Business Reporter
THE Director of the Financial Intelligence Centre within the Bank of Namibia, Bryan Eiseb, has said that Namibia has made significant progress in addressing the issues that landed the country on the Greylist of the Financial Action Task Force (FATF). He also mentioned that Namibia will submit a report earlier than expected in hopes of exiting the Greylist.
On 23 February 2024, the Financial Action Task Force (FATF) added Namibia to its list of jurisdictions under enhanced monitoring, commonly known as the Greylist. The Greylist contains countries with strategic deficiencies in their anti-money laundering and counter-terrorism financing frameworks.
Eiseb explained that Namibia was subjected to a Mutual Evaluation aimed at assessing the country’s compliance with the FATF Recommendations on combating money laundering, terrorism, and proliferation financing activities.
“A report on the outcomes was adopted and published in September 2022 by the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG), of which Namibia is a member. The report highlighted 72 Recommended Actions that needed to be addressed in the twelve-month period (from the adoption of the report) to October 2023. In January 2024, Namibia reported to the FATF on the progress made in addressing the 72 Recommended Actions. The country was found to have effectively addressed 59 Recommended Actions, while the remaining 13 required improvement,” Eiseb summarized.
He added that Greylisting typically impacts an economy through various channels, including GDP, government funding costs, exchange rates, cross-border transactions, and capital markets.
“The IMF notes that countries Greylisted by FATF generally experience significant reductions in capital inflows, averaging a net loss of 7.7% relative to GDP. Namibia’s strong macroeconomic fundamentals suggest that the country may be well-placed to withstand the short-term impact of Greylisting. However, we acknowledge that the period is certainly too short to thoroughly examine the full extent of the impact on some key indicators such as GDP, as the transmission of these effects takes time. Given the prevailing robust economic landscape, these effects may be offset,” Eiseb said.
He added that despite the Greylisting, investor perceptions of Namibia remain broadly positive.
“Given that Namibia’s currency is pegged to the South African Rand, the negative effects on the exchange rate associated with Greylisting appear minimal. In terms of the financial system impact, Greylisting may lead to increased due diligence requirements, higher compliance costs, and longer cross-border transaction times. Financial institutions have reported no immediate impact. However, measures are being put in place in preparation for potential medium- and long-term impacts of the Greylisting. Proactive action and engagements with correspondent banks are currently underway to enhance further compliance and additional checks and supplementary due diligence,” Eiseb said.
He further urged Namibians and other stakeholders to be mindful of the increased turnaround times and compliance checks that may be enhanced, and to factor that into their planning to avoid any inconvenience.
“Given the progress made since Greylisting, Namibia has decided to voluntarily submit an earlier report to the FATF for its meeting in October 2024. Reporting earlier than required can expedite exiting the Greylist if effective progress is said. Namibia’s report in this regard was submitted on 19 July 2024. A link containing the strategic deficiencies, known as an Action Plan, can be accessed,” Eiseb concluded.
