Further to our previous newsflash on the topic Implications of Botswana’s Anti-Money Laundering Blacklisting by the EU, we hereby give a compliance update on Botswana’s current situation and progress as at 1 March 2021 with respect to addressing strategic technical compliance deficiencies in its anti-money laundering/combat the financing of terrorism (“AML/CFT”) regime.
Put at its simplest, this compliance update asks four critical questions that aid in assessing progress made in addressing strategic technical compliance deficiencies in Botswana’s AML/CFT regime to warrant re-rating by the Financial Action Task Force (“FATF”), and by extension, the European Union (“EU”).
Where is Botswana now?
Botswana’s blacklist is still extant with respect to the EU member states only. As the EU continues to conduct enhanced customer due diligence on transactions involving Botswana clients and those involving Botswana intermediaries, delays in transactions involving Botswana clients and intermediaries continue, as Botswana transactions are classified as inherently high risk in respect of commission of financial offences. With respect to the rest of the world, in terms of the FATF, Botswana is still listed as one of the jurisdictions under increased monitoring (“grey listed”).
Where does Botswana want to go?
In an effort to be removed from the FATF grey list, and further efforts to get out of the EU blacklist, Botswana submitted itself in December 2020, to the Eastern and Southern Africa Anti-Money Laundering Group (“ESAAMLG”), which is an affiliate member of the FATF, for an analysis of Botswana’s progress in addressing the technical compliance deficiencies previously identified, and further requested for technical compliance re-ratings in order to be removed from the EU blacklist and the FATF grey list.
In January 2021, ESAAMLG published the ‘Anti-money laundering and counter-terrorist financing measures- Botswana, 4th Enhanced Follow-up Report and 2nd Technical Compliance Re-rating’ (“follow-up report”) analysing Botswana’s progress in addressing the previously identified technical compliance deficiencies, and further giving re-ratings where sufficient progress has been made. We discuss the follow-up report and the re-ratings below.
How did Botswana acquit herself in the follow-up report?
The follow-up report has concluded that Botswana has made progress in addressing some, but not all, technical compliance deficiencies. For example, based on recent legislative enactments, Botswana’s AML/CFT legal and compliance framework relating to targeted financial sanctions related to terrorism and terrorist financing, targeted financial sanctions to proliferation and customer due diligence, which were all previously rated ‘partially compliant’, are now re-rated ‘largely compliant’.
However, while Botswana has enacted the Data Protection Act No.32 of 2018 (“Data Protection Act”), which is still on notice, Botswana has not been rated favourably on account of its failure to demonstrate whether there is, or will be, cooperation and, where appropriate, coordination between relevant authorities when implementing the provisions of the Data Protection Act in order to ensure its compatibility with the Botswana AML/CFT requirements, as regards data protection and privacy rules, and other issues such as data security.
Further, Botswana could not be re-rated with respect to virtual assets and virtual assets service providers (“VASPs”), on the basis that no information was provided addressing how Botswana identifies and assesses the money laundering and terrorist financing risks emerging from virtual asset activities (such as bitcoin, crypto assets, virtual currencies) and the activities or operations of VASPs, and whether VASPs are required to take appropriate steps to identify, assess, manage and mitigate their money laundering and terrorist financing risks.
In the premises, ESAAMLG found that while Botswana has made progress, there are no sufficient grounds to justify re-rating Botswana as overall technically compliant, dictating removal from the FATF grey list.
How will Botswana get out of the grey list and blacklist?
As Botswana makes efforts to get out of the FATF grey list, which will in turn result in removal from the EU blacklist, Botswana looks ahead to the next ESAAMLG follow-up report and technical compliance re-rating session to be held on or about May 2021. In the meantime, Botswana remains under ESAAMLG ‘increased monitoring list’ and will continue to actively inform ESAAMLG of the progress made to address the outstanding technical compliance efficiencies in its AML/CFT framework.
For further information contact Thuto Senwedi on (+267 3912397) or email: thuto@bookbinderlaw.co.bw.