Zacc goes after banks

By The Standard and Newsday | Dec. 7, 2021 | 3 Min read

The southern African country’s banking system is said to be among those with the greatest risk of being used by money-launderers on the continent, with external transactions attracting extra scrutiny.

BY PRIVELEDGE GUMBODETE THE Zimbabwe Anti-Corruption Commission (Zacc) yesterday warned that it would go after local banks providing a “haven to stash dirty money” for corrupt individuals and with systems that were not strong enough to prevent money-laundering.

Zacc deputy chairperson Phineas Murapa yesterday told a financial crime indaba in Harare that some banks were ignoring know your client (KYC) protocols, leaving them vulnerable to being used for money-laundering.

“While banks and other financial intermediaries currently have a duty to ensure that, for instance, due diligence is taken by investors coming to do business in Zimbabwe, it is a known fact that some of them are failing or neglecting to do this,” Murapa said.

“Many banks continue to provide the corrupt with a haven to stash their dirty money. This loophole is due to both overall lax in enforcement of anti-money-laundering regulations and the way that banks currently undertake due diligence on clients.”

Murapa said as a result, the public was losing confidence in the financial services sector due to its complicit role in financial crimes taking place within their institutions.

“The commission (Zacc) has been receiving many reports of corruption in the financial services sector which, in turn, erodes public confidence in the banking sector,” he said.

Murapa questioned the character of local bank executives who were reportedly stashing money in offshore accounts, indicating a lack of confidence in the institutions they lead.

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“We even understand that in some cases, executives of local banks are stashing their monies in offshore accounts. If you do not have confidence in an institution that you lead, then who do you expect to have confidence? This must stop forthwith and as Zacc, we will investigate this and expose the culprits.”

He said the commission would not hesitate to unleash the full wrath of the law on banks that were conduits of the proceeds of ill-gotten money, especially from the public sector.

“The Zimbabwe Anti-Corruption Commission will not hesitate to use its constitutional and statutory authority to arrest any perpetrators of financial crimes,” Murapa said.

Reserve Bank of Zimbabwe governor John Mangudya, who also spoke at the Zacc event, said banks played an important role in preventing proceeds of financial crimes from entering the financial system before imploring them to identify risky customers and report suspicious transactions to the Financial Intelligence Unit (FIU).

“Financial institutions, and banks in particular, play a very important gatekeeping role to prevent proceeds of financial crimes from entering the financial system, or if the proceeds do enter the financial system, to be able to detect and report the same in the form of suspicious transactions reports to the FIU,” he said.

In September this year, the Basel Anti-Money-Laundering (AML) Index listed Zimbabwe as one of the countries whose banking systems were at the greatest risk of being used for money-laundering.

The AML is an independent annual ranking that assesses money-laundering and terror financing threats globally and tracks how governments deal with the risks.

Last year, the European Union blacklisted Zimbabwe along with about two dozen countries whose financial regulations were deemed notstrong enough to prevent money-laundering and terror financing.

Zimbabwe is currently in the process of amending its Money-Laundering and Proceeds of Crime law.