Money laundering, long the bailiwick of drug lords and corrupt politicians, has taken on a face lift after the September 11 attacks in the United States, with some countries using expanded powers granted to governments under various enabling legislation to trace dirty money to its foreign roots.
By its definition, money laundering is a conduit for trading criminal money. Money launderers tend to seek out areas in which there is a low risk due to ineffective anti-money laundering programmes.
The goal is to get the illegal funds to the individual who generated them. Launderers, therefore, prefer to move funds through areas with stable financial systems, such as the one prevailing in Namibia.
Once upon a time, money launderers were using undercover couriers or cloak-and-dagger offshore havens to move their money around. The traditional style of money laundering, where nefarious characters brought a cache of cash into a bank are also long over.
Today, however, they often are operating in broad daylight.
As one prominent Namibian economist put it: “With the greater scrutiny, much of that activity moved offshore. And the one rule for finding friendly offshore bankers was this: Everyone gets a Rolex.”
Trends in SADC
With regard to the SADC regional grouping, the constant threats posed by money launderers is real, as many countries ‑ including Uganda and Kenya ‑ do not yet have legislation to curb and deprive criminals from enjoying huge profits from illegal proceeds.
This, in my view, can have a tremendous negative effect on the business sector of the region as a whole.
As we have seen in many Namibian state-owned enterprises and financial institutions, if funds from criminal activities can be easily processed through a particular legitimate institution - either because its employees or directors have been bribed, or, because the institution turns a blind eye to the criminal source of such funds - the institution could be drawn into active complicity with criminals and inadvertently become part of the criminal network itself.
Call it fraud, embezzlement or money laundering but the damaging effect on ordinary customers, intermediaries and regulatory authorities is too ghastly to contemplate.
The Namibian government must be commended for having taken the lead to come up with proper legislation to combat the escalating number of criminal activities and thereby deprive such criminals from profit-making.
The process of money laundering is of critical importance for these criminals to disguise their illegal origin of proceeds of crime, as it enables them to enjoy these profits without jeopardising their sources.
Crimes that can generate huge sums of money are illegal arm sales, smuggling and the activities of organised criminal syndicates, such as drug trafficking and prostitution rings.
Embezzlement, insider trading, bribery and computer fraud schemes can also produce huge profits and create the incentive to legitimise the ill-gotten gains through money laundering.
Namibia’s enactment of the Financial Intelligence, Prevention of Organised Crime and Drugs Control acts are commendable efforts by our government to address threats posed by criminals who pose a security to our country. However, I would have preferred our laws to reflect an aggressive new strategy to try to trace dirty money in Namibia to its foreign roots.
Just as a reminder to all those voodoo journalists marauding as human rights advocates who may cry wolf, I need to refer them to the USA Patriot Act, as the sweeping legislation passed after the September 11 attacks is known, that has granted expanded powers to the US government to seize financial assets laundered into the US by foreign leaders whom they suspect of public corruption. It is now estimated that money laundered into American financial institutions by corrupt foreign leaders totals over US$10 billion tied up in American banks, real estate holdings, securities and insurance policies.
Switzerland has similar tough legislation. According to Alert Global Media Inc, the leading authority on money laundering, the Swiss seized US$550 million linked to the late Nigerian military leader, Sanni Abacha. Similarly, other private banking probes bordering on corruption have linked him to 19 foreign banks. Also a Swiss magistrate found two-timer former Prime Minister, the late Benazir Bhutto of Pakistan, and her husband guilty of money laundering and accepting bribes of US$12m from two Swiss companies.
Threats to National Security
Money laundering must be viewed as a threat to national security. Our laws must, therefore, equally address one system, favoured in the Middle East, called Hawala, which is thousands of years old. It is an informal exchange system, based on trust and honour, developed by ancient Arabian traders. As one Namibian expert observed, while hawalas had honourable origins and are still believed to be primarily a conduit for legitimate transactions, their lack of record-keeping makes the system particularly attractive to criminal elements.
It is therefore in Namibia’s security interest to have a very tough law against money laundering because it will be a shame and a disgrace to see corruption everywhere in the country.
Similarly, we should not attempt to coddle corrupt foreign dictators, tycoons, Johnny-come-lately self-made BEE millionaires or leaders who have fallen out of power.
We must focus our attention on foreign corruption - including foreign funding of opposition parties - as an indispensable part of attacking worldwide crimes like drug trafficking, terrorism and arms trafficking.
Finally, we should be sending a strong message to criminals here and abroad: DON’T COME HERE!
• Josephat Inambao Sinvula has a BSc in Urban Studies & Planning from Virginia Commonwealth University at Richmond, Virginia, USA; MPA from Atlanta University, Atlanta, Georgia, USA and is a PhD in Political Science. He is currently employed as Head of Human Capital, Finance & Administration at Oshana Regional Council in Namibia’s Oshana Region. The views expressed in this article are his own.