Anti-Money Laundering,
Combating the Financing of Terrorism,
Combating Proliferation Financing,
(AML/CFT/CPF)
Training
2024
REPORT OUTLINE
FINANCIAL CRIMES
• Money Laundering
• Terrorist Financing
01 •
•
Proliferation Financing
Predicate Offenses
• Ecocash Financial Crime Controls
KNOWING CUSTOMERS & RECORDING TRANSACTIONS
02 • KYC/CDD.
• Record Keeping
SUSPICIOUS TRANSACTIONS
03 • Suspicious Transactions – Legal Aspects
• Suspicious Transactions - Examples
• Suspicious Transactions - Reporting
• High Risk Persons – Customers on Sanctions Lists
RISK BASED APPROACH
04 • Risk Based Approach
• High Risk Persons
• High Risk Persons – Politically Exposed People
• High Risk Persons – Customers on Sanctions Lists
Financial Crimes
3
MONEY LAUNDERING
What are the stages?
IMTT Tax 1. Placement: Placing illicit
How they do it?
funds into financial system
e.g., through a Cash In 1. Disguising source of funds
What is it?
transaction Why criminals do it? 2. Changes its form e.g., from
• Process of concealing illicit
2. Layering: Multiple transaction cash to real estate
gains from criminal activity It enables them to launder or
such as multiple Cash In and
wash dirty money. It protects 3. Moving to places where
such as fraud, corruption,
Cash Out to confuse trail and
criminal source of wealth and there is no much attention
bribery robbery and
hide source of funds
criminals can enjoy funds as such as rural areas
prostitution
3. Integration: when the money though they came from
• In short, it is cleaning of
is reintroduced into the legitimate sources
dirty money All this can be facilitated
economy and appears clean
through Ecocash hence the
• This can be done through
need to be on the lookout
Ecocash
• Money Laundering is a
criminal offense in
Zimbabwe
TERRORIST FINANCING
▪ Terrorist financing involves dealing with money or property that may be used for financing terrorist activities. In
Zimbabwe, financing of terrorism is criminalized under section 9 of the MLPC Act [Chapter 9:24].
▪ Imagine a situation where Ecocash is used to transfer funds to or from terrorist groups to fund their activities – that is
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terrorist financing.
▪ Ecocash can be used to send and receive funds for terrorist activities although the risk is still low because Ecocash does
not do outbound transactions especially to terrorist countries.
▪ The methods used by terrorists to move money are substantially the same as those used by other criminals, such as the
following:
High value Commodities: gold and diamonds can also be used to transfer
value across borders as both are easy to convert into cash.
Methods
Cash couriers: Cash is smuggled across borders e.g. through land
used by crossings and sea shipments
terrorists
Traditional Financial Institutions - vulnerable to abuse by terrorists. E.g.,
accounts can be opened, and small withdrawals & deposits
PROLIFERATION FINANCING
"Proliferation financing" refers to: the act of providing funds or financial services which are used, in whole or in part, for the
manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of
nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual
IMTT Tax
use goods used for non-legitimate purposes), in contravention of national laws or, where applicable, international obligations.
PREDICATE OFFENSES
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Examples of predicate
offenses:
A predicate offence – or
In a financial context, the • Forgery
predicate crime – refers
predicate crime would be
• Sexual exploitation
to a crime which is a • Cybercrime
any crime that generates
What are predicate
component of a larger • Illegal arms
monetary proceeds. trafficking
crimes all about?
crime.
• Fraud
• Extortion
• Human Trafficking
• Illegal trafficking of
narcotics
ECOCASH FINANCIAL CRIME CONTROLS
1. Appoint compliance officer to lead compliance function
2. Institutional Risk Assessment
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3. Risk assessments to identify all money laundering risks
4. AML Policies and Procedures
5. Customer Due Diligence
6. Ongoing transactional monitoring to identify all money laundering red flags
7. Transactional screening to identify all money laundering red flags
8. Reporting all money laundering related STRs to the FIU
9. Risk Based Approach to classify and categorise customers based on the money laundering risk that they bear
10. KYC processes to identify all customers
11. Transactional records which can be reconstructed
12. Training of board, management employees and DMT partners on all money laundering related issues
13. Data protection on customer personal data to prevent ID theft for money laundering purposes
14. Senior management approval for PEPs and applying risk-based approach based on their money laundering risk
15. Identifying source country of funds and purpose for remittances to identify potential money laundering
16. Technological solutions – automated AML system
Knowing Customers and
Recording Transactions
9
KYC/CDD
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• Know Your Customer (KYC) is a • Ecocash is mandated to do
process that involves getting a 1 reasonable efforts to determine
customer’s data before starting 3 the identity and beneficial owner
a business relationship of accounts including ongoing
What is due diligence through
KYC/CDD transactional monitoring
and what is
Ecocash
expected to
do?
2
• (KYC) is about performing 4 • DMT transactions (Cash In and
customer due diligence (CDD), Cash Out) must follow KYC/CDD
i.e. identifying and verifying the
identity of a customer procedures
• This therefore means that every
Ecocash customer must present
their identification for verification
before carrying out a cash in or
cash out transaction
RECORD KEEPING
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• Ecocash should maintain, for at least 5years, all necessary records on transactions, both domestic and international, to
enable them to comply swiftly with information requests from the competent authorities.
• These records are in completely filled Ecocash transaction books which are signed by customers.
• Such records must be sufficient- to permit reconstruction of individual transactions (including the amounts and types of
currency involved, if any) so as to provide, if necessary, evidence for prosecution of criminal activity
• Record keeping obligations are meant to assist FIU and law enforcement agencies should the need arise to investigate a
customer or a transaction
• Ecocash should therefore maintain all books and records with respect to their customers and transactions.
