BOTSWANA: TREASURY DEPARTMENT REQUEST FOR

UNCLAS SECTION 01 OF 04 GABORONE 003517

E.O. 12958: N/A
TAGS: ETTC EFIN PREL PTER BC
SUBJECT: BOTSWANA: TREASURY DEPARTMENT REQUEST FOR
INFORMATION

REF: (A) STATE 185882, (B) GABORONE 3458, (C) GABORONE
3343, (D) GABORONE 3456, (E) MORROW-HOFFMAN EMAIL 10-30-
2001

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SUMMARY
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1. THE GOB HAS TAKEN SIGNIFICANT STEPS TO ENSURE THAT
ITS FINANCIAL SYSTEM DOES NOT BECOME A HAVEN FOR ILLEGAL
FINANCIAL TRANSACTIONS, WHETHER MONEY LAUNDERING, DRUG
TRAFFICKING, OR TERRORIST FINANCING. WHILE WE STILL HAVE
CONCERNS ABOUT VARYING LEVELS OF IMPLEMENTATION BY THE
DIFFERENT AGENCIES INVOLVED, WE ARE CONFIDENT THAT THE
MECHANISMS INVOLVED, BOTH THOSE PRE-EXISTING AND THOSE
UNDER DEVELOPMENT, WOULD BE SUFFICIENT TO IDENTIFY AND TO
BLOCK TERRORIST' ACCESS TO FINANCING IN BOTSWANA. END
SUMMARY.

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2. THE FOLLOWING CONSTITUTES OUR ANSWERS TO THE
QUESTIONS PRESENTED IN REF A. AS FURTHER INFORMATION
DEVELOPS, WE WILL UPDATE THESE ANSWERS. ALL DOCUMENTS
REFERRED TO BELOW ARE BEING SENT TO THE TREASURY
DEPARTMENT'S FOREIGN LAW UNI VIA EXPRESS COURIER (REF E).


A. THE GOB HAS BEEN PUBLICLY SUPPORTIVE OF GLOBAL
COALITION EFFORTS AGAINST TERRORISM, INCLUDING FINANCIAL
MEASURES. THE GOVERNOR OF THE BANK OF BOTSWANA (BOB)
BOTSWANA'S CENTRAL BANK, ISSUED A LETTER OCTOBER 8 TO ALL
BANKS IN BOTSWANA OUTLINING EXECUTIVE ORDER 13224,
DIRECTING THAT CONSTITUENT BANKS HALT PAYMENT AND/OR
TRANSFER OF FUNDS TO OR FOR ACCOUNTS OF ANY PERSON LISTED
BY SUCH ORDER. BOB DIRECTOR OF FINANCIAL INSTITUTIONS
MOSES PELAELO ISSUED A FOLLOW-UP LETTER OCTOBER 17 WHICH
PROVIDED THE UPDATED LIST OF ENTITIES AND INDIVIDUALS
WHOSE ASSETS ARE TO BE BLOCKED.
RELEVANT TEXT OF THE LETTERS FOLLOWS:

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OCTOBER 8, 2001

THIS IS TO REMIND YOU THAT BOTSWANA IS A SIGNATORY TO THE
INTERNATIONAL CONVENTION ON THE SUPPRESSION OF THE
FINANCING OF TERRORISM AND OTHER ANTI-TERRORISM
CONVENTIONS. THIS MEANS THAT ALL FINANCIAL INSTITUTIONS
IN BOTSWANA, PUBLIC AND PRIVATE, ARE EXPECTED TO TAKE ALL
MEASURES TO ENSURE THAT THEY DO NOT UNWITTINGLY PROVIDE
SAFE HARBOR FOR TERRORIST ACTIONS OR ACTIVITIES. THIS
FOLLOWS THE SIGNING OF THE EXECUTIVE ORDER BY THE
PRESIDENT OF THE UNITED STATES OF AMERICA, WHICH PROVIDES
FOR BLOCKING PROPERTY AND INTERESTS IN PROPERTY OF
PERSONS WHO HAVE COMMITTED OR POSE A SIGNIFICANT RISK OF
COMMITTING ACTS OF TERRORISM.

PLEASE FIND ATTACHED HEREWITH THE PAPER ON THE US
EXECUTIVE ORDER AS WELL AS AN ANNEX DETAILING PERSONS
WHOSE INTERESTS HAVE BEEN SPECIFICALLY DESIGNATED, THUS
FAR, BY THE US GOVERNMENT. ACCORDINGLY, WITH IMMEDIATE
EFFECT, NO PAYMENT AND/OR TRANSFER OF FUNDS TO, OR FOR
ACCOUNTS OF ANY PERSONS LISTED THEREIN ARE PERMITTED,
WITHOUT THE PRIOR WRITTEN APPROVAL BY THE GOVERNMENT OF
BOTSWANA.

