Lawyers red-flagged in anti-Money Laundering report

Botswana’s legal profession has emerged as a critical weak spot in the nation’s battle against money laundering and terrorist financing, a recent regional watchdog report reveals. The assessment highlights a glaring lack of effective oversight over lawyers and other high-risk sectors vulnerable to illicit financial activities. This exposes Botswana to reputational risks as it strives to uphold its financial integrity amid mounting international scrutiny.

The Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG) issued a new evaluation titled “Anti-Money Laundering and Counter-Terrorist Financing Measures Botswana: 8th Enhanced Follow-Up Report & 5th Technical Compliance Re-Rating,” which underscores significant deficiencies in regulatory supervision, most notably within the legal profession. The report states, “The authorities did not provide any information on the progress made by the other DNFBPs (lawyers, Trust and Company Service Providers (TCSPs), and Dealers in Precious Metals and Stones (DPMS). As a result, the rating for sub-criterion 28.5(a) is now Partly Met.” This pointedly identifies lawyers as a major oversight gap.

Designated non-financial businesses and professions (DNFBPs), including lawyers, accountants, casinos, and real estate agents, represent high-risk channels for laundering illicit funds. ESAAMLG’s findings reveal that Botswana lacks detailed supervisory data to prove that lawyers are being adequately monitored to thwart money laundering schemes. Given the country’s history of challenges with global financial watchlists and its ongoing quest to restore international trust, this lapse is especially troubling.

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The watchdog did not stop at lawyers; it also highlighted Botswana’s shortcomings in overseeing companies, cooperatives, societies, and other legal entities often exploited to obscure the true owners of illicit wealth. The report notes that Botswana has not conducted a comprehensive risk assessment of all legal persons since 2020, with societies notably omitted. At that time, Botswana registered 69,133 companies, 9,639 societies, and 323 cooperatives.

Although societies constitute roughly six percent of these entities, ESAAMLG deemed their exclusion a compliance failure, emphasizing that “The criterion remains Partly Met.” Further criticism was leveled at Botswana’s lack of evaluation concerning the quality of international cooperation in tracing beneficial owners, individuals who covertly control companies and often lie at the heart of money laundering operations. “Botswana has made no significant progress… particularly in terms of monitoring the quality of assistance received from other countries regarding requests for basic and beneficial ownership information,” the report remarked. This casts doubt on the reliability and effectiveness of information exchanged with foreign counterparts in tracking financial crime.

Despite these concerns, ESAAMLG acknowledged some commendable reforms, notably Botswana’s move to prohibit bearer shares and strengthen disclosure regulations. “Botswana has made significant progress… amending key laws to prohibit bearer shares,” the report observed. Yet, it warned that these gains risk being undermined by the weak supervision of lawyers and fragile monitoring frameworks.

These revelations arrive at a pivotal moment for Botswana, which aspires to be recognized as a transparent and well-regulated financial center. Given the pivotal role lawyers play in company formation, property transactions, and financial structuring, inadequate oversight could expose the nation to renewed grey-listing threats, erode investor confidence, and fundamentally weaken its anti-money laundering defenses from within.

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