The Financial Action Task Force (FATF), the world’s leading anti-money laundering organisation, recently greylisted South Africa citing deficiencies in the country’s ability to prevent the flow of dirty money in its systems. The FATF greylisted Botswana between 2018 and 2021, only lifting the label after government and Parliament fast-tracked more than a dozen new laws and amendments, to plug the identified weaknesses.
For Botswana, the greylisting prompted an automatic blacklisting by the European Union and proved a disincentive for investment, while also increasing the due diligence on payments to and from the country, making these take far longer than should have.
South Africa, as SACU’s biggest economy, contributes most of the revenue the bloc makes and distributes much of this to Botswana, Lesotho, Eswatini and Namibia under a revenue-sharing formula dating back to 2002.
For the upcoming financial year, SACU earnings in Botswana are expected to reach about P25 billion or about a third of total revenues.
Senior policy advisor in the Finance ministry, Keith Jefferis said it was not automatic that the greylisting of South Africa would impact SACU’s performance.
“SACU is about trade and there are payments in trade, but we don’t expect a huge impact because trade is based on well-established relationships and I think if there’s any impact on trade flows, it should be minimal,” he told BusinessWeek during a briefing. “When we were greylisted, we did not see that much impact on trade flows. “The impact will come more on investment and capital flows which is where we find that there is more scrutiny.”
Jefferis said Botswana had made formal and informal approaches to South Africa to share its experience on exiting the FATF’s greylist.
Finance Minister Peggy Serame told BusinessWeek that assessments of the potential impact of South Africa’s greylisting on sensitive economic sectors and entities in Botswana were underway.
“Different entities here are looking at what the risk to Botswana could be because quite a lot of our entities are headquartered in South Africa and they will be affected,” she said. “We know that greylisting means it will take more time for them to get some of their transactions done because the due diligence will be more intense. “We know that transactions that could have taken two days may now take two weeks or two months.”
She added: “The different entities in Botswana have been given a task to do an in-depth analysis of the risks and what we need to do here to mitigate these risks.”
Serame, who is also the president of the Eastern and Southern Africa Anti-Money Laundering Group's (ESAAMLG) Council of Ministers, said the region had reached out to help South Africa out of its greylisting. ESAAMLG has a committee of previously greylisted countries which include Botswana and Mauritius, advising the South Africans.
Financial Intelligence Agency director-general, Bopelokgale Soko told BusinessWeek that various ESAAMLG organs had offered support to South Africa. Soko chairs ESAAMLG’s task force of senior ministers.
“As a neighbour, we have been through that process and we are ready to help if they indicate where they need help. “It is of regional interest that South Africa exits the list because if the situation is prolonged, it may have an impact on a number of countries. “We are working with the ESAAMLG Secretariat and relevant authorities in South Africa to help them get the assistance they need,” she said.
