FIU moves on illicit transactions

…Cuts withdrawal limits

TINASHE MAKICHI

The Financial Intelligence Unit (FIU) has instructed banks, bureau de change and money transfer agencies to cut daily foreign currency withdrawals by half on domestic remittance services as it moves to control money laundering and terrorism financing, it emerged this week.

The directive comes as a number of institutions such as Mukuru and BancABC, among others, are providing domestic money remittance services in foreign currency.

In a directive dated May 19, FIU director general Oliver Chiperesa said there were attendant risks associated with the use of cash and  the inherent risk are particularly high where “high value foreign currency denominated cash transactions are involved”.

“The case becomes even greater in the case of walk in client who can split and launder high amounts by spreading their transactions across multiple financial institutions and/ or using proxies in the form of friends and relatives,” Chiperesa said.

He said there was need to put in place “appropriate” measures to ensure that financial institutions are not used as unwitting conduits that facilitate money laundering, terrorism financing and related illicit transactions.

Business Times can report that the daily limit is now US$500 from US$1 000 for those with a bank account with the sending institution. They have also been limited to a maximum of US$2000 a month.

For walk-in customers with no account with the institution, the daily limit is now US$250, from the previous US$500. They can only now withdraw a maximum of US$1000 a month.

The FIU said domestic foreign currency remittance services shall be permissible only for person-to-person transfers.

Corporate entities are expected to use inter-account transfers to effect business payments.

In addition, the financial institutions have also been ordered to comply with and implement all anti-money laundering and combating financing of terrorism requirements, including customer due diligence, transaction monitoring as well as identifying and reporting suspicious transactions to FIU.

“Financial institutions offering this service shall put in place necessary ICT infrastructure and tools to analyse transactions and extract such reports or returns as may be required by FIU or by RBZ including daily, weekly or monthly reports on values and volumes transacted, overall or per customer,” Chiperesa said.

 “Financial institutions should be aware of the money laundering and terrorism financing risks presented by this financial product especially the heightened risks presented by walk in clients utilising the service and should therefore put in place measures to mitigate the risks.”

Chiperesa said financial institutions are required to assess the money laundering and terrorism financing risks and put in place necessary controls in compliance with Section 12B (4) of the Money Laundering and Proceeds of Crime Act (Chapter 9:24).

He said FIU and the Reserve Bank of Zimbabwe were supportive of initiatives by financial institutions to “continuously innovate and offer financial products that meet the needs and convenience of the transacting public”.

The Financial Intelligence Unit was established in 2004 in terms of section 3 of the Bank Use Promotion and Suppression of Money Laundering Act [Chapter 24:24].

It exists as a Unit in the administrative establishment of the Reserve Bank of Zimbabwe but has its own governing statutes giving it a mandate distinct from that of the central bank.

The Unit bears the primary responsibility of ensuring AML/CFT compliance, but works in close cooperation with supervisory or regulatory bodies of the various types of designated reporting institutions to ensure that the regulated entities comply with their AML/CFT obligations. The Unit also works with relevant stakeholders in ensuring the investigation, prosecution, conviction of criminal offenders and confiscation of recovered assets or funds.

According to the National Anti-Money Laundering and Combating Financing of Terrorism strategic plan 2020-2025, Zimbabwe has set four key priority areas.

It will have AML/CFT awareness and capacity building. This will require that the various agencies of the national task force specifically those that are of a supervisory nature to ensure improved understanding by all relevant stakeholders from designated institutions right up to the public in general on the of the Money Laundering and Proceeds of Crime Act expectations and requirements, regulatory and supervisory frameworks, guidance and procedures which are easy to understand.

Another strategic priority is pursuing parallel investigations which would make more frequent use of external experts (for example forensic accountants) their parallel financial investigations when in the expertise is not available in-house, among others. Zimbabwe will operationalise the asset recovery fund as it intensifies the confiscation and forfeiture of criminal proceeds.

The Registry of Companies will extend the existing register to include beneficial ownership information of companies and other commercial partnerships.