Those who promote illegal financial schemes will, according to a newly tabled law, be liable to a fine of up to N$2 million, or 10 years in prison.
This is part of a new bill set to amend the Banking Institutions Act.
Amendments to the act are part of several bills parliamentarians are currently rushing to have signed into law to avoid the country being greylisted by the Financial Action Task Force (FATF).
The due date for strengthening Namibia’s laws against money laundering, financial crimes and terrorism is today.
Motivating the bill in parliament this week, the minister of finance and public enterprises, Iipumbu Shiimi, said the act needs to fit international supervisory standards set by the Bank of International Settlements and its Basel Core Principles for Banking Supervision, and the Financial Sector Assessment Programme of the International Monetary Fund (IMF) and FATF.
Shiimi said here was also a lack of adequate stabilisation powers for the Bank of Namibia (BoN) to deal with failing banking institutions.
This was, according to him, also reflected in assessments which further revealed that fit and proper assessments undertaken by the bank on directors and shareholders of banking institutions need to be enhanced.
Key is that there is no definition of ‘beneficial owner’ in relation to banking institutions as identified by the recent mutual evaluation conducted by the FATF/Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) in 2021, and if not addressed, this could have Namibia greylisted.
The proposed bill includes areas such as who cannot conduct an activity that resembles banking activities, shareholding of banking institutions, and restrictions on dividends to be paid out by commercial banks.
Shiimi said there was a need to clarify the provisions relating to illegal financial schemes.
The BoN has declared close to 10 financial schemes and ponzi schemes illegal since 2019.
The bank now not only wants to ban the promotion of such illegal schemes, but also to prohibit participation in them.
If found to have intentionally, knowingly or without having taken reasonable steps to ascertain the lawfulness or otherwise of any activity that is an illegal scheme, one could face jail time of 10 years or be fined up to N$2 million, or both.
The bill also calls for assessment that the real beneficial owners of commercial banks are fit and proper to hold such shareholding in banks.
Shiimi said he was shocked that all but two of the country’s eight banking institutions have a majority shareholding of foreign origin.
“In line with our national aspiration of local empowerment, a desirable blend of local and foreign-owned banking institutions is required to ensure socio-economic development of Namibia,” he said.
The new bill will overthrow the preposition of the Companies Act, and will now require the BoN’s approval on who becomes a shareholder in a commercial bank – especially when it involves more than 10% of ownership.
Other areas covered by the bill include limiting foreign parent company interference in the governance and management of local banking institutions.
“This interference has a negative impact on institutional independence, as well as on national economic development ..,” Shiimi said.
The bill further wants the BoN to suspend or remove directors or executive officers of banking institutions through an order, particularly where such directors or executive officers are suspected of conducting illegal activities.
This, according to Shiimi, was necessitated by the SME Bank saga.
The minister said the BoN has been receiving numerous complaints by members of the public regarding exorbitant banking fees.
The bill proposes that the minister be empowered to make regulations relating to banking fees and charges.
The full bill is available on the parliament’s website.
Email: lazarus@namibian.com.na
Twitter: @Lasarus_A
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