By: Nghiinomenwa Erastus
For the past four years, N$47,3 billion was suspected of having gone through the country’s financial system as potential tax evasion.
At the end of 2018, the FIC flagged N$7,3 billion as a potential tax evasion. However, that amount jumped to N$17,8 billion in 2019.
Last year, as the country battled the pandemic, FIC has flagged N$16,2 billion to be potentially evading tax obligation.
In the past 12 years, N$52,8 billion of the money that went through the country’s financial system is suspected of evading tax payments.
This amount is based on the financial intelligence analysis done by the Financial Intelligence Centre and has been submitted to NamRa for further action.
The findings are included in the Potential Tax Offences and Money Laundering Typology Report, prepared by the Financial Intelligence Centre, released July this year.
The report avails a detailed summary of common typologies, patterns, and indicators of such offences identified in cases within the domain of the FIC.
The suspected tax offences are detected through the suspicious transaction reports (STRs) and suspicious activities reports (SARs) related to possible tax evasion.
Accountable and reporting institutions have filed the reports since the reporting obligation commenced, until 31 December 2020.
From 2017 to 2020, the FIC has received 1 768 suspicious transaction reports related to potential tax offences – mainly from the banking sector.
The financial watchdog said banks are filing more reports because they appear to have the most matured AML/CFT/CPF control systems.
Moreover, the banks are generally exposed to higher risks as almost all other sectors use the banking systems.
In the same period (4 years), the FIC received 288 suspicious activities reports related to potential tax offences from various accountable and reporting institutions- banks, real estate agencies, and accounting offices filed more of the SARS.
In terms of the 2012 National Risk Assessment (NRA) outcomes and various FIC monthly and quarterly reports, “potential tax-related offences remain one of the main predicate offences associated with Money Laundering (ML) in Namibia”.
ML is how proceeds of crime, including tax offences, are hidden or disguised as legitimate assets.
The FIC has explained that given the high prevalence rate of tax offences in Namibia, understanding the underlying ML trends is essential for combatting such crimes.
Among various methods, money laundering emanates from tax offences when funds or assets earned are not presented to taxation authorities to determine taxes payable and ensure the collection of such taxes.
“This is often referred to as tax evasion,” the report highlight.
For the four years observed, the FIC has provided 459 Spontaneous Disclosures/ tip-offs from their data analysis to the receiver of revenue which is now called NamRa.
The disclosures are financial intelligence analysis on the utilisation of the country financial system (NamRa) still has to validate such FIC suspicions.
Then follow up with investigation and enable prosecution by the relevant authorities.
Overall, the highest number of disclosures (143) were disseminated during 2018, with a decrease observed in 2019.
The potential annual monetary value from suspected tax offences was highest in 2019 since 2009.
The FIC said such is mainly attributed to the reports related to the so-called Fishrot, pending in court at the time of reporting.
After their analysis, the agency has prepared 110 financial intelligence disclosures sent to NamRa to take it up further.
The financial watchdog explained numerous types of tax offences such as under-invoicing, smuggling, suppression of sales, fraudulently claiming Value Added Tax (VAT) refunds and undervaluation of imports.
As a result, the report shows the abuse of the financial system to disguise ill-gotten gains in potential tax offences, explained FIC.
Furthermore, the Financial watchdog has observed from the many cases at hand; there appears to be a general changing of trends in ML methods used.
“This may suggest that perpetrators continue to explore and find new methods of hiding or concealing the illicit origins of funds they launder,” wrote FIC. email@example.com