Anti-money laundering laws essential

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 (ISS) told IRIN that Angola, Malawi and Lesotho were some of the countries in the region that still did not have legislation criminalising money laundering in place, which was hampering law enforcement in the region. Stolen vehicles from South Africa, Botswana and Namibia were being smuggled to Angola, where they were 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 was a major problem in Malawi: farmers grew marijuana in northern Malawi, allowing them to purchase basic commodities, and the drug was then exported to Zimbabwe, Namibia and South Africa. The UN 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 believed that between $2 billion and $8 billion was being laundered through South African institutions every year. According to a 2002 study by the Zimbabwean think-tank, the National Economic Consultative Forum, money laundering had cost the country $1 billion over a six-year period. The book identified three kinds of money laundering: internal, incoming and outgoing. Proceeds from drug trafficking and theft were used for internal money laundering, often in the form of property purchases and other luxury items. Proceeds from fraud and theft were 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 like Malawi and Zimbabwe did not query the source of incoming foreign currency, which could be laundered through bureaux de change and banks. Proceeds from criminal activities could also be exported and turned into real estate. Mauritius and South Africa were 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, combined with legislation compelling the identification of clients before transactions could be made, were effective ways of countering money laundering, he noted. Goredema pointed out that since the centre had started operating, the South African government had picked up 7,000 illegal transactions, which had led to a number of high-profile arrests.