File:Secretary to Cabinet Roland Msiska giving out the Report to stakeholders shortly after the launch of the Money Laundering, Terrorist Financing National Risk Assessment Report at Pamodzi Hotel 2017

The Financial Intelligence Centre (FIC) is Zambia’s financial intelligence unit and was created by the Financial Intelligence Centre Act No. 46 of 2010 and was amended by the Act No. 4 of 2016 (the Act).It became operational in November, 2013.

The Financial Intelligence Centre has released annual Trends Reports since 2013 through publishing the report on their website. This is the first time that the FIC has conducted a “public’ release of its report when it held a news conference last week at which it invited media and stakeholders to engage them on the escalating levels of money laundering and terrorist financing trends in Zambia.As a sole statutory agency, it’s expected to be dedicated to providing timely, high quality, impartial and actionable financial intelligence to eliminate financial crimes.

The public launch of the report has not gone down very well with the ruling PF accusing the FIC of releasing “raw data” to the public and playing to the gallery.

Below is a summary of the key findings contained in the 2017 Money Laundering/Terrorist Financing Trends Report.

Money Laundering Trend Analysis

Large and Unusual Cash Deposits
Cash related transactions, which amounted to ZMW 181,534,059.93, accounted for 33.3% of the Suspicious Transaction Reports that were reported in 2017. As in other years, it was observed that large amounts of cash were being deposited in individual and business accounts. These would then be followed by wire transfers to individuals and corporations outside the country. Most beneficiaries were based in Asia.

Corruption
The number of reports received on grounds of suspected corruption represented 39% of the total number of reports received in 2017. The value of transactions was significantly high and accounted for over ZMW 6.3 billion of the total value of cases analyzed. Cases of corruption continued to be linked to public procurement contracts and were often perpetrated by Politically Exposed Person or their associates.

Illegal Small Scale Mining Activity
The Centre has continued to note the trend of foreigners purchasing stolen or illegally mined copper ore from small scale miners. In most instances, the foreigners buy the slimes and copper ore for cash. It was also noted that there were some cases of illegal takeovers of mining licenses from the locals. The amount detected was estimated to be in excess of ZMW 5 billion.

Construction
During the year, it was observed that some businesses in the construction sector made large cash deposits. This is unusual considering that payment for services provided in this sector are made either by cheque or other safer electronic means instead of cash. It was noted that a total of USD 9,668,421.14 and ZMW 14,150,918.70 cash deposits were made by construction businesses. In 2017, a total of USD 3,430,852.81 and ZMW 391,553,520.20 cash withdrawals were reported to the Centre.It was further observed that a number of construction companies awarded
contracts by some quasi-government institutions had no capacity to execute the works, while others were not tax compliant.

Agriculture
Some high value Currency Transaction Reports received by the FIC were attributed to the agriculture industry. Maize, Soya beans, cotton, fish and fertilizer sales were the most
frequently purchased/sold during the period under review. A total of ZMW
80,245,779.60 was involved.

Casinos and betting stores
Most recently, the country has seen a rise in the establishment of casinos and
betting stores. FIC has noted that the growing casino business is poorly regulated. Many are not registered, not tax compliant and can be easily used for money laundering.

Procurement Corruption
The trend in which companies connected to Politicians (Politically Exposed Person) being involved in suspected corruption and money laundering has continued. In some instances, shell companies have been used to conceal the beneficial owners of these companies.FIC noted that suspected procurement corruption mostly occurred in Government and Quasi Government Institutions when the private sector is contracted to do works. The attraction to procurement corruption is the large sums involved and the difficulty in detection due to collusion and management override. The main methods of procurement corruption are direct bidding and subsequent variation of contract sums that take away the value of tendering works. In 2017
the Centre analysed 624 reports on suspected procurement corruption.

Irregular Immigration Status
Foreigners without investment permits are allowed to set up companies and later remit business funds to their home nations using personal accounts. Majority are Asians.

