Zimbabwe has just made a high-level political commitment to work with the Financial Action Task Force and the Eastern and Southern African Anti-Money Laundering Group to strengthen the effectiveness of its anti-money laundering and combating financing terrorism regime.
According to FATF, Zimbabwe has already established an asset forfeiture unit within the National Prosecuting Authority and will work to implement its action plan by:
- improving understanding of the key money laundering /terrorist financing risks among the relevant stakeholders and implementing the national anti-money laundering/combating financial terrorism policy base on the identified risks;
- implementing risk-based supervision for Financial institutions and designated non-financial business and professions including through capacity building among the supervisory authority;
- ensuring development of adequate risk mitigation measures among FIs and DNFBPs, including by applying proportionate and dissuasive sanctions to breaches;
- developing a comprehensive legal framework and mechanism to collect and maintain accurate and updated beneficial ownership information for legal persons and arrangements, and ensure timey assess by the competent authorities; and
- addressing remaining gaps in the terrorism financing and proliferation financing-related targeted financial sanctions frameworks and demonstrating implementation.
The Reserve Bank of Zimbabwe already has a financial intelligence unit that can track money laundering but the central bank has problems supervising mobile money which has become a currency of its own.
The RBZ can easily monitor and supervise banks which are required to exercise know your customer (KYC).
According to the Bankers Association of Zimbabwe:
- Banking institutions should deal with customers they ‘know’. In this regard every banking institution shall establish a comprehensive Know-Your-Customer (KYC) program. The KYC program should include policies and procedures for customer acceptance, customer identification, ongoing review and monitoring of accounts and risk management.
- The KYC procedures should enable the banking institution to collect sufficient information to develop a customer profile that will enable the institution to realistically determine when transactions are suspicious or potentially illegal.
- The banking institution’s board of directors should be fully committed to an effective KYC program embracing policies and procedures for proper management oversight, systems and controls, segregation of duties, training and other related policies, including procedure for handling suspicious transactions .
The RBZ falls short on mobile money. It does not have the same controls on mobile money which can therefore be a massive conduit for money-laundering.
Although each of the three networks in the country has mobile Ecocash dominates the market. It has 6.6 million clients compared to NetOne’s 335 000 and Telecash’s 54 200.
However, according to the latest report from the Posts and Telecommunications Regulatory Authority of Zimbabwe, although it controls 94.4 percent of the market, Ecocash accounted for 99.6 percent of all the mobile money transactions in the country during the second quarter.
The transactions totalled a hefty $6.2 billion.
Ecocash claims that it is just a platform for transactions but according to one senior banker it knows and has control over all transactions on its platform. The Reserve Bank of Zimbabwe can therefore enforce know your customer rules on mobile money or shut the platform if it does not comply.
All the RBZ needs is to be tough and not be swayed by political pressure because things can really get out of control as they did last month.
With new notes coming, and demands likely to fall short of supply, it might be necessary for the RBZ to enforce these rules on mobile money operators before it injects cash into the market.
Like it or not, Ecocash is now a currency and something needs to be done about that if the country is to curb money laundering and stop the rot which is also eroding the value of the local currency.