Security Threat Posed by Organized Crime: Money Laundering a Formidable Challenge in East and Southe
Calls for enhanced measures against money laundering remain unanswered in most countries in East and Southern Africa. In the process, policies to reduce drug trafficking are being subverted. Money Laundering deals, like other crimes, take place mostly in urban settings controlled by criminal groups. This problem will worsen in the mega-cities of the future if governance does not keep pace with urbanization.
Thobani Matheza: Researcher, Organised Crime and Money Laundering Programme, ISS Cape Town
Calls for enhanced measures against money laundering remain
unanswered in most countries in East and Southern Africa. In the
process, policies to reduce drug trafficking are being subverted. Money
Laundering deals, like other crimes, take place mostly in urban settings
controlled by criminal groups. This problem will worsen in the
mega-cities of the future if governance does not keep pace with
urbanization. Honest citizens struggling at a time of economic hardship
wonder why the proceeds of crime converted into ostentatious real
estate, cars, boats and planes are not seized.
This year Namibia has begun to implement some of the provisions of
the United Nations Convention against Transnational Organised Crime by
adopting domestic legislation. Money laundering has been defined and
recognised as a crime. At the same time specific gang and racketeering
activity has been criminalised while a regulatory and administrative
framework has been established. The Prevention of Organised Crime
(Namibia) Act and the Financial Intelligence (Namibia) Act came into
operation on 5 May 2009. This is an important milestone and the
culmination of a complex legislative process spanning a period of almost
nine years. Regrettably, however, the domestication of the articles of
the Palermo Convention Protocols on trafficking in persons, arms and
ammunition, and on countering the financing of terrorism is still on the
drawing board. On a positive note the effective establishment of a
regulatory regime and a financial intelligence unit are significant
developments, which complement other measures to fight corruption, such
as the Anti-Corruption Commission (ACC). A bill on the control of drugs
and illicit drug trafficking is in the pipeline. Namibia can therefore
be said to be taking concrete measures to prepare itself to work with
other countries to confront transnational organised crimes such as
fraud, corruption, and money laundering.
As for Uganda, money laundering here is reflected in the levels of
financial crimes. In the first quarter of 2009, the most common offences
predicate to money laundering prosecuted by the Directorate of Public
Prosecutions include drug trafficking, corruption, smuggling, tax
evasion, embezzlement, issuing of false cheques, forgery and abuse of
office. In the absence of specific legislation to detect and punish
money laundering, there have been attempts to put in place certain
strategies, structures and policies. These practices affect both
financial regulation and law enforcement. As far back as June 2008, the
Minister of Finance committed himself in his budget speech to present a
bill to Parliament against money laundering during the Financial Year
2008/09. The Anti Money Laundering Bill was adopted by cabinet in the
first week of February 2009. The Minster is expected to bring the bill
to parliament in the second half of 2009. The Central Bank and other
institutions such as the Uganda Law Reform Commission (ULRC) and civil
society, plan to undertake advocacy work to sensitize relevant
Parliamentary committees and other key stakeholders on the bill.
In Zambia the Drug Enforcement Commission has recorded an escalation
in the use of fictitious or stolen identity documents by drug
traffickers to open and operate bank accounts. The accounts can
subsequently be used to fund further crime, or to deposit funds for
outward laundering. Drug traffickers also use shell companies and front
companies, to legitimize dealings in illicitly obtained funds.
Shell companies are companies that do not trade, but can be used to
open and operate accounts with financial institutions, such as banks and
insurance houses. In Zambia it is relatively easy to incorporate a
shell company. In Tanzania and Malawi bureaux de change continue to
conduct casual foreign currency cash transactions without any due
diligence enquiries. Violations of exchange controls are often
associated with money laundering. In a move ostensibly intended to
compel bureaux to implement measures against money laundering, the
central bank of Malawi ordered them to either enter into partnerships
with commercial banks or lose their licences. Following resistance to
comply, all bureaux were suspended from operating at the beginning of
August 2009. Tension is building up as a result of this development.
Multiple issues that affect policies, strategies and legislation
against money laundering still need to be resolved if there is to be
success in this area. All pending legislation should be enacted, and
adequate logistical and financial support provided to the institutions
charged with the responsibility of curbing money laundering.
