By Tawanda Musarurwa
Zimbabwe’s financial services sector is critical in the battle against money-laundering, an expert has said. Money laundering basically refers to the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.
Addressing participants at a Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) workshop on anti-money laundering and combating financing of terrorism, senior analyst (Regulatory Policy & Research Bank Supervision Department) at the Bank of Zambia Calvin Habasonda, said customer profiling and monitoring was essential in spotting financial irregularities.
“As a bank, the profiling of customers that you do is not in vain, it’s actually very useful. And the KYC (know-your-customer information) is not information that should be gathered and stored in archives, but it’s information that should be used on a daily basis to make a determination whether a customer is operating in the proper or defined frameworks,” he said. “It’s very important to monitor customers and their operations.”
According to Mr Habasonda, the money laundering cycle is rarely used by financial institutions to identify the risks they face from money laundering.
He said gaps in the law are easily exploited by criminals, which is why compliance is not effective in preventing money laundering.
In terms of anti-money laundering and counter financing of terrorism Zimbabwe is guided by the Money Laundering and Proceeds of Crime Act [Chapter 9:24].
And earlier this year, the Government has gazetted the Money Laundering and Proceeds of Crime (Amendment) Bill which seeks to strengthen the Financial Intelligence Unit of the Reserve Bank of Zimbabwe (RBZ) by giving it autonomous powers to effectively combat the crime.
The Bill will amend section 27 of the National Prosecuting Authority (Chapter 7:20) section six of the Criminal Matters (Mutual Assistance Act) (Chapter 9:06) section 87 of the deeds Registries Act (Chapter 20:05) section 210 of the Customs and Exercise Act (Chapter 23:05).
It will also amend section 5 of the Income Tax Act Chapter 23:06) section 34A of the Revenue Authority Act (Chapter 23:11) section 360 of the Companies Act (Chapter 24:03) and the Bank Use Promotion Act (Chapter 24:24.)
“Such activity has the power to undermine the integrity of financial entities and to corrupt legitimate industries. It threatens the political stability of states and societies. It damages the reputation of companies and nations. This has adverse consequences for the reputations, operations, and legal status of financial institutions,” he said.
“MEFMI is also concerned by the threat to global peace and stability posed by terrorism. One of the key measures to check terrorism is to choke financial resources flowing toward perpetrators of terrorist acts ie countering the financing terrorism.”
He said there is need to promote prudent anti-money laundering (AML) and combating financing of terrorism (CFT) initiatives within the corporate entities, starting with banking and financial systems within the region.
MEFMI is a regionally owned capacity building organisation with 14 member countries; Angola, Botswana, Burundi, Kenya, Lesotho, Malawi, Mozambique, Namibia, Tanzania, Swaziland, Zambia and Zimbabwe.