Namibia at a crossroads
Unmasking trade-based money laundering in SADC’s shadow economy
Namibia’s placement on the Financial Action Task Force (FATF) grey list in early 2024 triggered national scrutiny of the banking sector, regulators, and legal frameworks. Yet, a significant threat remains largely overlooked: Trade-Based Money Laundering (TBML).TBML is a global issue but poses a particular risk to Namibia due to its role as a trade and transit hub for the Southern African Development Community (SADC). It doesn’t resemble the typical image of crime—there are no suitcases of cash. Instead, it uses fake invoices, mispriced goods, and shell companies to launder money through seemingly legitimate trade transactions. The danger lies in how well it hides within routine import/export processes.
With strategic trade routes like the Walvis Bay Corridor and close connections to countries such as Angola, Zambia, and South Africa, Namibia is perfectly positioned—but also highly vulnerable. TBML could turn Namibia into a laundering zone if gaps in customs and financial oversight persist.
Wake-up call
Though TBML wasn’t a cause of the grey listing, the situation should serve as a wake-up call. Traditional anti-money laundering tools, like bank-level monitoring and customer due diligence, don’t easily extend to trade. Customs and financial systems still operate in silos, making TBML difficult to detect.
SADC’s lack of harmonised enforcement across borders compounds the issue. Criminals exploit regulatory gaps by routing funds or goods through countries with weaker controls. For example, over-invoicing between companies in Zambia and Namibia or under-declared diamond shipments from Angola through Walvis Bay are not far-fetched—they’re common tactics globally.
Namibia has taken some steps, such as ending Structured Market Access (SMA) trading, to close loopholes in capital markets. But more must be done, particularly in empowering the private sector. Freight forwarders and customs brokers are well-placed to detect suspicious trade, but many lack the training or legal responsibility to report it.
Investment in technology, like AI, blockchain, and data analytics, could modernise how trade is monitored. Agencies like NamRA and the Financial Intelligence Centre (FIC) must integrate such tools to detect TBML early.
TBML is not just a financial threat. It distorts markets, erodes tax revenue, and damages national credibility. Grey listing may not have named it, but the signs are clear. Namibia must act now to close the gaps—before they widen into national crises.
* Karischa Schmidt is a Group Compliance Officer at Old Mutual Namibia.