Zim makes progress in  anti-money laundering efforts

Tawanda Musarurwa Senior Business Reporter
Zimbabwe’s insurance and pensions sector is targeting to complete assessment of its exposure to money-laundering crimes.

The assessment is expected to “inform a Risk-Based Approach to Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT) supervision.”

The Financial Action Task Force (FATF) recommends that countries are required to identify, assess, and understand the money laundering and terrorist financing risks for the country, and should take action, including designating an authority or mechanism to coordinate actions to assess risks, and apply resources, aimed at ensuring the risks are mitigated effectively.

The insurance sector is typically vulnerable to white-collar crimes due to high levels of financial flows.

The Insurance and Pensions Commission (IPEC) is currently in the process of implementing a sector risk assessment, which is expected to be completed by year end.

“We envisaged completion of IRAs and Sectoral Risk Assessment by December 2020,” said IPEC director for pension supervision Mr Cuthbert Munjoma during the AML/CFT awareness workshop for the insurance sector last week.

Following the completion of the assessment, IPEC has said there will be enhanced focus on AML/CFT supervision going forward.

Because of the role and structure of insurance and pensions business, players in the sector typically operate by moving funds from parties with excess capital to parties needing funds.

All things being equal this financial intermediation works to create efficient markets and lower the cost of conducting business.

But it also makes the sector a target for money launders.

Money laundering has over the years become a potent threat to economies across the globe due to the rising volumes and sophistication of white collar crimes.

According to United States-based financial crime experts Comply Advantage, the main targets of money launderers in the insurance industry are single premium policies (insofar as these enable criminals to get rid of substantial amounts of money in one go), as well as annuity policies (with the money launderer getting to receive a legitimate income after paying premiums by using ‘dirty money’).

Enhancing Anti-Money Laundering (AML) regulation within the local insurance and pensions industry, is particularly important due to the significant exposure of the sector to the financial sector and other key industries.

The local pensions and insurance industry is heavily invested in the Zimbabwe Stock Exchange, on money markets and in property, which can be left exposed if linked to white-collar crime.

Meanwhile, according to the second money laundering and terrorist financing National Risk Assessment (NRA) of 2019, the national money laundering threat for Zimbabwe was assessed to be medium.

“Out of the 14 predicate offences assessed, the major predicate offences generating proceeds were: fraud, smuggling, illegal dealing in gold, corruption and tax evasion,” said Financial Intelligence Unit (FIU) senior manager Mr Tongesayi Murape.

“Assessed value of the proceeds of crime for the period under review, (2014-2018) was estimated to be an annual average of $900 million per year, down from the $1, 8 billion for the last NRA.”

“The main factors contributing to the down trend were: improved gold  collection strategies (from 6 tons to 24 tons per annum), and improved security arrangements in Chiadzwa diamond area, and more actively by the Minerals and Border Control Unit.”

Zimbabwe is a member of the FATF Global Community, which is responsible for setting and continuously updating international standards on Anti-Money Laundering and Combating Financing of Terrorism.

 

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