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Know Your Customer Campaign: much ado about nothing

The Financial Intelligence Centre’s Know Your Customer Campaign whose deadline was on 05 October has proven to be a damp squib according to information obtained by the Economist.
Mauriza Fredericks, Communications Practitioner at the Bank of Namibia said that information at the Financial Intelligence Centre (FIC) indicates that most, but not all, clients of local banks provided the required details to their respective banks.
Despite a one-and-half year extension to the deadline, Fredericks conceded that the public’s response to calls to furnish banks with their information has not been satisfactory.
The Financial Intelligence Act of 2007 prohibits banks from transacting with a client if they have not been properly verified of the customer’s identity. Despite an earlier announcement by the central bank that customers who were not compliant by the extended deadline day of 05 October risked having their accounts frozen,  Fredericks this week said the purpose of the whole campaign was not to close bank accounts.
Fredericks said: “Legislation to combat money laundering and the financing of terrorism is not aimed at preventing institutions from doing business or causing them to lose clients. Such legislation only calls upon those institutions to make sure that they know who their clients are and to monitor their clients against the knowledge/profile that they have of their clients.”
She said this is necessary in order to pick up suspicious activities which could be possible money laundering or financing of terrorism. “In other words, institutions are required to be careful and avoid establishing business relationships with clients with obvious fictitious names and clients who do not want to provide their names and ID numbers.”
Fredericks said it is important to note that the extended deadline was granted under the 2007 Financial Intelligence Act (FIA) which was rules based.
“This Act followed a rules-based, one-size-fits-all approach and therefore required an identification process with many requirements. The 2012 FIA, which repealed the 2007 FIA, provides for a risk-based approach, which will provide for basic/minimum “Know Your Client” requirements in the complementing Regulations currently being finalized for submission to the Minister of Finance.
“The FIC recently released a circular in the media which guided all concerned institutions on what to consider in respect of the 5 October deadline. Further, the FIC also undertook to not strictly enforce the requirements of the 2007 FIA Regulations which are still in force until the new regulations are passed.”

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