++++++++++

OCTOBER 17, 2001

INTERNATIONAL CONVENTION FOR THE SUPPRESSION OF THE
FINANCING OF TERRORISM

FURTHER TO THE GOVERNOR'S LETTER OF OCTOBER 8, 2001 ON
THE ABOVE, PLEASE FIND HEREWITH AN UPDATED LIST OF
ENTITIES AND INDIVIDUALS WHOSE FINANCIAL ASSETS ARE TO BE
BLOCKED.

ACCORDINGLY, WITH IMMEDIATE EFFECT, NO PAYMENT AND/OR
TRANSFER OF FUNDS TO OR FOR ACCOUNT OF ANY PERSON LISTED
IN ANNEXURE I SHALL BE PERMITTED, WITHOUT THE PRIOR
APPROVAL BY THE GOVERNMENT OF BOTSWANA.

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B. BOB ADVISOR (AND FORMER FEDERAL RESERVE BANK OF
CHICAGO EMPLOYEE) JOHN MONTGOMERY EXPLAINED TO US ON
OCTOBER 29 THAT THE LETTERS QUOTED ABOVE DO NOT RISE TO
THE LEVEL OF A FREEZE ORDER. A FREEZE ORDER WOULD NEED
TO COME FROM THE ATTORNEY GENERAL'S OFFICE OR FROM A
COURT OF COMPETENT JURISDICTION, DIRECTING ACTION AGAINST
A SPECIFIC ACCOUNT, ENTITY, PERSON, OR INSTITUTION, HE
SAID. OUR PRESUMPTION IS THAT, SHOULD A FINANCIAL
INSTITUTION REPORT TO THE BOB THE EXISTENCE OF SPECIFIC
ACCOUNTS, ATTORNEY GENERAL ACTION WOULD FOLLOW, BUT THAT
PRESUMPTION HAS NOT BEEN TESTED.


C. THE GOB HAS THUS FAR BLOCKED NO ASSETS UNDER THIS
ORDER, NOR HAS ANY BANK THUS FAR REPORTED THE EXISTENCE
OF ACCOUNTS BEING HELD BY ANY OF THE ENTITIES MENTIONED
IN THE ANNEX AND UPDATE TO E.O. 13324.


D.

(I) WE ARE STILL TRYING TO ASCERTAIN WHETHER A UN
SECURITY COUNCIL RESOLUTION, SUCH AS UNSCR 1267 OR 1373,
IS REQUIRED BEFORE ASSETS MAY BE FROZEN UNDER BOTSWANA
LAW. THE ABOVE OCTOBER 8 AND OCTOBER 17 LETTERS NOTE
THAT BOTSWANA IS A SIGNATORY TO THE INTERNATIONAL
CONVENTION ON THE SUPPRESSION OF THE FINANCING OF
TERRORISM AND OTHER ANTI-TERRORISM CONVENTIONS. BOB
ISSUED THE LETTERS DIRECTING NO FURTHER TRANSFERS OR
PAYMENTS TO THE LISTED PERSONS OR ENTITIES UNDER THEIR
OBLIGATIONS PURSUANT TO THAT AUTHORITY. FURTHER LEGAL
ACTION AGAINST THE ACCOUNTS OR THEIR HOLDERS WOULD BE THE
PURVIEW OF THE ATTORNEY GENERAL'S OFFICE.

(II) WE ARE STILL TRYING TO ASCERTAIN HOW UN SECURITY
COUNCIL 1373 WILL BE IMPLEMENTED IN THE ABSENCE OF SUCH
LISTS. MFA PERMANENT SECRETARY MPOFU IS CHAIRING AN AD
HOC INTER-AGENCY COMMITTEE TASKED WITH IMPLEMENTING UNSCR

1373. (REF D). THE BANK OF BOTSWANA HAS ALREADY
DIRECTED BOTSWANA BANKS NOT TO ACT ON ANY ACCOUNTS HELD
BY PERSONS MENTIONED IN THE ANNEX TO E.O. 13324 AND ITS
UPDATE THROUGH THE LETTERS ABOVE.

