27 Jan 2022

Most trusts are set for legitimate and noble causes, but research has shown that some are being used as vehicles for money laundering, terrorism and proliferation financing. 

Minister of Justice Defence and Security, Mr Kagiso Mmusi said this when presenting the Trust Property Control Bill (Amendment) of 2021 before Parliament on Tuesday. 

Minister Mmusi said the objective of the bill was to re-enact with amendments, the Trust Property Control Act to align it with the Financial Intelligence Act and regulate the control of trusts in Botswana. 

He said the Trust Property Control Act was first enacted in 2018, and established the legal framework for the regulation and control of trusts in Botswana. However, he said, owing to gaps in the Act there was minimal vetting and control of trusts in the country, which presented a laundering vulnerability through which criminals could disguise. 

Thus the bill aimed at closing those gaps, he said. Minister Mmusi said amending the existing Act would strengthen the country’s financial systems as well as comply with recommendations of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and Financial Action Task Force (FATF).

He noted the act was first amended in 2019 to clarify beneficial ownership requirements for trusts and to introduce requirements for trust to keep accurate and up-to-date information about their affairs. “Beneficial ownership through trusts and related legal arrangements must be available to competent authorities without legal impediments. This is achieved through defining what is considered to be a beneficial owner in the act. 

In this area, Botswana was found wanting as information was found to be inaccurate, outdated and not easily accessible,” he said. Thus the bill sought to introduce the regulation of trust service providers; provide for their registration; and provide for regulation of foreign trustees, he said. 

Additionally, said Mr Mmusi, the amended bill would empower the Master of the High Court to receive trust instruments executed before June 29, 2018; failure to comply would invalidate such instruments. Kgalagadi North MP, Ms Talitha Monnakgotla supported the bill as she said it aligned with amending the Financial Intelligence Act. Ms Monnakgotla concurred that criminals could use trusts on the pretext of donating. 

She said the bill would protect and regulate trusts’ properties, as they would be registered with the Master of the High Court. Ms Monnakgotla said international donors financed most trusts, and such trusts could easily be used to launder money. 

“We want investors with clean records, not those who will launder money through them,” she said. Meanwhile, MP for Palapye, Mr Oneetse Ramogapi said the bill must not only focus on compliance with FATF recommendations but must equally benefit locals. Mr Ramogapi noted that trusts were beneficial to communities, and the bill would offer legal protection of their goods and finances. He also said distribution of assets to identified beneficiaries would become easy. 

Supporting the proposed bill, Mochudi East legislator, Mr Mabuse Pule stressed the need for the Act to align with ESAAMLG and FATF recommendations, as that would help the country to deal with complex and sophisticated crime. 

Mr Pule said some churches were among bodies registered as trusts and were targeted by criminal syndicates for money laundering activities. 

Mahalapye West legislator, Mr David Tshere agreed there was need to amend the law, as trusts financial dealings were not regulated, creating a loophole for criminals. Mr Tshere said the proposed law would frustrate financing of terrorism and money laundering through trusts. 

ends