Designated Non-Financial Businesses and Professions
Professionals such as lawyers, accountants or real estate agents have continued to be used as vehicles for money laundering.Most criminal elements have resorted to using these professionals to mask the source of funds and aid its movement to foreign destinations for reinvestment or use. In the cases analysed by the FIC during 2017, approximately ZMW 50 million was channeled through lawyers’ accounts. The funds were subsequently used to buy assets or withdrawn in cash presumably for the benefit of the real owners.

Use Of Personal Accounts for Business Purposes and Unregistered Businesses
The trend in the use of personal accounts for business purposes in order to
evade tax, has continued. Through this act, Zambia has continued to lose revenue
due to tax evasion by individuals and aggressive tax avoidance schemes implemented by large international corporations.The amounts of money passing through personal accounts were estimated to be ZMW 872 million and USD 48 million. This is a continuing trend where individuals that transact on behalf of corporates receive large cash amounts and make these large deposits into individual accounts.

EMERGING TRENDS

Contracting of Loans and Proposals for Large Projects

In the recent past, the Country has been approached by a number of obscure foreign entities mainly through Zambian Nationals, offering to provide finance to the Government for various projects. The FIC, after verification, has determined that some of the sponsors and their Zambian accomplices are criminal elements and are trying to either over price the cost of loans or simply to swindle the Government as the guarantor of these loans.Other cases involve the fraudulent acquisition of land through unsolicited bids to Government in order to undertake seemingly sound projects when in fact these investors have no capacity to implement the projects. As a result, Zambians may be dislocated from their land to further the interests of persons with fraudulent intentions. The public should be cautioned that some of these criminal
elements have already swindled Zambians. Citizens or state institutions may be used as accomplices for these nefarious activities.

Timber Transactions

FIC noted an increase in the number of currency transaction reports involving timber sales and they were mostly performed by individuals in regions where the prohibited Mukula tree is being harvested. This raised suspicion of Mukula traders declaring their sales as proceeds from other types of timber as opposed to Mukula tree. This was after the enactment of statutory instrument 91 of 2015, which prohibited the harvesting and export of Mukula tree. During 2017, a total of ZMW 4,454,726.00 was reported as timber related currency transactions reports. It was further observed that the deposits in the accounts of individuals involved in the timber trade were done by third parties, mostly of Asian and Zambian origin.

Below are the FIC Trends Reports for 2017 & 2016

TRENDS-REPORT-2017

TRENDS REPORT 2016

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23 COMMENTS

  1. If reading this report does not make your blood boil then you do not care about the future of this country…and they have the cheek to shoot the messenger.

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    • Just read Irregular Immigration Status, Timber Transactions, Procurement Corruption ..etc at this rate we will soon turn into DRC Congo….then you have a minister like Dora telling us that the Director was wrong to publish this …imagine all past reports have been put in the bin like the Auditors General Report.

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    • This is the reason they want to stay in power at all costs, not serving the poor masses.

      This is just a tip of the ice-berg. Most transactions don’t even pass through local banks.

      It’s a pit some of us are suffering for other peoples mistakes.

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    • Even from just the vague Public Report you can see that a lot of officials have been caught in this together with their Mukula Paymasters from China…they become too big headed that the want to steal with impunity.
      Then you have the President dancing…what are you dancing about you dingbat are you not Zambia? Are you not annoyed by that report of the plunder under your watch? Unless you are involved as well…

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    • Zambians are watching as Mutaware and his band of thieves are tearing Zambia apart. By the time they are through with the pillaging, the country will be worse off than Somali, Central Africa or South Sudan. Things are certainly falling apart in our beloved nation. You can’t entrust leadership of a nation to a thief, a man whose identity is questionable, an alcoholic, a lover of pleasure and still expect him to care about you!

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  2. for the sake of shallow minds:
    The PF created and allowed the FIC to exist, if it was not a transparent GRZ and wanted to hide things, it would`ve delayed the formation of the FIC. 2013 PF was only 2yrs old in government. this GRZ has been castigated for being the most transparent GRZ ever. people need to change the way they analyse issues and remember that the reason the PF created and allowed the creation of the FIC was to help it fight corruption, somehow people have forgotten that little FACT!!.
    since independence we`ve not had this report and therefore will never know how much we have gained or lost, but now we can trace and see if we are winning the fight or losing.
    wear new glasses and see that the PF is actually strengthening institutions rather than weakening them.

