NAMIBIA: INCSR PART II, MONEY LAUNDERING AND FINANCIAL

UNCLAS WINDHOEK 000367

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN KCRM KTFN SNAR WA
SUBJECT: NAMIBIA: INCSR PART II, MONEY LAUNDERING AND FINANCIAL
CRIMES

REF: STATE 103815

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NAMIBIA
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1. (SBU) Although Namibia has one of the most highly developed
financial systems in Africa, it is not considered a regional
financial center. In addition to the Bank of Namibia (the central
bank),Namibia has four commercial banks.


2. (SBU) The major sources of potential money laundering in Namibia
are related to both regional and domestic criminal activities. The
regional activities include falsification or misuse of identity
documents, customs violations, trafficking in illegal drugs, and
stolen vehicles, mostly from South Africa. Organized crime groups
involved in smuggling activities generally use Namibia as a transit
point -particularly for goods destined for Angola. Namibia does not
appear to have a significant informal domestic market for smuggled
goods. Domestically, real estate as well as minerals and gems are
reportedly used as a vehicle for money laundering. Namibian
authorities believe that the proceeds of these activities are
laundered through Namibian financial institutions, but such money
laundering takes place on a small scale.


3. (SBU) Financial institutions are generally quick to react when
they suspect money laundering. There is little evidence of
significant laundering/terrorist financing within the banking
system, within an offshore financial center or free trade zone, or
in the non-bank financial system (e.g. exchange houses) or via
alternative remittance systems, such as hawala, hundi, or other
systems. There is also little evidence to suggest that financial
institutions engage in currency transactions involving international
narcotics trafficking proceeds that include significant amounts of
U.S. currency or currency derived from illegal drug sales in the
United States or that otherwise significantly affect the United
States. There are indications but no hard evidence that trade-based
money laundering occurs.

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OFFSHORE FINANCIAL CENTERS
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4. (SBU) Namibia is not considered an offshore financial center.
Since it has no offshore sector the government has no separate
agency to regulate offshore activities - such as the licensing of
offshore banks and businesses. While gambling and casinos are legal
within Namibia, offshore casinos are prohibited under Namibian law.
There is one internet gaming site, although online gaming sites are
not regulated under Namibian law.

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FREE TRADE ZONES
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5. (SBU) The Namibian government has set up Export Processing Zones
(EPZ) which act in many ways as free trade zones, but there are
differences. The Ministry of Trade and Industry's Offshore
Development Company (ODC) is responsible for the monitoring,
regulation and promotion of EPZs. According to ODC, "Namibia's EPZ
regime is unique in that it is not location-bound. EPZ registered
companies are free to locate themselves anywhere in the country and
are not restricted to specific geographical zones. Specially
designated industrial zones and parks have been established at
Walvis Bay, Oshikango and Katima Mulilo." According to the Ministry
of Trade and Industry, "EPZ enterprises operate outside the normal
foreign exchange regime in Namibia. . .[via]" two types of banking
accounts [that] have been tailor-made to the needs of enterprises
operating in the Namibia EPZ." There is no indication that EPZs are
being used in trade-based money laundering schemes or by the
financiers of terrorism.

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LEGAL FOUNDATION OF AML REGIME
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6. (SBU) In 2004, Namibia criminalized money laundering with the
passage of the Prevention of Organized Crime Act (POCA). Money
laundering under POCA applies to all serious crimes and not just
drug trafficking. In July 2007 the Financial Intelligence Act
(FIA) was passed. The FIA will serve as the cornerstone in
Namibia's anti-money laundering and counter terrorist financing
(AML/CTF) regime in concert with the POCA and the 2003
Anti-Corruption Act, as well as the Drug Control Bill and the
Anti-Terrorism Bill, both of which still need to be enacted. All
these acts will need to be harmonized, especially the POCA and the
FIA which overlap considerably, including the definition of money
laundering and requiring the reporting of suspicious transactions.
Implementation of POCA has been delayed in order to pass amendments
to the act to harmonize it with FIA. POCA will be implemented once
the recently proposed amendments to it are enacted and its
regulations are issued.



7. (SBU) Besides suspicious transaction reporting, the FIA has
additional reporting requirements, such as large cash transactions,
electronic funds transfers, and cross-border conveyances of
currency; and it strengthens the Government's ability to investigate
and prosecute money laundering crimes. The 2003 Anti-Corruption Act
provides for the establishment of an Anti-Corruption Commission. The
Anti-Corruption Commission was inaugurated in 2006. The Commission
appoints investigators, who have full and wide powers to investigate
allegations of corruption.


8. (SBU) Namibia has financial secrecy laws. But such laws do not
prevent disclosure of client and ownership information to bank
supervisors and law enforcement authorities.

