Always be alert to money launders

Money launderers use various financial intermediaries in the economy such as banks, stockbrokers, estate agents, lawyers, accountants, casinos, etc to successfully launder proceeds of crime into the economy. These intermediaries are often abused unknowingly. In some cases, however, the intermediaries are complicit in that they are knowingly and willing facilitators of the laundering or they know or suspect that the funds are proceeds of crime but choose to turn a blind eye, motivated solely by making business profits.

More sophisticated launderers or organised criminal groups go as far as owning or controlling financial banks or other intermediaries in order to facilitate their laundering activities more easily.

The offence of money laundering is provided for under section 8 of the Money Laundering and Proceeds of Crime (MLPC) Act.

At national level, the country’s anti-money laundering/criminalisaton of financing terrorism (AML/CFT) framework is set out under the Money Laundering and Proceeds of Crime Act, complemented by a number of other instruments.

The MLPC Act must be read together with directives, circulars and guidance issued by the FIU from time to time. The AML/CFT legal framework provides for the following:

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Criminalisation of money laundering; Criminalisation of financing of terrorism;

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Seizure and confiscation of proceeds of crime;

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International matters;

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Implementation of the United nations (Un) Security Council resolutions on Freezing of Assets of persons and entities designated by the UnSC as terrorists;

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establishment

(FIU);

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AML/CFT obligations and dnFBPs.

The country’s AML/CFT framework is modelled in compliance with the Financial Action Task Force recommendations, otherwise known as the FATF Forty recommendations. The Financial Action Task Force (FATF) is an intergovernmental body with the mandate to set AML/CFT Standards and to oversee compliance by countries. The FATF issued the 40 recommendations. every country is required to implement the FATF Forty recommendations and to ensure that “designated institutions” implement AML/CFT measures to guard the institutions against being used by criminals as conduits to clean-up proceeds of crime or to finance terrorism. The FATF monitors compliance by countries through a global network of FATFStyle regional Bodies (FSrBs). The eastern and Southern Africa Anti-Money Laundering group (eSAAMLg) is one of the eight global FSrBs, which Zimbabwe is a member of.

Countries are periodically assessed

There are two main classes of institutions that are subject to AML/CFT obligations, both in terms of the FATF recommendations and in terms of the MLPC Act, i.e. Financial institutions; and designated non-Financial Businesses and Professions (dnFBPs).

AML/CFT obligations of financial institutions

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Identifying, assessing and understanding the FI’s ML/TF risks and effectively mitigating the risks (the risk Based Approach);

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Board-approved AML/CFT policy: (These are high level principles that guides the institution on AML/CFT compliance; and

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AML/CFT procedures: These detail processes that must be followed by staff in implementing the various AML/CFT obligations. AML/CFT procedures must be in synch with the AML/ CFT PolicyInternal controls: These are safeguards and checks designed to ensure that the AML/CFT compliance program is functioning as intended

Customer due diligence (Cdd): This includes:

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Customer identification and verification; Identification and monitoring of high risk customers

and high risk transactions;

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Identification of Politically exposed and mitigating risks posed by PePs;

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Identifying and reporting transactions;

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Submitting threshold-based Cash Transaction reports (CTrs);

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Screening transactions / customers against Un sanctions lists;

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record-keeping requirements;

There is a lot of overlap with the above obligations, for example the obligation to identify, assess and understands the institution’s ML/ TF risks underpins and guides implementation of all the other listed obligations. All AML/CFT obligations must be tailored to respond to the institution’s peculiar ML/TF risks.

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AML/CFT procedures are meant to detail how the operational processes to be followed in complying with the other enumerated obligations, for example procedures on customer identification and Cdd, procedures on identifying and reporting suspicious transactions, e.t.c; Identifying, assessing and understanding the institution’s ML/TF risks: The risk Based Approach to AML/CFT requires institutions to have in place AML/CFT policies, procedures, controls and measures that are commensurate with the institution’s ML/TF risks. The starting point, therefore, towards creating a good AML/CFT compliance program is to identify, assess and understand the institution’s ML/TF risks. The international AML/ CFT Standards, as set out under the FATF 40 recommendations were comprehensively revised in 2012 to move away from the previous rulebased prescriptive, one-size-fits all approach, whereby institutions were required to implement uniform AML/CFT requirements regardless of the risks posed by different customers or products and services.The risk-based approach allows and requires institutions to identify the high risk situations

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