(III) WE ARE STILL TRYING TO ASCERTAIN WHETHER A LIST
ADOPTED BY A MULTILATERAL BODY OTHER THAN THE UN SECURITY
COUNCIL IS REQUIRED FOR SUCH FREEZING. AS BOB ADVISOR
MONTGOMERY INDICATED, FREEZING ACCOUNTS IN BOTSWANA CAN
ONLY OCCUR PURSUANT TO ATTORNEY GENERAL ACTION OR BY A
COURT OF COMPETENT AUTHORITY, AND CAN ONLY BE DIRECTED AT
A SPECIFIC ACCOUNT. (NOTE: BOTSWANA IS A MEMBER OF THE
FINANCIAL AFFAIRS TASK FORCE (FATF) OF COMMONWEALTH
COUNTRIES, BUT IT IS UNCLEAR WHETHER THE FATF WOULD HAVE
DIFFERENT AUTHORITY OR IMPOSE DIFFERENT REQUIREMENTS THAN
THOSE BY THE UN SECURITY COUNCIL. END NOTE.)

(IV) THE BANKING ACT OF 1995 DOES NOT EXPRESSLY MENTION
THE AUTHORITY TO FREEZE TERRORIST-RELATED OR TALIBAN-
RELATED ASSETS. PURSUANT TO ITS OBLIGATIONS UNDER THE
INTERNATIONAL CONVENTION ON THE SUPPRESSION OF THE
FINANCING OF TERRORISM AND OTHER ANTI-TERRORISM
CONVENTIONS, THE BOB ISSUED THE LETTERS ABOVE DIRECTING
BANKS TO CEASE ACTION ON ANY ACCOUNTS HELD BY PERSONS
MENTIONED IN THE ANNEX AND UPDATE TO E.O. 13324.


E. WE HAVE BEEN TOLD BY THE MFA THAT IMPLEMENTING
LEGISLATION IS REQUIRED TO INCORPORATE MANDATORY UN
SECURITY COUNCIL RESOLUTIONS INTO BOTSWANA LAW.
INTERNATIONAL TREATIES ARE NOT AUTOMATICALLY INCORPORATED
INTO BOTSWANA LAW; THEY ARE DEEMED RATIFIED ONLY UPON
SIGNATURE BY BOTSWANA'S PRESIDENT. AFTER RATIFICATION,
THEN THE MINISTRY WITH LOCAL JURISDICTION OVER THE TREATY
IN QUESTION, IN COORDINATION WITH THE ATTORNEY GENERAL'S
OFFICE, WILL IMPLEMENT CHANGES TO BOTSWANA LAW TO
ACCOMMODATE THE OBLIGATIONS STEMMING FROM THE TREATY IN
QUESTION.


F. AS BOB'S MONTGOMERY INDICATED, FREEZING ACCOUNTS IN
BOTSWANA CAN ONLY OCCUR PURSUANT TO ATTORNEY GENERAL
ACTION OR BY A COURT OF COMPETENT AUTHORITY, AND CAN ONLY
BE DIRECTED AT A SPECIFIC ACCOUNT. PURSUANT TO ITS
OBLIGATIONS UNDER THE INTERNATIONAL CONVENTION ON THE
SUPPRESSION OF THE FINANCING OF TERRORISM AND OTHER ANTI-
TERRORISM CONVENTIONS, THE BOB ISSUED THE LETTERS ABOVE
DIRECTING BANKS TO CEASE ACTION ON ANY ACCOUNTS HELD BY
PERSONS MENTIONED IN THE ANNEX AND UPDATE TO E.O. 13324.


G. IF THE USG WERE TO PROVIDE SPECIFIC ACCOUNT/ACCOUNT
HOLDER/FINANCIAL INSTITUTION INFORMATION, IT APPEARS
POSSIBLE THAT THE AG'S OFFICE COULD ISSUE A FREEZE ORDER.
ABSENT THAT, THE GOB COULD BLOCK ALL TRANSACTIONS TO ANY
CATEGORY OF ACCOUNTS IMMEDIATELY, AND SUBSEQUENTLY MOVE
TO FREEZE INDIVIDUAL ACCOUNTS ONCE IDENTIFIED.


H. BOB FINANCIAL INSTITUTIONS DEPUTY DIRECTOR NCUBE ON
OCTOBER 29 GAVE US THREE DOCUMENTS WHICH THE GOB CREATED
PRIOR TO SEPTEMBER 11 TO AUGMENT ITS EFFORTS IN TRACKING
ILLEGAL FINANCIAL ACTIVITY: "DIRECTIVE BOB 3/2001:
GUIDELINES FOR AN ANTI-MONEY LAUNDERING PROGRAM"; AN
"EXAMPLES OF SUSPICIOUS ACTIVITY" HANDOUT; AND A
"SUSPICIOUS ACTIVITY REPORT" FORM FOR NOTICE AND COMMENT
TO BANKS IN BOTSWANA. THESE DOCUMENTS, CURRENTLY BEING
CURCULATED TO BANKS IN BOTSWANA FOR COMMENT, WILL BE
INCORPORATED AS DIRECTIVES INTO REQUIREMENTS FOR BANKS IN
BOTSWANA TO REPORT MONEY-LAUNDERING ACTIVITIES, AS PER
SECTION 21(4) OF THE BANKING ACT OF 1995. BOB'S TARGET
DATE FOR IMPLEMENTING THESE DIRECTIVES IS JANUARY 2002.

