FINSEC SUPPORTS MARKET INTEGRITY

Capital or securities markets provide opportunities for investors to invest and grow their money. However there are some who may be tempted to use the capital market as a conduit for illegal activities. They attempt to do this by taking advantage of the integrity of the capital market to hide the origins or purposes of ill-gotten funds and hope to use securities market to 'clean' their 'dirty' money. This money laundering and financing of terrorist activities negatively affects the entire financial and capital system of the world. Regulatory authorities impose strict obligations on all participants to adhere to Anti-Money Laundering statutes. In Zimbabwe, we are governed by the Bank Use Promotion and Suppression of Money Laundering Act [Chapter 24: 24] and its implementing regulations. Money l aundering is generally defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the proceeds appear to have been derived from legitimate origins or constitute legitimate assets. It is the policy of the FINSEC to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities by complying with all applicable requirements under the Bank Use Promotion and Suppression of Money Laundering Act [Chapter 24:24] and its implementing regulations. FINSEC's Anti Money Laundering (AML) and Combating of Financial Terrorism (CFT) policies, procedures and internal controls are designed to ensure compliance with all applicable Anti- Money Laundering and Financing of Terrorist Activities regulations and are reviewed and updated on a regular basis to ensure appropriate policies, procedures and internal controls are in place to account for both changes in regulations and changes in our business. Money laundering happens in three main stages. In the first stage cash first enters the financial system at the "placement" stage, where the cash generated from crim i nal activities i s conver ted i nto monetar y instruments, such as money orders or bank drafts, or deposited into accounts at financial institutions. At the second stage commonly referred to as the "layering" stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin. The third and final stage is the "integration" stage, where funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses. Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal either the origin of the funds or their intended use, which could be for criminal purposes. Legitimate sources of funds are a key difference between terrorist financiers and traditional criminal organisations. In addition to charitable donations, legitimate sources include foreign government sponsors, business ownership and personal employment. Although the motivation differs between traditional money launderers and terrorist financiers, the actual methods used to fund terrorist operations can be the same as or similar to methods used by other criminals to launder funds. FINSEC believes in promoting market integrity to reduce money laundering and/or financing of terrorist activities. FINSEC has therefore developed and adopted sound practices which support and adhere to the principles of continuous disclosure by issuers to ensure the effective management of confidential information and facilitate the responsible handling of money laundering. FINSEC is committed to upholding solid corporate governance standards that protect market integrity and ensure compliance with both local and international standards and guidelines. The exchange has put in place robust systems that assist in complying with applicable Anti-Money Laundering and Combating of Financial Terrorism Acts. The Financial Securities Exchange (FINSEC) is a Zimbabwe registered securities exchange and a member of the Escrow Group. The Escrow Group has interests in the financial services and technology sectors. Corpserve Registrars and Escrow Systems are the other members of the group. For more information contact: 2 nd Floor ZB centre, Cnr Kwame Nkrumah and 1 st Street Harare, Zimbabwe, Tel: +263 242 758193