Fighting crime the FIU way
The Central Bank of Lesotho (CBL) in 2014 launched the Financial Intelligence Unit (FIU) to enhance the integrity of the country’s economic system. The Unit was established by the Money laundering and Proceeds of Crime Act 4 of 2008 with the mission to become “a dynamic centre of excellence providing financial intelligence reports for combating money laundering and terrorist financing in Lesotho and internationally”. Lesotho Times (LT) reporter Pascalinah Kabi speaks with FIU Legal and Information Officer, Mofokeng Ramakhala, about the agency and why it was necessary for the country to establish it.
LT: The Financial Intelligence Unit or FIU in short, was launched became operational in 2013 after being launched by the Ministry of Finance, through the Central Bank of Lesotho. Could you please tell us what this agency is all about?
Ramakhala: The Financial Intelligence Unit was established by the Money laundering and Proceeds of Crime Act 4 of 2008. Its main responsibilities are requesting, receiving and analysing financial information concerning suspected proceeds of crime and terrorist financing and passing on the data to law-enforcement agencies for investigation and possible prosecution. The FIU further exchanges information with its foreign counterparts and undertakes typology studies on money laundering and terrorist financing techniques.
LT: When we talk about money laundering, what does it really mean?
Ramakhala: Money laundering can simply be described as a process of obtaining proceeds through illicit sources and later disguise their true origin in order to avoid prosecution.
The negative effects of money laundering on economic development cannot be easily quantified. However, this does not mean we should be allowing these illegal activities to take place because that would not be an optimal economic development policy.
Doing so would damage financial institutions that are critical to economic growth, reduces productivity in the real sector by diverting resources and encouraging crime and corruption.
Money laundering can further distort the country’s international trade and capital flows to the detriment of long-term economic development. One would be aware that Lesotho depends mostly on donor funding and if such crimes take place unabated, donor confidence will diminish to the detriment of the nation. So the long and short of it is that money laundering is a very serious and terrible crime hence the reason why the FIU was launched.
LT: The FIU says it wants to be “a dynamic centre of excellence providing financial intelligence reports for combating money laundering and terrorist financing in Lesotho and internationally”. But is terrorism a big issue in this part of the continent? Should Lesotho be concerned about terrorism?
Ramakhala: Terrorist financing offences can basically be described as when a person willfully provides or collects funds by any means, directly or indirectly, with the unlawful intention that they should be used to carry out a terrorist act or by a terrorist organisation or individual terrorist even in the absence of a specific link to that act of terrorism.
Emphasis may be made that whereas money laundering is committed through illicit means, terrorist financing can be committed from both illicit and legitimate funds.
LT: But are there any terrorist financing issues in Lesotho or is this just a precaution to ensure the country is safe from this criminal act?
Ramakhala: Studies done so far have not picked on any terrorist financing here in Lesotho. However, this does not rule out the possibility of terrorist financing in our country, given the fact that the full implementation of anti-money laundering and combating financing of terrorism measures is still in its initial stages.
LT: What are some of the obvious signs of money laundering which the public can pick and alert your office or law-enforcement agencies about?
Ramakhala: There are a couple of money laundering signs that the public can easily pick and alert us or law-enforcement agencies about. These include unusual, large transactions and unusual patterns of transactions which have no apparent economic or legal purpose.
Money laundering suspects can further be seen by immediately withdrawing funds just deposited from unexplained sources, as well as transactions or financial activities inconsistent with the customer’s profile.
LT: Since the FIU is an arm of government, can it then act against powerful ruling party officials or politically connected individuals should they be found to have committed a crime which falls under the jurisdiction of this Unit?
Ramakhala: The FIU is an agency of the government, but entrusted to function autonomously. But as earlier stated, the FIU does not investigate but provides intelligence to law-enforcement agencies, irrespective of the status of an individual, under review. Ours is an administrative-type FIU, which does not get involved in investigations but supports all the country’s law-enforcement agencies with financial intelligence, as mentioned before. Some of this intelligence can be gathered from our foreign counter-parts and then passed on to the relevant requesting law-enforcement agency. Consequently, a distinction between undertaking an investigation with the aim of gathering evidence should be made where the FIU makes an analysis of suspicion to determine if a possible offence of money laundering or terrorist financing has been committed.
LT: What is the difference between the FIU and the Directorate on Corruption and Economic Offences (DCEO)? The DCEO says its core business is fighting corruption and economic offenses using a classical three-pronged approach namely public education, prevention and investigation. This mandate sounds quite similar to that of the FIU. So are the two organisations not duplicating their roles?
Ramakhala: Under the Money laundering and Proceeds of Crime Act, the DCEO shall investigate and with the consent of the Director of Public Prosecutions, prosecute wrongdoing. The FIU, on the other hand, provides pure financial intelligence to law-enforcement agencies such as the DCEO and the intelligence does not form part of evidence that may be tendered in a court of law. In short, the FIU is a buffer between accountable institutions that feed it with information about suspicious financial activities and law-enforcement agencies that investigate such suspicion on the basis of analysis made by the FIU.
So the role of the FIU should not be confused with that of the DCEO or the police. Like I said, the FIU’s functions are mainly to receive, analyse and disseminate disclosures of suspicious financial activities. This dissemination is made either to the DCEO, the police or Lesotho Revenue Authority (LRA) if the suspected offence is tax-related.