All Southern African countries need to outlaw money laundering because it is costing their economies several billion dollars a year, says a specialist researcher.
Charles Goredema of the Institute for Security Studies said Angola, Malawi and Lesotho are some of the countries in the region that still do not have in place legislation criminalising money laundering, which is hampering law enforcement in the region.
Stolen vehicles from South Africa, Botswana and Namibia are being smuggled to Angola, where they are exchanged for diamonds, or paid for with cash realised from the sale of illegal diamonds or hard currency, according to a book co-authored by Goredema, Profiling Money Laundering in Eastern and Southern Africa.
Money laundering through drug trafficking is a major problem in Malawi: farmers grow marijuana in northern Malawi, allowing them to purchase basic commodities, and the drug is then exported to Zimbabwe, Namibia and South Africa.
The United Nations Convention against Transnational Organised Crime, signed in 2000, requires countries to pass legislation to prevent the proceeds of crime from being laundered.
South African Minister of Finance Trevor Manuel has reportedly said that while there has been no conclusive study, the government believes that between $2-billion and $8-billion is being laundered through South African institutions every year.
According to a 2002 study by a Zimbabwean think-tank, the National Economic Consultative Forum, money laundering had cost the country $1-billion over a six-year period.
The book identifies three kinds of money laundering: internal, incoming and outgoing. Proceeds from drug trafficking and theft are used for internal money laundering, often in the form of property purchases and other luxury items.
Proceeds from fraud and theft are also invested in businesses, such as taxi companies or liquor outlets, popularly known as ”cuca” shops in Namibia or ”shebeens” in South Africa.
Many countries such as Malawi and Zimbabwe do not query the source of incoming foreign currency, which can be laundered through bureaux de change and banks.
Proceeds from criminal activities can also be exported and turned into real estate.
Mauritius and South Africa are in the forefront in terms of putting anti-money-laundering legislation into place, Goredema said.
The Financial Intelligence Centre — set up two years ago in South Africa to monitor transactions handled by financial institutions — and legislation compelling the identification of clients before transactions can be made are effective ways of countering money laundering, he noted.
Goredema pointed out that since the centre started operating, the South African government has picked up 7 000 illegal transactions, which has led to a number of high-profile arrests. — Irin