by a lack of education and skills among supervisors and, to a lesser extent, by the inadequacy of their own risk-based supervision methodologies”.Money laundering involves the moving of illegally acquired money through financial systems to make it appear that it had been acquired legally.The issue of money laundering has become particularly worrisome with globalisation and the liberalisation of financial markets characterised by a cross-border flow of large volumes of money or capital.This month the Financial Intelligence Bill was passed into law in Namibia.The law is aimed at combating money laundering.The Act provides for the establishment of a Financial Intelligence Centre, which will be hosted by the Bank of Namibia.The centre would require institutions such as commercial banks, trust funds and real estate companies to report any suspicious financial transaction conducted by their clients.”The reports received from accountable institutions will be used to compile intelligence information that will be disseminated to law-enforcement authorities for investigation and possible prosecution,” Alweendo said.