Govt goes after ill-gotten wealth

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Tawanda Musarurwa
Government has started tracking unexplained transfers of money in the country’s financial system through the Asset Management Unit (AMU), which it has already set up and housed under the Reserve Bank of Zimbabwe (RBZ), as it moves to curb money-laundering, unmask ill-gotten wealth and curtail a litany of vices threatening the domestic financial system.

Chief among the targeted improprieties is money laundering, which basically refers to concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.

The AMU was established by way of amendment of the Money Laundering and Proceeds of Crime Act [Chapter 9:24] following the promulgation of Statutory Instrument 246 of 2018 earlier this week.

Under the recently gazetted regulations that took effect since the beginning of the current week, the Government is now tracking unexplained movement of money in the financial system.

Unexplained wealth orders statute
The new piece of legislation, Statutory Instrument 246 of 2018 encompasses an ‘Unexplained Wealth Orders Statute’, which empowers the High Court, on an ex parte application made by an enforcement authority, to make an unexplained wealth order in respect of any property if the court is satisfied that each of the requirements for the making of the order is fulfilled.

“An unexplained wealth order is an order requiring the respondent to provide a statement— (a) setting out the nature and extent of the respondent’s interest in the property in respect of which the order is made;  and (b) explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met);  and (c) where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order; and (d) setting out such other information in connection with the property as may be so specified,” reads part of the amended regulations.

Last month, President Mnangagwa instructed the Justice Ministry to work expeditiously with the Attorney-General’s Office to draft regulations to bring currency manipulators and money launderers to book. This came as speculative currency trading and arbitrage on parallel markets caused a wild spiral in prices of goods and services in the country.

Asset Management Unit mandate
To this extent, the AMU has been established with a mandate to manage, monitor, safeguard and maintain properties (cash, real estate and personal properties) that would have been restrained, seized, forfeited or recovered under the Money Laundering and Proceeds of Crime Act [Chapter 9:24].

According to SI-246 of 2018 Chapter VI (A) (100B) (1): “Subject to this Act, the function of the AMU shall be to act as receiver or trustee for all property for which a receiver or trustee may be appointed in terms of section 37K, 41(2)(c), 69(2) or 82(1)(c), for which purpose it may do anything that is reasonably necessary to preserve the property and its value…”

According to the regulations the budget for the AMU will be approved by the board of the RBZ, but the unit will be managed by a Director-General independent of the central bank.

However, the unit will be subject to internal audit by the RBZ and would also be liable to being audited by the auditors of the apex bank.

The AMU will give effect to Government’s bid to combat the problem of money laundering in the country, which appeared to reach epic proportions and spiral out of control in recent years.

Measures to curb illegal financial practice
In terms of anti-money laundering and counter financing of terrorism, Zimbabwe is guided by the Money Laundering and Proceeds of Crime Act [Chapter 9:24], which borrows from global best practice.

And earlier this year, the Government gazetted the Money Laundering and Proceeds of Crime (Amendment) Bill which seeks to strengthen the Financial Intelligence Unit of the Reserve Bank of Zimbabwe (RBZ) by giving it autonomous powers to effectively combat the crime.

The new stipulations outlined in SI-246 of 2018 is a further strengthening of that law.

With the strengthening of the RBZ’s hand in combating money laundering through the establishment of the AMU in particular, being a key strategic move.

Senior analyst (regulatory policy & research bank supervision department) in the Bank of Zambia Calvin Habasonda says the financial services sector is vital in the battle against money-laundering.

Habasonda says the money laundering cycle (there are three stages involved in money laundering; placement, layering and integration) is rarely used by financial institutions to identify the risks they face from money laundering.

Instead, he added, Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) policy and frameworks are developed around relevant local and international laws, allowing for gaps that are easily exploited by criminals, which is why facile compliance is not an effective strategy to prevent money laundering.

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