April 22, 2024

Namibia and Kenya Added to FATF’s “Gray List” Amid Scrutiny Over Anti-Financial Crime Measures

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In a significant development, both Namibia and Kenya have been added to the “gray list” by the international financial crime watchdog, the Financial Action Task Force (FATF), highlighting concerns about the effectiveness of their measures to combat illicit financial flows, money laundering, and terrorism financing.

Namibia, currently striving to attract foreign capital to capitalize on its green hydrogen and mineral reserves, faces potential setbacks in foreign direct investment, trade, and financial transactions. Central bank Governor Johannes Gawaxab expressed concerns over the implications, citing an International Monetary Fund (IMF) study that indicates an average decline of 7.6% of gross domestic product in capital inflows for gray-listed countries.

Entities engaging with Namibia may be subjected to enhanced due diligence, leading to increased costs and scrutiny, Gawaxab noted. The evaluation conducted by FATF concluded that Namibia fell short in meeting all 11 effectiveness measures to combat financial crimes.

Similarly, Kenya’s National Treasury announced on Friday that the country has also been added to the FATF’s “gray list,” signifying special scrutiny to implement standards preventing money laundering and terrorism financing. FATF maintained Uganda, Tanzania, South Sudan, and the Democratic Republic of Congo on its list of jurisdictions under “increased monitoring,” pointing out weaknesses in their measures to combat various financial crimes.

The “gray-listing” of Namibia and Kenya adds to the growing number of countries facing increased scrutiny for their financial crime prevention measures. Last year, Nigeria and South Africa were added to the FATF’s list, reflecting a global focus on addressing money laundering and terrorism financing.

Namibia’s ambitions to become a major player in green hydrogen production and its standing as a significant producer of diamonds and uranium make the FATF’s decision particularly noteworthy. The gray-listing underscores the importance of robust financial regulations as countries seek to attract foreign investment and bolster economic growth.

In June 2023, private equity firm FGA Partners released a report addressing the challenges of doing business in Africa, highlighting the prevalence of fraud in certain countries, this can be read here. The current developments in Namibia and Kenya add urgency to the need for comprehensive measures to address financial irregularities and meet international standards.

David Thompson
Financial Desk

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