• Ecocash should also ensure that CDD information is available on a timely basis to law enforcement agencies and FIUs
Risk-Based Approach
12
RISK BASED APPROACH (RBA)
IMTT Tax
What is the RBA?
A risk-based approach means that Ecocash identifies, assesses, and understand
the money laundering and terrorist financing risk to which it is exposed, and take
the appropriate mitigation measures in accordance with the level of risk. The
How it looks like:
rationale is that all customers and product do not bear the same ML/TF/PF risk
Risk factor Client A Client B Client C
Does Ecocash apply RBA? Is customer a PEP? P P O
Ecocash applies the RBA and conducts periodic institutional risk assessments Is customer a foreigner or resides
P O O
in high risk areas?
based on the following which are classified into low, medium and high risk:
Does customer have suspicious
Customers Geography P P O
transactions?
Product Transaction patterns
Delivery channel Risk rating (RBA Approach) HIGH MEDIUM LOW
HIGH RISK PERSONS
These are customers with a higher chance or propensity of committing money laundering and other financial crimes.
Enhanced due diligence and heightened transactional monitoring need to be applied for these customers such as:
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Non-resident customers
Customer from countries that
do not sufficiently apply FATF
recommendations High Net worth individuals
Trusts Politically Exposed Persons
Entities with complex structures Unregistered or unregulated
investment vehicles
Non face to face customers Correspondent Banks
HIGH RISK PERSONS – POLITICALLY EXPOSED PERSONS (PEPs)
A PEP is any person who is or has been entrusted in Zimbabwe with prominent public functions, including but not limited to, a Head of State or of government, a senior government,
judicial or military official, a senior executive of a state-owned corporation, or a senior official of a political party; or
any person who is or has been entrusted with prominent public functions by a foreign country, including but not limited to, a Head of State or of government, a senior government, judicial
or militaryIMTT Tax
official, a senior executive of a state-owned corporation, or a senior official of a political party; or
any person who is or has held a position as a member of senior management of an international organisation, including the position of director, deputy director, member of the board or
equivalent functions; or
any close associate, spouse or family member of a person referred to the above paragraphs
Below is the Ecocash process to onboard PEPs :
Confirm that search result is a PEP true match or family member/close
associate true match.
Search mechanism applied for Identification of PEP at on-boarding stage. If individual is on UN sanctions list, Ecocash does not onboard
All PEPs are high risk clients because of their influence and positions
they hold
Obtain Senior Management approval for PEP relationships.
Approval of the Relationship
Senior Management to document approval or refusal.
Schedule review PEP relationship in accordance with risk category of the client.
Ongoing Monitoring Apply trigger events management for ad hoc events during PEP business
relationship.
HIGH RISK PERSONS – CUSTOMERS ON SANCTIONS LISTS
IMTT Tax What are sanctions lists
01 • Sanctions lists are records of individuals, organizations, and governments that are being penalized by a regulatory
body
Why are individuals and organisations sanctioned?
02 • Individuals are sanctions for various reasons especially financial crimes such as ML/TF/PF
• Examples of sanctions lists are UN list, EU list, OFAC list
• Individuals on sanctions lists are not allowed to transact on Ecocash
How does Ecocash determine who is on sanctions lists?
03 • As a control Ecocash does sanctions screening through an automated system called Financial Crime Module (FCM)
to screen customers against sanctions lists
• If the individual or organisation is sanctioned, Ecocash will not proceed with onboarding
Suspicious Transactions
17
SUSPICIOUS TRANSACTIONS – LEGAL ASPECTS
Section 30 of the Money Laundering and
Proceeds of Tax
IMTT Crime Act, 2013:
Obligation to report Attempted Reports to be
Financial institutions and their respective suspicious transactions submitted to the
directors, principals, officers, partners, transactions, promptly, shall also be FIU through
professionals, agents and employees that
suspect or have reasonable grounds to suspect but not later than three reported within Compliance Unit.
that any property-
(3) working days after the same
• Is the proceeds of crime;
forming the suspicion period.
• Is related or linked to terrorism or the
financing of terrorism.
Shall submit promptly, but no later than three
working days after forming the suspicion a
report to the RBZ (includes attempted
transactions)
NB Confidentiality
Inapplicability of confidentiality provisions Identity of staff who Staff are protected provisions of
Protection of identity reported is protected from liability customer data do not
Exemption of liability
apply
SUSPICIOUS TRANSACTION - EXAMPLES
Subscriber Receiving Money Multiple Times
(daily, weekly and monthly)
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Subscriber Sending Money Multiple Times Providing fictitious or reluctance in providing
(daily, weekly and monthly) minimal/normal KYC information
Frequent remittance receipts from unrelated Customers who frequently exchange large
parties sums of money or large volumes of
transactions on Bureau de Change platform
Customers who frequently purchase forex
for the same reason e.g. BTA or PTA
Once off transaction or Unexplained activation of
dormant account
Customers who consistently bust limits and request limit reset
SUSPICIOUS TRANSACTIONS - REPORTING (STRs)
IMTT Tax
Suspicious transaction refers to any transaction (including attempted Who should identify and report STRs?
or proposed), regardless of the amount that:
• Did you know that?
• appears unusual; ➢ Ecocash has a Money Laundering Reporting Officer -
• has no clear economic purpose;
• appears illegal; Munyaradzi Rupondo – email:
• does not commensurate with the customer’s profile or business activities;
[email protected]• involves proceeds from an unlawful activity;
• indicates that the customer is involved in money laundering or terrorism cc:
financing activities
[email protected] ➢ The MLRO is responsible for submitting all STRs to the FIU
In simple terms – these are transactions outside the normal
expected behavior of an ordinary customer.
THANK YOU
