- Council targets money laundering
- NBFIRA, BoB, Finance Ministry, FIA team up
In the wake of rising allegations centered on corruption involving the misappropriation of public funds, the Bank of Botswana (BoB), in partnership with other financial institutions has launched a Financial Stability Council (FSC), aimed at monitoring the financial sector to address the ongoing crisis.
Bank of Botswana Governor, Moses Pelaelo said that the council will share information and where desirable, facilitate collective and coordinated approaches to financial sector monitoring frameworks and crisis resolution.
The Governor said there is a specific need to address the challenges arising from implementation of the Anti-Money Laundering and Combatting the Financing of Terrorism protocols and requirements. Botswana is amongst many countries that lose billions in money laundering every year.
Top of the concerns according to Pelaelo is the requirement to decisively address the incipient misconduct and governance challenges in the financial sector, deriving from greed and/or misunderstanding or incompetence with respect to fiduciary responsibilities, as well as opportunistic crime and fraud. According to the BoB boss, the council will also involve consideration of a deposit protection scheme for the country, to guarantee access to deposits up to a specified threshold, in the event of bank failure.
He said coordinated oversight is necessary because while the relevant institutions are distinctly and individually supervised at a micro level, the financial system encompasses interconnected relationships and activities and is subject to common and transferable risks. Therefore, he said the Council is designed to foster collaboration and coordination in the four areas of: sharing of data and information for purposes of monitoring and risk assessment; overseeing and guiding macro-prudential policy framework and implementation; regular briefings, consultations and policy review with respect to relevant developments; and structured and coordinated response to any financial system imbalances and resolution as may be necessary.
The Financial Stability Council comprises the leadership of the Ministry of Finance and Economic Development (MFED), the Bank of Botswana (the Bank), Non-Bank Financial Institutions Regulatory Authority (NBFIRA), and Financial Intelligence Agency (FIA), institutions that are involved in developing legislation and regulations, policymaking and supervision with respect to the whole or facets of the financial sector. It is acknowledged that the respective institutions have unique statutory mandates, objectives, oversight frameworks and operational spheres, albeit mostly related.
In this regard, the Financial Stability Council is not established to usurp or dilute the role of the respective institutions, which is neither feasible nor desirable. Rather it is to share information and where, desirable, facilitate collective and coordinated approach to financial sector monitoring frameworks and crisis resolution.