(I) WE BELIEVE THE ACTIONS TAKEN BY THE BOB OCTOBER 8
AND OCTOBER 17 CONSTITUTE THEIR RESPONSE TO FINANCIAL
REQUIREMENTS OF THE RESOLUTIONS.

(II) BOB OFFICIALS REPORT NO TERRORIST ASSETS HAVE BEEN
LOCATED, AND THEREFORE NO FINANCING HAS BEEN FROZEN,
UNDER UNSCR 1267, 1333, OR 1373.


I. PLEASE SEE ANSWER TO H. ABOVE.


J. ON NUMEROUS OCCASIONS, THE GOB HAS VOICED ITS
"UNQUALIFIED SUPPORT" IN OUR EFFORTS TO COMBAT TERRORISM.
(REF D). PRESIDENT MOGAE GAVE SPECIFIC EXAMPLES OF HOW
BOTSWANA'S LAWS ARE ALREADY DESIGNED TO THWART ILLEGAL
FINANCIAL ACTIVITY, INCLUDING TERRORIST FINANCING (REF
C). FOREIGN MINISTER MERAFHE HAS ASSURED US THAT
BOTSWANA WILL BE FULLY COMPLIANT WITH THE REQUIREMENTS OF
UNSCR 1373 (REF C). WE RECENTLY SENT A DIPLOMATIC NOTE
TO THE MFA NOTING THAT WE WOULD WELCOME ANY INFORMATION
IT CAN PROVIDE PRIOR TO THE REQUIRED 90-DAY REPORT TO THE
UN.


K. THE OCTOBER 17 LETTER QUOTED IN PARA (A) INCLUDED THE
COMPLETE USG LISTS OF 39 NAMES.


L. THE BOB OWES NO DUTY OF CONFIDENTIALITY TO ACCOUNT
HOLDERS. SECTION 43(1) OF THE BANKING ACT OF 1995
IMPOSES A DUTY OF CONFIDENTIALITY ON THE BANKS TO THEIR
ACCOUNT HOLDERS IN BOTSWANA, SUBJECT TO CERTAIN
EXCEPTIONS. BANK OF BOTSWANA ACT SECTION 59, HOWEVER,
NOTES THAT "FOR THE PURPOSES OF THE ADMINISTRATION OF
THIS ACT AND IN THE PROPER PERFORMANCE OF ITS FUNCTIONS
UNDER THIS ACT, THE BANK MAY CALL FOR SUCH INFORMATION AS
IT MAY REQUIRE FROM ANY PERSON." SECTION 60 STATES THAT
"THE BANK (OF BOTSWANA) SHALL NOT BE SUBJECT TO ANY OF
THE PROVISIONS APPLICABLE TO FINANCIAL INSTITUTIONS UNDER
THE BANKING ACT.


M. COPIES OF ALL AVAILABLE LAWS AND THE LETTERS
MENTIONED ABOVE ARE BEING SENT VIA EXPRESS COURIER TO THE
TREASURY DEPARTMENT'S FOREIGN LAW UNIT. THE PACKAGE WILL
INCLUDE:

-- BANKING ACT OF 1995;

-- BANK OF BOTSWANA ACT OF 1996, INCLUDING ITS 1999
AMENDMENT;

-- BOTSWANA STOCK EXCHANGE ACT OF 1994;

-- COLLECTIVE INVESTMENT UNDERTAKINGS REGULATIONS,
1998;

-- FINANCE AND AUDIT ACT OF 1994, INCLUDING ITS 1997
AMENDMENT;

-- LETTER FROM BANK OF BOTSWANA GOVERNOR LINAH K.
MOHOHLO OF OCTOBER 8, 2001 TO BANKS AND BUREAUX
DE CHANGES ON RESPONSIBILITIES UNDER THE
INTERNATIONAL CONVENTION ON THE SUPPRESSION OF
THE FINANCING OF TERRORISM; AND

-- LETTER FROM BANK OF BOTSWANA FINANCIAL INSTITUTIONS
DIRECTOR MOSES PELAELO OF OCTOBER 17, 2001 TO BANKS
AND BUREAUX DE CHANGES ON UPDATED LIST OF ENTITIES
AND INDIVIDUALS WHOSE FINANCIAL ASSETS ARE TO BE
BLOCKED.


