Regulatory Framework and Money Laundering in Zambia

Money Laundering is the system where funds that illegally acquired or generated from criminal activities are brought in the normal money circulation to hide the tracks that it was illegally sourced. The word Launder is a word derived from the word laundry, i. e. to clean up. Money laundering activities involve generating funds from a wide range of criminal activities which include: •illegal drug trafficking, •prostitution, •extortion, robbery, •counterfeit currency issuing, • false accounting e. t. c.

Money laundering has also known to further fund even worse crimes against humanity like that of terrorism and wars that intend to take over incumbent governments. In Zambia, Money laundering and other Financial crimes are enforced by the Anti-Money Laundering and Investigations Unit {AMLIU) of the Drug Enforcement Commission and the Anti-Corruption Commission (ACC) as well as the Ant-Frauds Department of the Zambia Police. Further, the government is intending to create yet another agency to fight financial crime called Financial Intelligence Unit (FIU). Of course there a number of questions that arise as to why the government should create another agency.

Before the FIU is created, a number of factors have to be considered. •Would an FIU add value to the investigations of financial crimes in the country? •How different would the FIU be from the Anti-Money Laundering Investigations Unit (AMLIU)? • What is its composition going to be like and where is it going to be placed? The Bank of Zambia? The Anti-Corruption Commission? The Ministry of Finance? The Judiciary or the Zambia Police or the Drug Enforcement Commission? • Is it going to be a stand-alone government agency to be established with a new organizational structure? 3RULES RELATING TO MONEY LAUNDERING.

The rules relating to money laundering are enshrined in the Bank of Zambia Anti-money Laundering directives, 2004 part III to VII as well as in the Prohibition and Prevention of Money laundering Act, 2001 parts IV and V. 3. 1Bank of Zambia Anti-money Laundering directives, 2004 part III to VII These rules entitled as “Customer due diligence and other obligations” are: •Anti-money laundering measures and practices •Customer identification •Verification of individual customers’ names and addresses •Verification of corporate bodies’ names and addresses •Trusts •Record keeping •Reporting of suspicious activities.

•Money laundering reporting officer •Obligations of employees •Obligations of regulated institutions Further the directives also contain other parts that include: •Co-operation with law enforcement agencies enshrined in part IV •Obligations of board and principal officers of regulated institution and Annual compliance report that are both enshrined in part V. Part VI enshrines Staff training and other obligations that include •Staff training •Programme for staff training •Staff not to disclose investigations to customer •Staff to report money-laundering offence in which involved.

Part VII tilted General includes: •External auditors •Offence and penalty • Coming into force of the Directives 3. 2Prohibition and Prevention of Money laundering Act, 2001 parts IV and V. In Part IV tilted Money Laundering Offences, includes: •Prohibition of money laundering •Offences committed by a body or person •Attempts, aiding and abetting or conspiring to commit an offence •Falsification of documents •Divulging information to unauthorised person Under Part V Prevention OF Money Laundering is: •Duties of Supervisory Authorities •Duties of Regulated Institutions •Disclosure protected 3.

3Anti-Money Laundering Authority (AMLA). The Act also provides for the prevention of money laundering and the creation of an Anti-Money Laundering Authority (AMLA). It further Establishes an Anti-Money Laundering Investigations Unit that is empowered to collect, evaluate and investigate financial information from regulated institutions. This information must relate to financial and business transactions suspected to be part of money laundering. The Unit also has powers to conduct prosecutions for the offence of money laundering. As stated in the introduction, this unit is under the Drug Enforcement Commission.

4EXAMINING THE RULES RELATING TO MONEY LAUNDERING The rules are vital in the sense that they aid in: •The enforcement and the due administration of Anti-money laundering. •The investigation of all financial crimes including counterfeiting, futures market fraud, fraudulent encashment of negotiable instruments, computer credit card fraud, contract scam, etc. ; •The co-ordination and enforcement of all economic and financial crimes laws and enforcement functions conferred on any other person or authority; •The adoption of measures to identify, trace, freeze, confiscate or seize proceeds derived from financial crimes.

•The adoption of measures which includes coordinated preventive and regulatory actions, introduction and maintenance of investigative and control techniques on the prevention of money laundering and financial related crimes. •Giving appointed bodies the powers of taking charge of, supervising, controlling, and coordinating all the responsibilities, functions and activities relating to the current investigation and prosecution of all offenses connected with money laundering.

•The establishment and maintenance of a system for monitoring international economic and financial crimes in order to identify suspicious transactions and persons involved. Another piece of legislation to note is that of the Banking and Financial Services Act CAP 387 and The Banking and Financial Services (Bureau de Change) Regulations, 2003 This contains regulations made in terms of section 124 of the Banking and Financial Services Act.

•Part II – Confers powers on the Bank of Zambia to act as the Regulatory Authority in order to give effect to the regulations. •Part III, section 8 – Prohibits and restricts the business of buying or selling of any foreign exchange to authorised persons. •Sections 5 – Gives power to the Bank of Zambia to request a bureau to, furnish information detailing any foreign exchange transaction, or provide returns in a prescribed format. The Bank may also set a threshold limit for over the counter cash transactions in which a bureau may engage.

(Section 6 of the Regulation) •Section 31 – A bureau under this section has a duty to keep and maintain adequate accounting control systems and records regarding its foreign currency exchange business. 5CONCLUSION In order to combat the scourge of money laundering certain measures have to be implemented. The measures that are derived from legislation are that a person who engages in money laundering, shall be guilty of an offence and shall be liable, upon conviction to a fine not exceeding one hundred and seventy thousand penalty units or to imprisonment for a term not exceeding ten years or to both.

Further, Any person who knows or suspects that an investigation into money laundering has been, is being or is about to be con- ducted, without lawful authority, divulges that fact or information to another person, shall be guilty of an offence and shall be liable, upon conviction, to a fine not exceeding one hundred and thirty- nine thousand penalty units or to imprisonment for a term not exceeding five years or to both. These two preceding pieces of legislation are detailed in part IV section 7 and 11 of The Prohibition and Prevention of Money Laundering Act, 2001 respectively.

Finally, the act in part VI provides for the seizure and forfeiture of property proved to be acquired from money laundering. Section 15 states that an authorised officer shall seize property which that officer has reasonable grounds to believe that the property is derived or acquired from money laundering. 6REFERENCES •Zambanker Journal , June 2011 • Bank Of Zambia Anti-Money Laundering Directives, 2004 •The Prohibition And Prevention Of Money Laundering Bill, 2001 •AML Around The World, FIU, The Zambian Case, Solomon Caleb Ngoma, 2010 •010 www. acams. org A.