- It is the bank’s prerogative to close any account as a business decision
- Advised by the bank to take their businesses elsewhere
- Given back their millions through cheques
- Inside sources say accounts were closed over risk appetite-type reasons
- Local banks refusing to accept some spies as new clients
TEFO PHEAGE
In the wake of a clean up at the Directorate of Intelligence Services and a change of guard at the spy agency commercial banks, it has emerged under pressure to close accounts of former DIS agents and declined to accept their deposits.
Information reaching this publication reveals that Barclays Bank has decided to shut down bank accounts of former top members of the intelligence community (DIS) in what has been explained by experts in the field as a brave move to contain the risks and the costs of compliance with anti-money laundering laws in respect of Politically Exposed Persons-PEPs.
Isaac Kgosi has denied allegations that his bank accounts have been closed and that he is now in possession of a cheque in lieu of his bank balance.
Highly placed sources have informed this publication that former DIS senior agents were recently informed that the, “bank has decided it will close your accounts, and you will have to take your businesses elsewhere.” The sources said no reasons were given and the spies were told that the decision was final. “It is the bank’s prerogative to close any account as a business decision,” another senior insider revealed to this publication also stating that millions were returned through cheques and they were advised to take their funds elsewhere. Information reaching this publication is that major banks have declined to house funds from the said individuals citing reputational threats such as the recent National Petroleum Fund scandal in which at least two commercial banks have regularly been mentioned.
There are a total of ten commercial banks that are all subsidiaries of foreign banks operating in Botswana. In 2017, the Anti-Money Laundering and Counter-terrorism Financing Measures Report revealed that “the Botswana banks which are foreign owned or foreign controlled banks have a better understanding of their Money Laundering/Terrorism Financing risks by virtue of implementing their parent Anti Money Laundering policies.”
The report said that the Financial Intelligence Agency (FIA) received a total of 246 suspicious reports from 2014 to June 2016, with most of the reports filed by banks.
When confronted for enquiry on the Bank accounts closure, Isaac Kgosi, the former director at DIS, dismissed the reports, “That is not true. It’s just rubbish,” he said in an interview with this publication. Kgosi said the news was spread by people who are out there to tarnish his name.
Kgosi is implicated by the defence attorney in criminal proceedings in which Bakang Seretse, Botho Leburu, Kenneth Kerekang and Khulaco Pty Ltd have been charged with a single count of money laundering, contrary to Section 47 of the Proceeds and Instruments of Crime Act. The former Director General of the DIS is also a key figure in the parliamentary probe investigating the maladministration of the National Petroleum Fund from which the P250 Million was reallocated without compliance with statutory regulations.
No efforts were made to get an official response from the bank as Section 43 of the Banking Act does not permit for disclosure of clients’ information without a written and freely given permission of the customer.
Information reaching the Botswana Gazette reveals that the estimated value of the closed accounts is in the region of P30 million. According to internal sources the cheques have remained un-deposited as no other commercial bank is willing to take on the risk. Banking experts indicate that for the closure of accounts with such sums of money the decision would have had to have been taken at the highest levels of the banking institution.
The Botswana Gazette engaged an expert in the field of banking and compliance who did not want to be named, who advised that issues of Anti Money Laundering have become a serious and growing threat to banks in Botswana and that they have been advised to be on the lookout in order to minimise risks.
“Over exposures due to compliance failures by banks in respect of PEPs that they did not identify results in banks being exposed to reputational risks for unwittingly accepting funds from PEPs, if it later emerges that huge sums banked with them were actually proceeds of corruption,” the expert said.
“Generally when PEPs attempt to open bank, asset or investment accounts, enhanced due diligence is expected to be conducted which includes ascertaining and verifying source of wealth and the bank/banks may have realised that they slept on the job. In due course court orders may be coming the direction of the banks to enquire on the money, origins and so forth and nobody wants the stress,” he advised, further adding that the bank must be seen to be doing something.
He said the order to close accounts may as well have been an order or advice from their parent leadership to consider the decision as most banks are going the same route in the countries where some Botswana banks are controlled and managed.
“A PEP is an individual who is or has been entrusted with a prominent function. Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery.”
In 2014 it was reported that JP Morgan, a leading global financial services firm and one of the largest banking institutions in the United States, with operations worldwide closed the bank and credit card accounts held by non-domestic PEPs in the US in order to contain the risks and the costs of compliance with anti-money laundering law in respect of PEPs. Experts lauded the decision saying it made business and legal sense because PEP compliance is one of the most difficult and expensive areas in anti-money laundering law.
It is not only the Americans, in 2016 a report commissioned by the Financial Conduct Authority revealed that, between them, two large (unnamed) UK banks were closing about 1,000 personal and 600 business/corporate accounts per month for “risk appetite-type reasons”.
It also revealed that the Financial Ombudsman Service (FOS) was dealing with 20 to 30 complaints a week about bank account closures. However, the FOS told the UK Guardian that it estimated that the figure was now nearer 80-90 a week.
In 2012, BBC reported that the chairman of a key consumer body- the Financial Services Authority’s Consumer Panel, Adam Philips raised complaints that Banks are currently closing customer accounts without explanation and refuse to discuss their decisions.
Philips who attacked the practices as going against the rules of natural justice revealed that the banks say they are following anti-money laundering rules.