Page 28 - Noble Magazine • July-August 2020-1

EDUCATION

Money Laundering

Schools Must Mitigate

Money Laundering Risk

A place probably would An accountable institution is defined Once the AML/CFT risk assessment
the
school
is
you
as “any legal entity registered or
has been completed, and it should be
last
consider being used as a
incorporated under any law” and
appreciated that it is a living document
vehicle to launder illegal
an organisation can then set about
employee. Legal entities in Botswana
money. However private schools and includes any associate, subsidiary, or any and must be reviewed regularly,
universities, just like most businesses, captured by the definition include trusts implementing the other important
can be used as instruments of financial and companies. A trust is required to be measures including:
crime. Schools and universities caught registered with the Master of the High
up in money laundering are usually Court pursuant to the Trust Property • AML/CFT policies, programmes,
unwitting participants. The amount Control Act 2018, while a private procedures, and controls to
of money laundered through a school company must be registered with the educate and guide staff on what the
is not significant compared to other Companies and Intellectual Property organisation and they must do to
techniques, but the volume can be Authority. If a school or university in comply with the law. The AML/CFT
increased with the help of school Botswana operates as a trust or as a frameworks should be more than just
administrators who receive a kickback private company or a combination of a a compliance exercise undertaken
or “commission” from criminals trust with a company as the trustee, then by an educational institution. For a
to move illegal money through the it is an accountable institution and must system to be effective, it is important
school. making the funds returned to comply with the FIA and regulations. to build a culture within the
them appear to have originated from a It is beyond this article to state all the organisation where managers and
legitimate source. AML/CFT obligations a private school or employees of all levels understand
university as an accountable institution the threat posed to their country,
Last year, private schools in the UK must comply with, but a summary of the community and organisation by
were identified as being soft targets for core compliance obligations is briefly criminal activities and will therefore
money laundering. While in the US, the discussed here. do the right thing and go beyond the
recent nationwide college admissions minimum required by law;
scandal involving many prominent When designing any anti-crime
people has highlighted the risk of an measure, the first step is to assess the • Development and maintenance
education facility, in that case the criminal risk the institution is facing. The of an independent audit function
University of Southern California, being assessment of criminal risk is important to examine and evaluate the
caught up in financial crime. Parents not just for a school or university but for effectiveness of the educational
have been charged with conspiracy to any business. Understanding all risks, institution’s AML/CFT programme;
launder money for concealing bribes including criminal risk, are important • Designation of AML/CFT compliance
and other payments. With a charity, and a sound business planning strategy. officers at the management level to
fake consulting agreements and fake This is acknowledged in global AML/ ensure a high level of ownership and
invoices being some of the methods CFT frameworks and legally enforced in commitment to preventing financial
used to conceal funds as legitimate the FI Act. The risk assessment must be crime. The largest fines imposed
payments. done first because all other AML/CFT on financial institutions for failing
plans and mitigation strategies hang to comply with AML/CFT law have
In most countries, for example the UK off it. Some organisations in Botswana, occurred because of incompetent,
and Australia, schools are not regulated to expediate their obligation to comply poor commitment, or a failure of
by anti-money laundering and counter- with the FI Act and regulations are leadership by senior management;
financing of terrorism frameworks. designing their AML/CFT strategy and
In Botswana a private educational policies first. This approach is thwart • Establishment of procedures to
institution such as a university or with problems that will occur later. It ensure high standards of employee
school, if it is an accountable institution, could result in some risks, including integrity and a system to evaluate the
is captured by the Financial Intelligence high risks, being overlooked and personal, employment and financial
Act (FIA) and regulations which is the resources wasted on low risks which history of potential employees. In
anti-money laundering and counter- either did not require the degree of conjunction with the development
financing of terrorism (AML/CFT) law mitigation deployed or could have been
of Botswana. eliminated completely. Continues in Page 30

28 Noble Magazine // July - August 2020