NAMFISA and Compliance with Anti-Money Laundering Laws
Namibia Financial Institutions
Supervisory Authority
(“NAMFISA”) is the designated
Anti-Money Laundering
(“AML”), Combatting Financing of
Terrorism (“CFT”) and Combatting
Proliferation Financing (“CPF”) supervisory
body (Authority) for accountable institutions
(“AIs”) and reporting institutions (“RIs”)
under its jurisdiction in terms of sec 35 of
the Financial Intelligence Act, No. 13 of 2012
(“FIA”) read with the NAMFISA Act, No.
3 of 2001. The following sectors are AIs and
RIs: capital markets, collective investment
schemes, micro lenders and insurers.
In terms of sec 35 (2) of FIA, NAMFISA supervises, monitors and enforces compliance by AIs and RIs with FIA. Any reference to FIA in this article shall include all subordinate legislations such as regulations, orders, circulars, notices, determinations and directives issued under FIA. This article discusses the consequences that AI’s and RI’s face if they fail to comply with FIA and the international standards. For purposes of this article, the AIs and RIs will be jointly referred to as the financial institutions. International framework
In terms of sec 35 (2) of FIA, NAMFISA supervises, monitors and enforces compliance by AIs and RIs with FIA. Any reference to FIA in this article shall include all subordinate legislations such as regulations, orders, circulars, notices, determinations and directives issued under FIA. This article discusses the consequences that AI’s and RI’s face if they fail to comply with FIA and the international standards. For purposes of this article, the AIs and RIs will be jointly referred to as the financial institutions. International framework
Why Compliance Matters
The Financial Action Task Force (FATF) recommends strong, fair penalties for institutions and their management that fail to comply with AML/CFT/CPF laws. These requirements include KYC (Know Your Customer) checks, monitoring of transactions, and reporting of suspicious or large cash transactions.
Failure to comply can:
Types of Offences under the FIAOffences are grouped into five categories:
1. Administrative – Failure in client identification, risk assessment, due diligence, etc.
2. Records – Tampering with or failing to keep/access required records.
3. Reporting – Not reporting large or suspicious transactions.
4. Disclosure – Tipping off or misusing confidential information.
5. Directives – Ignoring directives or obstructing NAMFISA officials.
Penalties can include up to N$100 million in fines or 30 years in prison, or both.
Failure to submit compliance reports to NAMFISA can also result in up to N$10 million fine or 10 years imprisonment. Penalties may also apply to NAMFISA itself if it fails in its supervisory duties.
1. Administrative – Failure in client identification, risk assessment, due diligence, etc.
2. Records – Tampering with or failing to keep/access required records.
3. Reporting – Not reporting large or suspicious transactions.
4. Disclosure – Tipping off or misusing confidential information.
5. Directives – Ignoring directives or obstructing NAMFISA officials.
Penalties can include up to N$100 million in fines or 30 years in prison, or both.
Failure to submit compliance reports to NAMFISA can also result in up to N$10 million fine or 10 years imprisonment. Penalties may also apply to NAMFISA itself if it fails in its supervisory duties.
5 Types of Offences Expanded Upon
(i)Administrative related: these are offences related
to the identification of clients, procedures to follow
when dealing with clients identified as high risk
clients, on going and enhanced due diligence, cross
border correspondent transactions, the conduct of risk
assessments and the formulation and implementation
of internal rules to combat AML/CFT/CPF.
(ii)Records related: these are offences related to the destruction or tampering of any records kept; record keeping; failure to give assistance to the Financial Intelligence Centre (“FIC”) to access the records kept; failure to declare cross border movement of cash and bearer negotiable instruments above the prescribed limits; and failure to electronically register declared cross border movement of cash and bearer negotiable instruments
(iii)Reporting related: these are offences related to reporting cash transactions above prescribed limits, reporting suspicious or unusual transactions to the FIC; and reporting of conveyance of cash in excess to the prescribed limits into or out of Namibia.
(iv)Disclosure related: these are offences related to tipping off; misusing and disclosure of confidential information.
(v)Directives / order related: these are offences related to failure to comply with a directive, monitoring order, obstruction hindrance or threatening NAMFISA officials or agents in performance of their functions. In addition, failure by financial institutions to submit requested reports to NAMFISA regarding the institution’s compliance with FIA is a criminal offence, if found guilty, a fine of up to N$10 million or 10 years imprisonment, or both the fine and the imprisonment may be imposed.
