Non Banking Financial Institutions Regulatory Authority (NBFIRA) National Risk Assesment report indicates that Life Insurance sector is highly vulnerable to money laundering risks.
According to the report conducted in 2017, the insurance industry in Botswana was at a relatively high risk of money laundering while the non-life insurance sector indicates a lower vulnerability risk. “This could be atrributable to the unnattractiveness of the non-life insurance products to money laundering. Non-life insurance products are based on pure risk and annuall renewability as opposed to life insurance products that are long term and have an investment feature,” states the report.
Among the prevalent issues in the insurance industry include the acceptance of very high value or unlimited value payments, allowing withdrawals at any time with limited charges or fees or the use of the product as collateral and the acceptance of insurance policy to be used as collateral for loans. Currently there are 24 regulated life insurance companies and 53 insurance brokers regulated by NBFIRA.
NBFIRA Chief Executive, Oaitse Ramasedi said insurance companies need to enhance anti-money laundering knowledge of their staff through training. He said this is to ensure that they are equiped with relevant anti-money laundering knowledge on an ongoing basis. “They should regularly update them on domestic and transnational money laundering schemes and typologies including typologies involving the misuse of insurance companies specialised knowledge and skills of its staff and products,” said Ramasedi.
He highlighted that insurance companies must employ a well resourced and independent anti-money laundering compliance role within their operations rather than having this function doubled up with the current role of principal officer. “Insurance companies must ensure that internal compliance programmes are in place and must be commensurate to the level of risk taking into account the type and volume of insurance products provided and client base profile among others.” said Ramasedi.
The Anti-Money Laundering and Counter Financing of Terrorism National Risk Assesment was introduced in 2015 by the ministry of finance and Economic Development with an ‘objective to identify, asses and understand the exposure of the various sectors of socio-economic activities in Botswana associated with money laundering and terrorist finacing. However the report states that the overal money laundering threat at a national level is medium high. Obtaining by false pretences, motor vehicle theft, tax evasion, corruption, poaching have been identified as the criminal offenses that present a high level of money laundering risks. “All these predictate offenses pose high riosks in terms of proceeds that arise from the commission of such offences.”
Ramasedi explained that the wide expanse of the country and inadequate monitoring of the long and porous borders created vulnerabilities to all sorts of crimes including trans-national organised crime and this results in vulnerability to money landering risks. “Botswana’s geographical position presented a potential transit point for illicit funds and other illegal materials including drug trafficking and human traficking.”