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    • And we applaud PF for being progressive enough to establish this FIC..now what do we tell the doctors who haven’t been paid for 8 months,what do we say to our relatives who are dying at UTH because of lack of medicines and equipment? The story that there is no money is obviously false.Look, we get it that everyone steals even in developed countries but at least those thieving politicians develope their countries and then steal whatever change is left,manje we steal EVERYTHING and don’t develope anything. How are people going to trust the governement with their taxes or soon coming NHI?

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    • Right you are and kudos to them for creating this wing. However, keeping a crocodile in your pool does not mean it shouldn’t eat you when you dive in. If the PF is diving in the national kitty, let the crocodile FIC eat them.

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    • @DILDO Please get your facts right, PF was not even in power….don’t be lazy research, what facts are talking about…. the FIC was established under section 3 of the Financial Intelligence Centre Act No. 46 of 2010 (the Act) of the laws of Zambia BUT one thing you should note is that FIC became operational on April 1, 2011 via a Statutory Instrument (S.I.) Number 22 of 2011. Through FICA, the Government of the Republic of Zambia (GRZ) hopes to prevent the misuse of public funds, the abuse of the financial system, and emphasize enhanced transparency and protection of the integrity of the financial system(ACAM Today, 2011)

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    • So PF created FIC in 2010 before they came into power in 2011? Are you OK in the head mudala?

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    • @ DILDO we forgive you. You are obviously too young to know that there was an Institution called CITET during the Kaunda era.

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    • Soon as you see a name like DILDO and then proceed to read the inaccuracies you realize this is the usual trend to peddle fake news with a lot of words and intimidating style. Cioneni bati! You could even be part of those encouraging the rape of your own country!

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  3. Zambians we need to protect that young Director at FIC before these selfish evil criminals in State House destroy her!!

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  4. This is the problem with us Zambians when it comes to issues of great importance that affect service delivery and short changes everyone…they avoid such topics simply look at this thread…no no no.. the docile nincompoops would rather talk about useless issues about what the fooools in opposition or the ruling party said at a rally…or about so and so has filed for divorce because X doesn’t perform in bed.

    Wake up your docile foooooooools and you wonder why you are wallowing in poverty you simpletons!!!

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  5. Rightly so it was first thought out in 2010, but its upto the sitting grz to operationise any unit when they dim fit. Ala mukanaka, castigating Ba PF while they just steam roll everyone,because you so called abamano don’t get the real reason PF beat MMD.

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  6. It was Micheal Sata’s PF which created the FIC and reappointed most of Levy Mwanawasa’s people to continue the fight against corruption.
    Edgar Lungu’s PF has been getting rid of Sata’s people and bring back Rupiah Bandas tandem of crooks.
    Don’t mislead people by making blanket statements such as “Its the PF that created the FI”.
    We are dealing with two different PF governments

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  7. We want to see if Jonathan Mutaware is responsible enough to act on his thieving ministers and advisors. A responsible president would have addressed the nation and shown concern about these criminal activities going on under his watch! If Jonathan Mutaware does not fire his thieving lot, we can conclude that he is part if not the architect of the mass looting going by his philosophy of Ubomba Mwibala! It is clear now that BOZ was artificially maintaining a stable kwacha dollar exchange rate. With our reserves down to $1.8bn and widening budget deficit and ballooning debt, we are headed for serious economic troubles ahead! The FIC report shows that criminal elements, both local and foreign, have taken over all institutions of government! Mutaware owes the citizens an explanation on the…

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  8. This is a good report. What is the function of the public protector in Zambia? Do we have such office in Zambia? The public protector must take up these cases on behalf of all Zambians please.

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    • Public protector has not protected even one person. How can it protect the public?

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  9. This is bad. But what hurts is that nothing will be done, i really wish I could vote PF out immediately. Im tired.

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Comments are closed.