Zambia: FIU to Enforce Money Laundering Fight

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LAST week, President Michael Sata swore in five members of the Financial Intelligence Unit (FIU) board and that ignited my wish to feature the unit.

The unit or is it the centre, is a creation of the Financial Intelligence Centre (FIC) Act of 2010 which falls under the Government's bigger struggle against money laundering, terrorist financing and other serious offences.

This is the main responsibility Caritas Zambia executive director Samuel Mulafulafu, former Drug Enforcement Commission (DEC) Commissioner Raphael Mungole, Cecilia Banda, John Kasanga and Joseph Chikolwa, who were sworn in as board members, carry.

Leading economist, Oliver Saasa was immediately quoted by the media as having said the Unit will help the President to make correct and informed decisions.

Professor Saasa said the FIU will consider decisions made at policy and Cabinet levels. It is an independent mind that will ensure policies are taken independently and see whether policy choices taken are right or wrong.

In 2010 the Government then said it had introduced the FIU which would also help "flush out" civil servants who were living beyond their means.

Indeed there have been questions about some civil servants building mansions and living beyond their pay.

In terms of actual work, nothing much has been reported on the FIU, making one to wonder whether it was founded moribund.

According to the United States (US) Department Money Laundering Report - 2012, since 2010, when the Zambian Government passed legislation creating the FIU, independent from law enforcement agencies, the Unit has received little Government funding and was not yet operational.

But with the unveiling of the board now, a lot is expected from the body corporate whose offices are housed at the Bank of Zambia (BoZ) headquarters in Lusaka.

Money laundering takes place in both the formal financial sector and the non-bank financial sector.

According to the parent Act and as already alluded to, the main objective of the centre or unit is to prevent money laundering and the financing of terrorism.

A review of the Act by four lawyers from Corpus Legal Practitioners of Lusaka states that the centre is designed to ensure that various institutions, financial and otherwise, are not used as channels for unlawful economic gain.

"The principal objective of the centre is to prevent money laundering and the financing of terrorism. The centre therefore has no authority to prosecute crimes; instead, it is designed to ensure that various

institutions, financial and otherwise, are not used as vehicles for illicit economic gain," states the review conducted by Situlile Ngatsha, Lupiya Simusokwe, Chanda Kasanda and Charles Mkokweza.

The centre is responsible for the receipt, requesting, analysing, disclosure and dissemination of Suspicious Transaction Reports (STRs).

The Act defines an STR as a report submitted on suspected money laundering, financing of terrorism or other serious offences.

In this vein, the Act creates apparatuses for law enforcement agencies, which if used well could curb money laundering and other related crimes.

With provision for various offences, the FIC Act contains provisions which are intended to ensure that money laundering and the financing of terrorism are prevented and/or detected.

The Act forbids the establishment and maintenance of anonymous accounts and shell banks.

A shell bank is a bank that has no physical presence in the country in which it is incorporated and licensed, but that does not include a bank which is wholly owned by one or more financial institutions forming part of a regulated financial services group.

The FIC Act places various obligations on supervisory authorities and reporting entities.

Supervisory authorities include BoZ, the Pensions and Insurance Authority, the Securities and Exchange Commission, the Patents and Companies Registration Agency, the Zambia Development Agency; the Licensing Committee under the Tourism and Hospitality Act, the Law Association of Zambia and the Zambia Institute of Chartered Accountants.

The supervisory authorities are under an obligation to monitor and ensure compliance by reporting entities with their obligations under the FIC Act.

They have authority to compel the production of any information by reporting entities and to impose sanctions for any failure.

The FIC Act further stipulates due diligence and other obligations on reporting entities like record keeping and customer identification procedures.

The centre therefore ensures that various institutions, financial and otherwise, are regulated to prevent money laundering.

According to US Department Money Laundering Report, the launderers in Zambia have used structuring, currency exchanges, monetary instruments, gambling, under-valuing assets, front businesses, and non-financial institutions to launder their proceeds.

Other laundering methodologies include securities, debit/credit cards, bulk cash smuggling, wire transfers, and false currency reporting.

Further, some criminals use their proceeds to purchase luxury goods such as vehicles and real estate.

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During the week I received a congratulatory message from Ms Mildred Kaunda on my winning of the 2012 National Science and Technology Council award for the media.

Writing on behalf of the entire Cutting Edge PR team, Ms Kaunda said: "Good morning James, "A brief word to express our sincere congratulations on winning the 2012 NSTC print media award. It is well deserved. Best regards, Cutting Edge PR team."

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