N. AGENCIES RESPONSIBLE FOR CARRYING OUT UN SECURITY
COUNCIL RESOLUTIONS 1267, 1333, AND 1373 INCLUDE THE
FOLLOWING:

MINISTRY OF FOREIGN AFFAIRS - OVERALL COORDINATION OF
RESPONSIBILITIES UNDER THE AD HOC COMMITTEE.

CONTACT:

MR. ERNEST MPOFU
PERMANENT SECRETARY
MINISTRY OF FOREIGN AFFAIRS
PRIVATE BAG 00368
GABORONE
BOTSWANA
TEL: +267 360-0712
FAX: +267 313-366

BANK OF BOTSWANA - MONITORING OF BANKS FOR SUSPICIOUS
FINANCIAL TRANSACTIONS, VIA MONEY LAUNDERING, DRUG MONEY,
OR TERRORIST FINANCING.

CONTACT:

MR. MOSES PELAELO
DIRECTOR OF FINANCIAL INSTITUTIONS
BANK OF BOTSWANA
PRIVATE BAG 00154
GABORONE
BOTSWANA
TEL: +267 360-6368
FAX: +267 313-862

DIRECTORATE ON CORRUPTION AND ECONOMIC CRIME (DCEC) -
CHARGED WITH THE INVESTIGATION OF ALL FINANCIAL CRIMES IN
BOTSWANA. UPON CONCLUDING THAT A SUSPICIOUS TRANSACTION
HAS BEEN CONDUCTED IN BOTSWANA, THE BANK OF BOTSWANA
IMMEDIATELY TURNS OVER ALL INFORMATION TO THE DCEC TO
CONDUCT THE INVESTIGATION.

CONTACT:

MR. TYMON KATHOLO
DIRECTOR
DIRECTORATE ON CORRUPTION AND ECONOMIC CRIME (DCEC)
PRIVATE BAG 00344
GABORONE
BOTSWANA
TEL: +267 314-002
FAX: +267 313-508

ATTORNEY GENERAL'S OFFICE - HANDLES COORDINATION OF LEGAL
ISSUES BETWEEN OBLIGATIONS UNDER INTERNATIONAL LAW AND
COMPLIANCE WITH BOTSWANA LAW.

CONTACT: TBD.


O. BOTSWANA IS A SIGNATORY AND HAS RATIFIED ALL TWELVE
OF THE COUNTER-TERRORISM CONVENTIONS. CONCERNING
DOMESTIC LAW, AS INDICATED ABOVE, THE BOB HAS CREATED
THREE DRAFT REGULATIONS TO AUGMENT CURRENT REGULATIONS ON
MONEY-LAUNDERING. THE REGULATIONS, "DIRECTIVE BOB
3/2001: GUIDELINES FOR AN ANTI-MONEY LAUNDERING
PROGRAMME" (SIC); AN "EXAMPLES OF SUSPICIOUS ACTIVITY"
HANDOUT; AND A "SUSPICIOUS ACTIVITY REPORT" FORM, HAVE
BEEN MADE AVAILABLE TO BANKS IN BOTSWANA FOR COMMENT.
UPON CONCLUSION OF THE PERIOD FOR COMMENT, THE
REGULATIONS WILL BE FINALIZED AND ISSUED AS FURTHER
DIRECTIVES TO SUPPLEMENT THE BANKING ACT SECTION 21(4)'S
REQUIREMENT THAT "A BANK SHALL NOTIFY THE CENTRAL BANK OF
ANY TRANSACTION BY ANY OF ITS CUSTOMERS WHICH IT SUSPECTS
TO BE MONEY LAUNDERING."


3. COMMENT: A NUMBER OF THESE ISSUES WILL REQUIRE
FURTHER INFORMATION FROM THE ATTORNEY GENERAL'S OFFICE
AND/OR THE MFA-CHAIRED INTER-AGENCY AD HOC COMMITTEE.
MUCH OF THIS IS NEW GROUND FOR BOTSWANA'S FINANCIAL AND
REGULATORY INSTITUTIONS. HOWEVER, WE ARE CONFIDENT OF
THE GOB'S WILL TO COOPERATE FULLY ON THESE ISSUES. WE
WILL CONTINUE TO RESEARCH THESE QUESTIONS, AND WILL
PROVIDE PERIODIC UPDATES.

LANGE