Call to fight crime lords

In an annual address to business leaders and government officials, Alweendo said that Namibia should speedily sign into law an anti-money laundering and financial intelligence services Bill, which have already been approved by Parliament.

Alweendo warned that foreign direct investment starved developing countries ‘have been duped into what appears to be irresistible investments.’

“Except that the investments turned out to be highly sophisticated financial scams, where the aim was to launder money,” Alweendo said.

Globally, the extent of money laundering is estimated to be between US$500 billion and US$1 trillion.

Alweendo said that the problem of lack of accurate money laundering statistics from Africa is compounded where the setting up of anti-money laundering is only gaining momentum.

“It would take some time for Africa to build up accurate statistics on money laundering as this would to be sources from actual cases investigated and finalised,” he said.

The central bank governor said that international crime lords can launder money through dealings in illicit diamonds, the infamous rhino horn and ivory trafficking and car theft syndicates, which he said are prevalent in the Southern African region.

“Then there is the dilemma of weapon trade in certain war-torn parts of our region, which carries on despite strict controls and international embargoes,” Alweendo said.

He said that Namibia, which currently does not have a law on anti-money laundering and does not have extradition laws with countries such as the United States of America, Italy and Germany had become a drug trafficking route for the southern African region.

“Of late we have also witnessed a renewed wave of drug trafficking using Namibia as a route into southern African region,” Alweendo said.

He expressed fears that liberalisation of financial markets, particularly for cross border capital flows ‘unintentionally promote money laundering.’

“An added concern is that most efforts to deepen and broaden financial markets and to mordenise domestic and cross border payment systems could make it easier for criminals to transfer funds within emerging economies,” Alweendo said.

The BoN governor said that, if left unchecked, money laundering could result in ‘accumulation of economic power to organised crime.’

“As regulatory institutions and agencies have stepped up their controls, the money launderers have also become progressively more sophisticated in their approaches and schemes.

“The problem is compounded by the much larger volume of legitimate capital moving at any one time in the world. Because of the relatively limited official controls on such movements, it is easier for money of questionable origin to enter this huge money stream without attracting much attention,” Alweendo said.

Allowing money launderers to operate unchecked ‘could spell disaster for stability and rule of law’ and money laundering has a ‘negative impact on any economy.’

“Generally the money launderer will target an environment that most easily allows the recycling of the illegally obtained money,” Alweendo said.

Large capital inflows and outflows could significantly influence exchange rate, interest rates movements and prices of assets.

In free-flowing exchange rate economies, inflow of large amounts of money could lead to an exchange rate appreciation or an expansion of monetary base.

“In response, economic policymakers may there wrongly respond by adjusting fiscal and or monetary policies, thereby eroding the effectiveness of both monetary and fiscal policies,” Alweendo said.

He warned that if money laundering is perpetrated on a higher scale, it would complicate the ability of financial institutions to manage their operations and risks because they would not be able to ‘predict the movement of laundered money.’

“The combating of money laundering requires first and foremost the drafting of appropriate laws and the creation of national and international capacity to implement such laws,” Alweendo said.

November 2006
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