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FINANCIAL SECTOR
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9. (SBU) The Bank of Namibia (BoN) supervises and examines the four
commercial banks operating in Namibia. The Namibian Financial
Institutions Supervisory Authority (NAMFISA) supervises and examines
non-banking financial institutions, such as securities firms and
insurance companies. The BoN has established the Financial
Intelligence Centre (FIC) to carry out the Bank's AML duties and
responsibilities. The FIC is located within the BoN. The BoN has
appointed the FIC's Director, and the FIC appears to be adequately
staffed with two deputy directors and five analysts. It has some
operational and budgetary independence, but the BoN should grant the
FIC more independence through a delegation order. The FIC receives
its budget from the BoN.


10. (SBU) Once in effect FIA will require both bank and non-bank
financial institutions to identify customers and to report
suspicious transactions to the Central Bank and provide relevant
documents and other information to government authorities for use in
criminal investigations. FIA also requires such institutions to
report transactions above threshold limits, namely cash
transactions, electronic funds transfers, and cross border
conveyances of cash. The threshold limits are under study and have
not yet been established by regulation. There is no threshold
amount for suspicious transactions.


11. (SBU) Once FIA is implemented, banks and other financial
institutions will be required to maintain records for five years.
This is intended to allow FIC to reconstruct significant
transactions through financial institutions in order to be able to
respond quickly to information requests from appropriate government
authorities in narcotics-related or other money laundering or
terrorist finance cases.


12. (SBU) Under FIA, AML/CTF controls will be applied to non-bank
financial institutions (NBFIs) and designated non-financial
businesses and professions (DNFBPs),such as exchange houses, stock
brokerages, cash couriers, casinos, dealers in jewels and precious
metals, insurance companies, pawn shops, realtors, high-worth
dealers in art and vehicles, and to intermediaries, such as lawyers,
accountants, notaries, or broker/dealers.


13. (SBU) Reporting individuals (bankers and others) are protected
by law with respect to their cooperation with law enforcement
entities.

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FINANCIAL INTELLIGENCE UNIT (FIU)/INVESTIGATIONS
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14. (SBU) The FIC is the administrative body that has regulatory
and analytic (but not investigative) duties and responsibilities
under the FIA. Under FIA, the FIC will have access to government and
financial institution records and databases. The FIC has not yet
formally entered into MOUs or other mechanisms for domestic and
international information sharing, but it has authority to do so
under the FIA.


15. (SBU) Since the FIA is not yet in effect, no suspicious
transaction reports (STRs) were received in 2008 under the new
formal AML regime. However, over the years, a handful of STRs have
routinely been received by the Bank under directives and the like
exercised under its supervisory powers.


16. (SBU) The Commercial Crime Unit of the Namibian Police (NAMPOL)
and the Office of the Prosecutor General are responsible for
formally investigating financial crimes. The Office of the
Prosecutor General appears to be adequately staffed and fairly well
trained, but NAMPOL, while somewhat adequately staffed is generally
regarded as being poorly equipped and trained.

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ASSET FORFEITURE AND SEIZURE LEGISLATION
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17. (SBU) There have never been any arrests or prosecutions for
money laundering. Money laundering was not a criminal offense under
Namibian law until POCA, and POCA is not yet fully implemented.


18. (SBU) Namibia is still waiting to implement its laws (POCA and
FIA) that criminalize money laundering or the financing of
terrorism. Once POCA is in effect money laundering will be an
offense, and forfeiture will be a mechanism for responding to a
laundering infraction. POCA provides for both civil and criminal
forfeiture. Amendments to POCA appear to have cleared most hurdles
in Parliament and are expected to be signed into law soon, thereby
clearing the way to place POCA itself into effect.


19. (SBU) Under POCA, the Government will be able to seize assets
and intangible property such as bank accounts, including the
instrumentalities and proceeds of crime, as well as substitute
assets. Namibia does not yet have a law similar to the RICO Act
under U.S. law that would permit the seizure of a legitimate
business if used to launder money or support terrorist activity.
The major provisions in POCA regarding asset forfeiture and seizure
are:

- Asset confiscation or asset forfeiture.

- Restraint Orders -- A High Court order which restrains persons
from dealing with the property which is the subject of the order.

- A Criminal Assets Recovery Fund into which the proceeds of
confiscated assets and certain other funds are to be deposited.

- Search/investigative powers which are useful for obtaining
property information from third party custodians of information
(such as banks or other financial institutions).


20. (SBU) The Office of the Prosecutor General and NAMPOL are
responsible for the tracing, seizing, and freezing of assets. It is
expected that the banking community will fully cooperate with
enforcement efforts to trace funds and seize/freeze bank accounts
once POCA is in effect.


