Why are financial and other institutions asking so many questions these days?
Whether opening a bank account, buying property or a car, taking out insurance policies, making an investment, taking out a loan or sending money overseas, the same information (and a copy of identification) is asked of the consumer over and over again. In some instances, different divisions of the same bank will ask the same information of their clients, depending on the type of transaction that the client is conducting, such as buying a house, car, unit trusts or taking out a loan. Consumers are also required to disclose to the institution where the money for the particular transactions is coming from. The most common response from consumers is “Why?” Either that or “it’s none of your business!”
Consumers should realise that all financial institutions and businesses mentioned under Schedule 1 and 3 of the Financial Intelligence Act, 2012 (Act No. 13 of 2012)(the FIA) are obligated under that Act to ask all these questions and to record certain information regarding their clients. The purpose of the FIA is to combat the crimes of money laundering, the financing of terrorism and the financing and proliferation of weapons of mass destruction – global crimes these days. The obligation for all countries to combat these crimes derives from certain United Nations Conventions and certain United Nations Security Council Resolutions.
FINANCIAL INTELLIGENCE ACT, 2012
SCHEDULE 3: REPORTING INSTITUTIONS,
1 A person or institution who carries on the
business of a motor vehicle dealership.
2 A person who carries on the business of
3 A person who carries on the business of a
gambling house, a totalisator or
4 4. A person or entity who carries on the
business of trading in jewellery, antiques
5 5. Any person or entity regulated by the
Namibia Financial Institutions Supervisory
Authority (NAMFISA) who conducts as a
business one or more of the following activities – Short term insurer.
WHAT IS MONEY LAUNDERING?
Money laundering is the process whereby criminals take the money they make from their criminal activities and perform numerous transactions with it so that it seems at the oldest end as if that money was
made from legitimate activities. E.g. buy a house and selling the house after a short period; take the same money to buy shares and sell the shares after a while; take the same money and buy something else just to sell it again. In this process of buying and selling, the “illegal footprints” of the money are wiped away.
WHY SHOULD WE FIGHT MONEY
Crime, especially organised crime, has become difficult to combat worldwide. Crime has a negative impact on society and on the economy. Crimes such as drug trafficking, human trafficking and organised prostitution erodes the very fabric of society. Money is power, and when criminals are in charge of a country’s economy, the economy becomes highly cash-based and the inflation rate is very high. Countries that do not combat money laundering and financing of terrorism are regarded as posing a risk to the international financial system, which leads to such countries losing investors and other countries being reluctant to trade with them.
WHAT IS FINANCING OR FUNDING OF TERRORISM? This crime involves any kind of assistance, including financial, to persons or groups engaged in terrorist activities – activities which cause serious injury or death to people or serious damage to public and private property in order to force a government’s hand.
WHY SHOULD WE COMBAT FINANCING/FUNDING OF TERRORISM? Terrorist activities cause devastation and impacts innocent citizens, displacing families and leaving children as orphans. In order to comply with United Nations’ conventions in combating money laundering and the financing of terrorism, Namibia has passed the following laws: • The Prevention of Organised Crime Act, 2004 (Act No. 29 of 2004) (POCA), which makes money laundering a crime; • The Financial Intelligence Act, 2012 (Act No. 13 of 2012)(FIA), which places certain obligations on certain financial institutions and other businesses in order to prevent criminals from
abusing those businesses for money laundering and terrorist financing purposes; and • The Prevention and Combating of Terrorist and Proliferation Activities Act, 2014 (Act No. 4 of 2014)(PACOTPAA), which makes terrorism, the financing of terrorism, proliferation of weapons of mass destructions and the financing of proliferation criminal offences. In terms of the Financial Intelligence Act of 2012, all businesses and institutions mentioned in Schedule 1 and 3 of that Act have, amongst other things, the following legal obligations: • To identify their clients in line with the requirements of the Act and its Regulations; • To keep certain records regarding information on their clients, in line with the requirements of the Act and its Regulations; and • To report suspicious transactions or activities in line with the requirements of the Act and its Regulations. Identification information may include: full names, nationality, national ID number/passport number/ date of birth (with a copy of identification), address, contact particulars, occupation, source of income, nature of business activities (if any), the source of funds involved in this particular transaction, and so on. A full record must also be kept of such information.
CONSUMER EDUCATION BULLETIN 14
Failure by these businesses and institutions to comply with the abovementioned obligations is a criminal offence and the persons responsible for such businesses and institutions, if found guilty, may be fined a maximum of N$100 million, 30 years’ imprisonment or both. It is therefore in the best interest of these businesses to comply with the FIA and to obtain the required identification and other information from their clients. Clients who refuse to give the required information may be regarded as acting suspiciously and these businesses can either refuse to do any further business with the client or to report the client’s suspicious behaviour to the Financial Intelligence Centre to take further action. The general public is therefore requested to cooperate with all these businesses and institutions and to provide the information as required by the Financial Intelligence Act and its Regulations. By Njeri Mwangi