Eswatini, a small kingdom nestled in southern Africa, has recently gained notoriety as a transit hub for large-scale money laundering activities. Despite its modest size, the country’s strategic location, economic ties with neighboring South Africa, and the financial advantages offered by its economic zones have made it an attractive point for illicit financial flows. Recently leaked documents from Eswatini’s Financial Intelligence Unit (EFIU) have shed light on suspicious transactions involving millions of rands that originated in South Africa and were funneled through Eswatini before being transferred to Dubai.
The leak revealed a complex network of financial transactions, raising alarms among investigators both within Eswatini and internationally. In particular, the movement of funds from Eswatini to Dubai raised serious questions about the legitimacy of these payments, as they appeared to have no clear business purpose. The leaked files revealed how politically connected businessmen and corporations used Eswatini’s financial system as a channel for moving illicit money, effectively laundering large sums under the radar.
Special Economic Zone and Its Role in Money Laundering
One of the main focal points of this laundering operation was Eswatini’s Special Economic Zone (SEZ), which was initially created to boost the country’s economy. The SEZ was intended to attract foreign investment by offering tax incentives and a conducive environment for business development. However, it soon became apparent that these incentives were being exploited for illicit purposes. Companies operating within the SEZ, particularly those with links to politically influential figures, were implicated in these suspicious financial transactions.
In 2018, Eswatini’s authorities began investigating a local businessman who had connections to a Dubai-based gold trader. This businessman, along with a group of partners, was linked to multiple companies that were set up within the SEZ, where funds originating in South Africa were deposited. These funds were swiftly moved through various channels, including the companies Mint of Eswatini and Schofield & Co., before reaching Dubai, where they disappeared into the global financial system.
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While the SEZ had initially been billed as a promising development for Eswatini, it was quickly tarnished by allegations of misuse. The zone, which was supposed to house a gold refinery, remained underdeveloped, and the financial activity associated with it appeared far from legitimate. This created a situation where money could easily pass through Eswatini, making it difficult for investigators to trace the origins of the funds or ascertain the true purpose of these transactions.
Layers of Suspicious Cash Flows
The investigation revealed that a network of companies was used to obscure the flow of money. Between November and December 2018, Schofield & Co., a company based in Eswatini, received large sums of money from a company in Johannesburg, AMFS. These payments, often in cash, were quickly transferred to a Dubai account, with little to no documentation justifying the transactions. The pattern was consistent with typical money laundering techniques, such as “layering,” where funds are moved through multiple companies or jurisdictions to hide their illicit origins.
The use of cash transactions further raised concerns. Large sums of cash were deposited into accounts linked to Eswatini-based companies, before being transferred overseas. This is a classic sign of money laundering, where cash deposits are used to obscure the paper trail. In Eswatini’s case, the absence of clear business transactions made it difficult to explain why these funds were passing through the country.
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Another key element of the investigation was the Mint of Eswatini, which served as one of the conduits for the illicit money. Though Mint was purportedly involved in refining gold, there was little evidence that any actual business took place at the company. Instead, it seemed to function primarily as a front for moving money in and out of Eswatini without raising suspicion. These companies were able to operate with little oversight, creating an environment where money laundering could flourish.
Lack of Action and Challenges for Eswatini’s Financial System
Despite the mounting evidence of suspicious financial activity, Eswatini’s authorities did not take swift action. The leaked documents show that reports were filed to the country’s Anti-Corruption Commission, but investigations were slow and yielded limited results. In some instances, the people implicated in the money laundering schemes were well-connected individuals, and their political influence may have prevented more aggressive action from being taken.
This lack of action has raised questions about Eswatini’s ability to tackle complex financial crime and enforce anti-money laundering regulations. As a small nation, it faces significant challenges in policing its financial system, particularly when powerful political or business figures are involved. This makes the country vulnerable to being used as a conduit for illicit financial flows that affect not just its economy, but also regional and international markets.
The case of Eswatini highlights the challenges that smaller nations face when trying to control financial crime, particularly in an increasingly globalized financial system. While Eswatini may not have been the origin of the illicit funds, it became a critical link in a broader money laundering operation that spanned multiple countries. The country’s role in these activities underscores the importance of international cooperation and robust financial oversight to prevent such networks from exploiting weak regulatory systems.
