A mutual report conducted by the Eastern and Southern Anti-Money Laundering Group (ESAAMLG) in 2021 and issued in April 2022 revealed that the Kingdom of Eswatini was put on observation for 12 months following the findings.
ESAAMLG is an institution responsible for facilitating the adoption and implementation of AML and CFT recommendations in Eastern and Southern Africa.
The mutual report evaluated the country on two tests, namely; technical compliance and effectiveness.
Technical compliance looks at whether the country has implemented measures or legislation to adopt the 40 recommendations set by ESAAMLG. Effectiveness on the other hand tests whether the efforts put in place are effective.
This information was disclosed by the Governor of the Central Bank of Eswatini (CBE) Governor Dr. Phil Mnisi during the Anti-Money Laundering Indaba hosted by the National Task Force at the Convention Centre.
The Governor noted that regarding technical compliance, countries are considered to have passed the test when the ratings are largely compliant.
“In the case of Eswatini, under technical compliance, the outcome indicates that the country has put in place some measures but there are some areas that need corrective action.”
Mnisi then detailed the outcome. “Out of 40 recommendations, only 4 are compliant, 11 are largely compliant, 19 of the recommendations are partially compliant, and 6 are non-compliant.”
Regarding the Effectiveness test, the Governor noted that the country achieved a low level of effectiveness on all the expected standards.
“This indicates that the country has the laws and measures but when it comes to implementation, we aren’t effective. We need to ensure that we move quickly on the effectiveness test to address this shortcoming.”
The Governor noted that following the findings there was a warning letter issued to Eswatini.
The Warning Letter in Detail
· Following the shortcomings, the FATF issued a warning to the nation to swiftly implement the report’s recommendations.
· Eswatini is under observation and has 12 months to make significant progress in remediating the findings. The country is to submit progress reports every 6 months to ESAAMLG.
· Failure to make significant progress in remediating the findings will result in the country being greylisted and considered a high-risk country.
Mnisi vehemently stated that following such potential reputational damage, the country then acted swiftly to ensure that it remediates the findings.
He outlined current achievements which will aid in ensuring that the country is not greylisted.
Achievements by the Country in Remediating the Findings
· Trained technical staff of stakeholders on the FATF recommendations and FAFT methodology in May 2022.
· Launched the intergovernmental agency framework in July 2022. There are already some cases in court through the implementation of this framework.
· Commissioned Illicit Financial Flows Committee in January 2023.
Furthermore, the Governor revealed that there were Action Plans in Progress, which entail the following:
· Draft Omnibus Law in Progress.
· National Risk Assessment in progress.
· Strategy and Action Plan in progress.
· Commissioned Supervisors Forum.
· Cash Threshold Transaction Reporting Requirement Issued.
· Commissioned Virtual Assets Policy Paper.
Impact of Greylisting & Being Classified High-Risk Country
· Appeal to Investors will be greatly affected.
· Loss of Economic activity.
· Reputational damage on Eswatini.
· Negative impact on financial stability.