(ii)Records related: these are offences related to the destruction or tampering of any records kept; record keeping; failure to give assistance to the Financial Intelligence Centre (“FIC”) to access the records kept; failure to declare cross border movement of cash and bearer negotiable instruments above the prescribed limits; and failure to electronically register declared cross border movement of cash and bearer negotiable instruments
(iii)Reporting related: these are offences related to reporting cash transactions above prescribed limits, reporting suspicious or unusual transactions to the FIC; and reporting of conveyance of cash in excess to the prescribed limits into or out of Namibia.
(iv)Disclosure related: these are offences related to tipping off; misusing and disclosure of confidential information.
(v)Directives / order related: these are offences related to failure to comply with a directive, monitoring order, obstruction hindrance or threatening NAMFISA officials or agents in performance of their functions. In addition, failure by financial institutions to submit requested reports to NAMFISA regarding the institution’s compliance with FIA is a criminal offence, if found guilty, a fine of up to N$10 million or 10 years imprisonment, or both the fine and the imprisonment may be imposed.
Penalties
It should be noted that penalties under FIA are not
only limited to persons responsible for such financial
institutions but also applicable to supervisory bodies
like NAMFISA in the event they fail to execute their
mandate. A administrative fine not exceeding N$10
million or imprisonment term of not more than 10
years may be imposed on the supervisory body.
1. Directives Here NAMFISA directs the institution/s involved to provide certain information / documents or reports; cease or refrain from specified omission or commission which contravenes FIA; take correction action; or perform acts necessary to meet obligations imposed by FIA.
2. Administrative penalties NAMFISA may, after consulting the FIC impose one or more of the following administrative penalties on institution or person namely:
(i) a caution not to repeat the;
(ii) a formal expression of disapproval,
(iii) a directive to take corrective action or make specific arrangements;
(iv) the restriction or suspension of certain identified business activities;
(v) suspension of licence to carry on business; or
(vi) a financial penalty not exceeding N$10 million.
3. Application to court NAMFISA may institute legal proceedings against a financial institution or a person, after consulting the FIC, to:
(i) discharge any obligations imposed by the FIC or supervisory body;
(ii) compel the institution or person to comply with FIA;
(iii) cease contravening FIA;
(iv) compel the institution or person to comply with a directive; or
(v) obtain declaratory order on any point of law relating to FIA.
Alternative measures before imposition of penalties Before resorting to criminal action NAMFISA may explore other alternatives to ensure compliance with FIA. FIA makes provision for the following alternative compliance enforcement measures:
1. Directives Here NAMFISA directs the institution/s involved to provide certain information / documents or reports; cease or refrain from specified omission or commission which contravenes FIA; take correction action; or perform acts necessary to meet obligations imposed by FIA.
2. Administrative penalties NAMFISA may, after consulting the FIC impose one or more of the following administrative penalties on institution or person namely:
(i) a caution not to repeat the;
(ii) a formal expression of disapproval,
(iii) a directive to take corrective action or make specific arrangements;
(iv) the restriction or suspension of certain identified business activities;
(v) suspension of licence to carry on business; or
(vi) a financial penalty not exceeding N$10 million.
3. Application to court NAMFISA may institute legal proceedings against a financial institution or a person, after consulting the FIC, to:
(i) discharge any obligations imposed by the FIC or supervisory body;
(ii) compel the institution or person to comply with FIA;
(iii) cease contravening FIA;
(iv) compel the institution or person to comply with a directive; or
(v) obtain declaratory order on any point of law relating to FIA.
Conclusion
In conclusion, non-compliance with the provisions of
FIA by financial institutions or persons in control of
such institutions can lead to a damaged national reputation,
threaten the good functioning of our financial system
and dampen foreign direct investment. Compliance with
FIA should be an objective of all stakeholders. In order to
maintain a good reputation, ensure that Namibia remains
an investment place of choice and ensure that potential
money launders are excluded from the financial system,
financial institutions insist on KYC and AML/CFT/CPF
compliance. For more info on the AML/CFT/CPF legislations,
please visit our website: www.NAMFISA.com