21. (SBU) Namibia has not yet enacted any laws for the sharing of
seized assets with other governments, but apparently could do so
pursuant to an international agreement or treaty. Namibia is not
currently engaged in any bilateral multilateral negotiations with
other governments to enhance asset tracing, freezing, and
forfeiture. However, Namibia did participate in the negotiations
regarding the UN Convention against Transnational Organized Crime,
and signed and ratified the resulting Convention which deals
extensively with seizure and forfeiture.

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TERRORIST FINANCING
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22. (SBU) There have been no known arrests or prosecutions for
terrorist financing. An Anti-Terrorism Bill has passed the legal
drafting stage, but has still not been tabled in Parliament. Under
the proposed counterterrorism law, the Government would be empowered
to proscribe an organization if it commits or participates in
terrorism; prepares for acts of terrorism; promotes or encourages
terrorism; or is otherwise involved with terrorism. The proposed law
would also prohibit individuals from providing money or other
property with the intention or knowledge (or suspicion) that such
money or other property would be used for the purposes of terrorism
(regardless whether or not a terrorism act was committed). Until
the Anti-Terrorism Bill is enacted, there will be no system for
freezing terrorist assets.


23. (SBU) Namibia is a member of the Eastern and Southern African
Anti-Money Laundering Group (ESAAMLG). Namibia served as the Chair
of ESAAMLG from August 2001 until August 2002. Namibia is a party to
the UN Convention against Transnational Organized Crime. In November
2001, the GRN signed the UN International Convention for the
Suppression of the Financing of Terrorism, and is making progress
toward becoming a party. An Anti-Terrorism Bill is still in the
drafting process and is not yet under consideration by Parliament.
Until such a bill is passed, terrorist financing would not be
considered a serious crime and a predicate offense for money
laundering.


24. (SBU) The BoN routinely circulates to its financial
institutions the list of individuals and entities that have been
included on the UN 1267 sanctions committee's consolidated list as
being linked to Usama bin Ladin, members of the Al Qa'ida
organization, and the Taliban. The BoN also circulates the list of
terrorist organizations/financiers that the United States and the
European Union (EU) have designated under relevant authorities.


25. (SBU) There is no evidence that indicates that value transfer
systems are used in Namibia in lieu of the formal financial system.
Namibia has not yet taken measures to thwart the possible misuse of
charitable and/or non-profit entities that can be used as conduits

for the financing of terrorism. There is no government entity that
regulates or supervises such sectors.

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CROSS-BORDER TRANSPORTATION OF CURRENCY
AND NEGOTIABLE INSTRUMENTS
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26. (SBU) The FIA has provisions for monitoring the cross-border
transportation of currency and monetary instruments, namely,
threshold reporting requirements for cross-border conveyances of
cash. Once FIA is in effect the FIC will require (after a phase-in
process) that Customs forward such reports to it for entry into FIC
data bases.

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INTERNATIONAL COOPERATION
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27. (SBU) Namibia is a party to the UN Convention against
Transnational Organized Crime (Palermo Convention). In November
2001, the GRN signed the UN International Convention for the
Suppression of the Financing of Terrorism, but it has not yet
ratified the Convention.


28. (SBU) Namibian law only permits the exchange of records with
the United States on investigations and proceedings related to
narcotics, all-source money laundering, terrorism and terrorist
financing if there is a bilateral or multilateral treaty in place
specifically providing for such cooperation. Unfortunately,
Namibian courts have ruled that the Palermo Convention does not
trigger such law and thus the provisions of the Palermo Convention
are not "self-executing" under Namibian law. Namibia has not
reached any bilateral agreement with the United States authorities
on a mechanism for exchange of records in connection with such
investigations and proceedings. Furthermore, there are no current
negotiations between Namibia and the United States to establish such
an exchange mechanism. Namibia does have such cooperative
agreements with countries in the SADC Region.


29. (SBU) Namibia is not yet a member of the Egmont group. It has
not yet entered into any agreements with other FIUs because the FIA
is not yet in effect. The FIC is developing MOUs with other
supervisory authorities to facilitate the exchange of supervisory
information regarding banking and non-banking financial institutions
in Namibia.


30. (SBU) Namibia has made substantial efforts to cooperate with
the United States and other countries in the area of law
enforcement, especially in the area of extradition. There is no
evidence that suggests the Namibian government has deliberately
refused to cooperate with foreign governments.


31. (SBU) Namibia is attempting to adhere to all established
relevant international money laundering standards, such as the
recommendations of the FATF and the Basel Group by establishing the
FIC and enacting the FIA and POCA.

MATHIEU