Countries/Jurisdictions of Primary Concern - Zambia
Zambia is not a major financial center. The proceeds of narcotics transactions and public corruption are the main sources of laundered funds. Wildlife trafficking and human trafficking also are problems. Banks, real estate agents, insurance companies, casinos, and law firms are the institutions most commonly used to launder money. Criminals in Zambia have used structuring, currency exchanges, monetary instruments, gambling, under-valuing assets, and front companies to launder illicit proceeds. Other devices include securities, debit and credit cards, bulk cash smuggling, wire transfers, false currency declarations, and trade-based money laundering via the purchase of luxury goods, such as vehicles and real estate.
Zambia is not considered an offshore financial center. The Government of Zambia is developing a number of multi-facility economic zones that are similar to free trade zones.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO
KYC covered entities: Commercial and development banks, building societies and microfinance entities, savings and credit institutions, money exchanges and remitters, securities firms, and casinos
Number of STRs received and time frame: 75 in 2012
Number of CTRs received and time frame: Not applicable
STR covered entities: Commercial and development banks, building societies and micro-finance entities, savings and credit institutions, money exchanges and remitters, securities firms, insurance companies, venture capital and pension funds, leasing companies, and casinos
money laundering criminal Prosecutions/convictions:
Prosecutions: 55 in 2011
Convictions: 16 in 2011
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Zambia is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF-style regional body. Its most recent mutual evaluation report can be found at: http://www.esaamlg.org/reports/view_me.php?id=195
Enforcement and implementation issues and comments:
The Prevention and Prohibition of Money Laundering Act only indirectly requires identification of customers, as part of its requirement to document transactions. The Bank of Zambia’s Anti-Money Laundering Directives of 2004 provide a direct customer identification obligation, which is applied flexibly to avoid financial exclusion in rural areas. Zambian banks have voluntarily adopted KYC rules.
The Financial Intelligence Centre (FIC), Zambia’s financial intelligence unit, continues to look for capacity building and financial support from international donors. At present, most financial crimes, including money laundering, are prosecuted through the Drug Enforcement Commission (DEC), which has a dedicated Anti-Money Laundering Investigations Unit. Like much of the Zambian government, those authorities tasked with investigating and prosecuting financial crimes are hampered by a lack of resources and capacity. The latest DEC Annual Report, covering 2011-2012, cites the following statistics for AML arrests: 79 (2011) and 82 (2012).
In May 2012, the Government of Zambia enacted Statutory Instrument (SI) 33, prohibiting the use of foreign currencies in domestic transactions. In July 2013, the government enacted SI 55, imposing new reporting requirements for all foreign currency transactions, including all imports and exports. These SIs were expected to aid enforcement of Zambia’s AML/CFT laws and regulations; however, they were both revoked in March 2014. On January 1, 2013, Zambia transitioned to a rebased local currency, the kwacha. This is expected to aid AML enforcement by making previously concealed funds worthless.
The Government of Zambia should become a party to the UN International Convention for the Suppression of the Financing of Terrorism.