It has been found that Close Corporations (CCs) are most vulnerable to be used for money laundering and for terrorist financing in Namibia.
This is according to the Financial Intelligence Centre (FIC) Report titled Terrorist Financing Risks In The Non-Profit Organization Sector, which was released in May this year.
The 2023 National Risk Assessment (NRA) update indicates “the use of CCs to advance financial crimes is common in Namibia”.
According to the report, they have uncovered enough to show that the CCs companies are used as a vehicle to finance terrorism in the country based on the few cases handled.
“This trend is evident in this report, with regard to the overwhelming findings which suggest that CCs as the most preferred vehicles employed in the advancement of TF (based on the few cases at hand),” read the report.
The various risk assessments over the years have also found that Faith Based Organisations (FBOs) in general and in particular those associated with Islamic extremism present the highest risk of potential TF.
Money laundering generally refers to the act of disguising the true source of proceeds generated from unlawful activities and presenting such in the financial system as sourced from legitimate activities.
However, broadly can include engagement, acquisition and concealment of proceeds of crime whether directly or indirectly;
Terrorist financing (TF): includes “acts which are aimed at directly or indirectly providing or collecting funds with the intention that such funds should be used, or with the knowledge that such funds are to be used, in full or in part, to carry out any act of terrorism.
Irrespective of whether or not the funds are used for such purpose or to carry out such acts”;
The Mutual Evaluation Report of Namibia, carried out by ESAAMLG with the report being adopted in September 2022 has highlighted various weaknesses in the country’s ability to combat ML and TF.
Those weaknesses can be exploited by the threat or that may support or facilitate financial crime activities.
Thus, the Ministry of Finance and Public Enterprise is facilitating various changes and new laws to fix the country’s loopholes and weaknesses.
According to the report the Namibian Police has a certain male they are suspecting as a potential subject of terrorist acts and terrorist funding.
The profiling of the subject started in 2012 and the initial case was registered in March 2016.
The subject case docket bearing a certain Windhoek CRXXXX was registered for contravention of section 2(1) & (2) of the Prevention and Combating of Terrorists and Proliferation Activities Act.
Further, such a case docket is under investigation and the subject has not yet been charged.
The report has indicated that it was then established that the subject has been sending funds to individuals in foreign countries that are considered to be high risk in terms of terrorist activities through various foreign money exchange entities.
With the information collected, it was discovered that the subject has been using Western Union and MoneyGram to send and receive the money.
It is further confirmed that the subject sent and received money from countries considered to be high risk through the same entities.
According to FIC, the subject was operating in small businesses such as: car washing and dealing in hand second-hand used car sales, as a source of income, this could not sustain him to frequently send money out of the country.
It was also established that the subject is currently venturing in the charcoal industry operating under two companies in the Grootfontein district.
The first being a Close Corporation a Namibian national (5%); with another individual who is not of Namibia origin (40%)and another partner with (30%) equity who has dual citizenship of certain countries known by the FIC.
A fourth part has 25% shares from a country that is known.
The second Close Corporation has the same Namibian partner with 6% shares; and a partner with foreign origin owning 94%.
The FIC has however, indicated so far, the subject is not arrested, nor interviewed in relation to the matter and the case is still under investigation.
“The above confirms the view that the subject is merely accorded insignificant shareholding or interest in the above mentioned businesses but he appears to be the main front or person who exercises the cross border remittances,” the report stated.
Potential Red Flags
Potential indicators on the CCs being investigated in the name of the subject and other beneficiaries are exporting charcoal to foreign jurisdictions in the Middle East, but no payments are received in their local business accounts.
“As such it is suspected that the profit is channelled to fund possible terrorist activities elsewhere,” the report added.
Thirdly, the financial watchdog has indicated that the subject is religiously radicalised into the extremist Islamic religion which is linked to ISIS, adding the funds may be generated through the exportation of charcoal, and with the available information from the banking institutions no indications of income could be traced.
It has been noted that the subject makes use of social media like Facebook and WhatsApp where he openly sympathises with and supports the activities of ISIS, for example by posting pictures.
To date, “through investigations, it is confirmed that funds are raised under the pretext of the charcoal business”.
The only countries to have been detected in the importation of charcoal from the subjects’ business are Dubai and Saudi Arabia.
The case is currently with the office of the Prosecutor General for judgement.
Another individual identified by the FIC to be exposing the country to terrorism financing is a certain male from a certain country married to a Namibian citizen as reportedly been residing in Namibia since 2006.
He is the beneficial owner of at least six business entities registered in Namibia, 14 being: Close Corporation CC-A, Company (PTY) Ltd-A, Close Corporation CC-B, Close Corporation CC-C, Close Corporation CC-D and Close Corporation CC-E.
The subject and his entities have been reported in various reports to the FIC on suspicion of possibly advancing TF.
Information provided by the law enforcement agency has alleged that the subject may be linked to the terrorist group Hezbollah. Below is a case study on the said subject with potential indicators of TF.
In 2011, the subject was also suspected of human trafficking as he sent six Namibian males to Country-L who underwent labour exploitation at a farm on the outskirts of a certain town of two countries.
Intelligence on the matter was shared with the NCIS and NamPol (AML & CFT Division Crime Investigation Directorate), however, investigations eventually confirmed that such escalated reports are false positives for terrorism or TF and did not warrant them to pursue the matter further.