SECZIM develops handbook on Anti-Money Laundering

 SECZIM develops handbook on Anti-Money Laundering
Published: 23 September 2019
In a bid to assist Securities Market Intermediaries (SMIs) in understanding their obligations in the fight against money laundering and terrorist financing in the securities sector, the Security and Exchange Commission of Zimbabwe (SECZIM) will on Wednesday launch an Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) booklet.

The International Monetary Fund (IMF) defines money laundering as the processing of assets generated by criminal activity to obscure the link between the funds and their illegal origins.

Money laundering and terrorist financing has detrimental effects on the economy as it depresses economic growth, discourage foreign direct investment and affect the reputation and integrity of financial institutions. Effective anti-money laundering and countering the financing of terrorism regimes are therefore indispensable to protect the integrity of securities markets and the global financial system as they help mitigate the factors that facilitate financial abuse.

In Zimbabwe, the offence of money laundering is criminalized under section 8 of the Money Laundering and Proceeds of Crime Act [Chapter 9:24] of 2013.

However, the Money Laundering and Proceeds of Crime Amendment Bill now before Parliament will have a new clause giving power to the Zimbabwe Anti-Corruption Commission (ZACC), the Zimbabwe Revenue Authority (Zimra) and police power to demand explanation from people regarding suspicious wealth.

Terrorism Financing is the act of soliciting, collecting or providing funds, from both legal and illegal sources, with the intention of supporting terrorist activities or organizations. The financing of terrorism is criminalized under section 9 of the MLPC Act.

"Money laundering and terrorist financing can harm the soundness of a country's financial sector, as well as the stability of individual SMIs. The adverse consequences to SMIs include; liquidity problems through withdrawal of funds, termination of correspondent banking facilities, investigation costs and fines, asset seizures and decline in the market value of financial institutions," Securities market booklet will show.

SECZIM recognizes that some SMIs may have systems and procedures in place which, whilst not identical to those outlined in the handbook, nevertheless impose controls and procedures which are at least equal to, or higher than those contained in this handbook. This will be considered by the Commission when assessing the adequacy of an SMI's systems and controls.

On compliance culture, the commission expects SMIs to give due priority to establishing and maintaining an effective compliance regime and culture.

"Further, the board and senior management of SMIs have an ultimate responsibility to ensure that their systems and controls are appropriately designed and implemented and are effectively operated to reduce the vulnerability of the SMIs to Money Laundering/Terrorist Financing."

In terms of non-compliance, the commission may impose sanctions as laid out in terms of Section 5 of the Money Laundering and Proceeds of Crime Act and Sections 49 and 105 of the Securities and Exchange Act [Chapter 24:25].

The booklet highlighted that a reputation as a successful money launderer helps make criminal activities profitable and hence rewards criminals.

"Thus, to the extent that a country is viewed as a haven for money laundering, it is likely to attract criminals and promote corruption. A money laundering or terrorist financing haven, alone, could cause significant adverse consequences on the development of an economy. Foreign financial institutions may decide to limit their transactions with SMIs from money laundering havens and subject these transactions to extra scrutiny or correspondent relationships altogether. Legitimate businesses from money laundering havens may suffer from reduced access to world markets or access at a higher cost due to extra scrutiny of their ownership, organization and control systems."

The southern African nation is a member of the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG), a regional Financial Action Task Force (FATF-STYLE) body, and is required to comply with the FATF's 40 Recommendations.

The financial intelligence unit of the Reserve Bank of Zimbabwe is currently working with Treasury to tackle illicit financial flows.
- finx
Tags: Laundering,


Latest News

Latest Published Reports

Latest jobs