By Ayanda Dlamini
Tax evasion and corruption have emerged as the most financially damaging illicit financial flows affecting Eswatini, with losses in some cases ranging from E6 million to E11 million per subject, according to the first-ever Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Typology Report released by the Eswatini Financial Intelligence Centre (EFIC).
The landmark strategic analysis, covering 2022-2024, sheds light on the scale, patterns, and evolving nature of money laundering and related financial crimes in the country’s financial system.
The report identifies tax evasion as one of the most financially significant predicate offences in Eswatini. Some of the cases investigated recorded losses ranging from E6 million to E11 million per subject, a scale that has serious implications for national revenue mobilisation.
The report, released in line with the EFIC’s mandate under the Money Laundering and Terrorist Financing Prevention Act, 2011 (as amended), provides a comprehensive analysis of trends, patterns, and emerging risks affecting Eswatini’s financial system.
It also marks a significant milestone in addressing gaps identified in the country’s last Mutual Evaluation Report (MER), which noted the absence of a strategic analysis product to guide law enforcement agencies in identifying and pursuing potential money-laundering and terrorist-financing cases.
Illicit Financial Flows on the Rise
Beyond tax evasion and corruption, the EFIC observed a notable rise in fraud-related activities, particularly mobile money fraud, including the widely reported “Facata” scam and the proliferation of Ponzi and other unregulated investment schemes.
The Centre notes that the rapid growth of digital financial services, while advancing financial inclusion, has also introduced new vulnerabilities.
Fraudsters are increasingly exploiting mobile money platforms and digital channels to move illicit funds quickly across borders, often complicating detection and recovery.
Ponzi schemes have similarly gained traction, capitalizing on economic pressures and public appetite for high-return investment opportunities. These schemes not only cause direct financial losses for individuals but also undermine confidence in legitimate financial institutions and markets.
Fiscal and Economic Impact
The implications of these typologies extend far beyond isolated criminal acts. Tax evasion on the scale identified in the report directly undermines revenue mobilization efforts, constraining the government’s ability to fund public services and infrastructure.
Corruption involving inflated or fraudulent invoicing further distorts procurement processes and weakens public financial management systems. Together, these activities represent significant fiscal leakages at a time when efficient resource mobilization is critical for economic stability and development.
The report also highlights risks to consumer protection and financial inclusion. As fraud and investment scams proliferate, public trust in formal financial systems may erode, potentially reversing gains in expanding access to financial services.
Strengthening Compliance and Oversight
The typology report is intended as a practical tool for financial institutions, designated non-financial businesses and professions (DNFBPs), supervisory authorities, and law enforcement agencies.
For reporting institutions, the findings underscore the need to enhance risk-based approaches, strengthen customer due diligence, and refine transaction-monitoring systems to detect suspicious patterns consistent with the identified typologies.
Supervisory authorities are encouraged to intensify risk-based supervision and ensure that institutions implement AML/CFT controls effectively. The report also provides intelligence insights to help law enforcement agencies prioritize and coordinate investigations.
Notably, the EFIC emphasises the importance of beneficial ownership transparency. Anonymous corporate structures and proxy arrangements remain common features of complex money laundering and corruption schemes.
Strengthening transparency around the true ownership and control of legal entities is essential to closing loopholes exploited by criminals.
Cross-Border and Digital Risks
Another key theme emerging from the report is the growing cross-border dimension of financial crime. Transactions facilitated by digital platforms often have international components, necessitating stronger regulatory cooperation and information-sharing with foreign counterparts.
As financial crime grows increasingly sophisticated and digitally enabled, the EFIC emphasizes the importance of leveraging technology, data analytics, and inter-agency collaboration to stay ahead of evolving threats.