Sanitising business and monetary transactional processes: An insight into anti-money laundering
FUNGAI CHIMWAMUROMBE AND MARTIN MASITERA
Introduction
Zimbabwe, like many countries around the world, has implemented laws and regulations to combat money laundering, a financial crime that can have severe consequences for the economy and society as a whole.
Criminals use money laundering to conceal their crimes and the money derived from them.
Therefore Anti-Money Laundering seeks to deter criminals by making it harder for them to hide ill-gotten money.
What is money laundering?
Money laundering is the process of making large amounts of money generated by a criminal activity, such as drug trafficking, terrorism or organized crime and making it appear to be earned legally. It involves concealing the source of the money and creating a complex trail of transactions to disguise its origin.
What is anti-money laundering?
Anti-Money Laundering (herein referred to as AML) refers to the laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legal and genuinely amassed income typically obtained through criminal activities such as corruption, terrorism or organized crime. The goal of AML is to disrupt and dismantle the financial networks that support these illegal activities, thereby protecting the integrity of all sound financial systems. Effective AML measures involve a combination of customer due diligence, transaction monitoring, and reporting suspicious activities to the relevant authorities. AML has become a critical component of financial regulation, requiring ongoing vigilance and collaboration among governments, financial institutions, and other stakeholders to stay ahead of emerging threats and prevent the misuse of financial systems.
The legislative framework
The primary legislation governing AML in Zimbabwe is the Money Laundering and Proceeds of Crime Act [Chapter 9:24] of 2004, which was enacted to suppress the abuse of the financial system and enable the unlawful proceeds of all serious crimes to be identified, traced, frozen, seized and eventually confiscated. This Act establishes it as an offence to launder money and it sets up the Financial Intelligence Unit (FIU) as the central agency responsible for receiving, analyzing, and disseminating financial intelligence related to money laundering and other financial crimes.
Regulatory bodies
The FIU is the main regulatory body responsible for overseeing the implementation of AML regulations in Zimbabwe by;
l Receiving, analyzing and disseminates reports of suspicious transactions from financial institutions and other reporting entities.
l Conducting investigations into suspected money laundering activities
l Providing guidance and support to financial institutions and other reporting entities on AML matters
l Collaborating with other law enforcement agencies and regulatory bodies to combat money laundering.
Other regulatory bodies that play a role in AML in Zimbabwe include the Reserve Bank of Zimbabwe (RBZ), which is responsible for regulating and supervising financial institutions, and the Zimbabwe Revenue Authority (ZIMRA) which is responsible for collecting taxes and preventing tax evasion.
Obligations for financial institutions and other reporting entities
Financial institutions and other reporting entities such as banks, insurance companies are required to implement AML measures to prevent and detect money laundering. The measures include:
l Conducting customer due diligence to verify the identity of customers and assess their risk profile
l Monitoring transactions to detect and report suspicious activity
l Maintaining accurate and detailed records of transactions and customer information
l Providing training to employees on AML matters
l Reporting suspicious transactions to the FIU
Conclusion
Anti-Money Laundering is an important aspect of Zimbabwean law, financial institutions and other reporting entities must implement measures to prevent and detect money laundering. The FIU plays a critical role in overseeing the implementation of AML regulations, and reporting entities must comply with their obligations to report suspicious transactions and conduct due diligence to curb money laundering crimes.
Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Zenas Legal Practice and can be contacted at fungai@ zenaslegalpractice.com
Martin Masitera is a legal Associate at Zenas Legal Practice (Nyanga) (Pvt) Limited and can be contacted on martin@zenaslegalpractice.com and Whatsapp +263 77 621 8956
