The Financial Action Task Force (FATF), an international financial crime watchdog, added Namibia to its “grey list” on Friday. The South African country now faces special scrutiny to implement standards aimed at preventing money laundering and terrorism financing.
According to Bloomberg, central bank Governor Johannes Gawaxab said in a statement that the decision has several implications for Namibia, including potential negative impacts on FDI, trade and financial transactions.
Whether the decision gets turned around or not hinges on how much the country in question takes the recommendations to heart and puts policies in place to fix things up.
African countries on grey list
As of October 2023, the FATF has reviewed 129 countries and jurisdictions and publicly identified 102 of them. Of these 76 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process.
On average, it takes countries on the grey list five to 10 years to get themselves removed from it, according to Glacier Invest. However, it is very possible to reverse the decision in a shorter time. Mauritius is a good example, having been removed after less than two years on the grey list.
While the historical impact of greylisting on finances remains inconclusive, studies conducted after 2016 have reported a decline of up to 16% in cross-border payments.
A study by the International Monetary Fund (IMF) conducted in 2021 and authored by Kida and Paetzold examined the impact across all financial flow measures. This study, which used more recent data and the most comprehensive list of grey-listed countries revealed an average decline in capital flows equivalent to 7.6% of gross domestic product (GDP).
Similar to the impact of a credit rating downgrade, the market and broader economic repercussions do not occur immediately upon the announcement of the event but gradually over time if not remedied.
Source link : https://africa.businessinsider.com/local/markets/global-financial-crime-watchdog-adds-namibia-to-grey-list/2ne0p2n
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Publish date : 2024-02-23 08:00:00
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