By Isaac Mwanza
When Zambia enacted the law to create the Financial Intelligence Centre (FIC) in 2010, Government recognised and does still recognise the Centre as an essential vehicle in combating money laundering and promoting national security through receiving, requesting, analysing and disseminating suspicious financial transactions. So what has gone wrong now, that the nation is getting divided each time the FIC releases what it calls “Trends Reports”?
Best Practices from Western Countries
Firstly, it’s worth appreciating that a good number of countries around the globe have established Financial Intelligence centres as functional limbs of the Executive arm of government. The US Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury whose periodic data analysis is published as Suspicious Activity Reports Statistics, which is essentially an Excel spreadsheet with multiple tabs.
Also, the UK Financial Intelligence Unit (UKFIU) receives, analyses and distributes financial intelligence gathered from Suspicious Activity Reports (SARs). Nearly all of the SARs data is shared with UK law enforcement through a secure channel, enabling visibility of over two million SARs that can be used to deliver impact against crime threats.
Why is there uproar in Zambia over the FIC reports?
The current uproar in Zambia as regards the FIC reports is, in the main, not only centred on lack of clarity in the law on how the FIC Trends reports must be disseminated and to whom, but also the type of information being published and the massive detail which, with subtlety, connect State institutions and individuals to wrongdoing (corruption, money laundering, and tax evasion) without according these institutions and individuals any right whatsoever to respond.
Where is the wrong in the manner FIC disseminates its data?
Firstly, an examination of best practices from both the US and Britain show that financial intelligence entities in those countries do not publish the information to the public that would, in the minds of the American and British public, connect State institutions or their political leadership (whether under investigation or not), to these reports. Those foreign centres are still able to disseminate information to the public without being suggestive as to who is alleged to have done or not done what wrong.
Secondly, these financial intelligence units are custodians of raw data. What do we mean when we say raw data? Intelligence practitioners use the term “raw data” as a common sense category, as a description of information they want or have gained access to, in the same manner FIC gains access to banking records of citizens, that is, by receiving this information from the financial institutions as mandated by law.
The principle concept to understand in financial intelligence analysis is that analysts try to understand a financial world they cannot see by patching together a mass of data from various sources. This data can vary greatly in reliability, completeness, and bias. One must therefore not wonder that the Drug Enforcement Commissioner, Ms. Alita Mbahwe, said this about the FIC reports:
“…the intelligence reports disseminated [by FIC] to law enforcement agencies such as the Drug Enforcement Commission sometimes turn out to be false on enquiry leading to closure of cases, a situation which is always misconstrued as inaction by investigative wings.”
To be clear, raw intelligence is raw data gathered by an intelligence operation, such as the data we have seen published in the Trends Reports by the FIC. As a matter of intelligence practice, such data require processing and analysis to make it useful and reliable. To turn the raw intelligence into a finished form, the steps required may include decryption, translation, collation, evaluation and confirmation.
In the United States of America, the Central Intelligence Agency was created to collate, analyse and summarise the raw intelligence collected by the other departments while in Zambia that duty is reserved for law enforcement agencies. US agencies which focus on the collection of raw intelligence include the National Reconnaissance Office and the National Security Agency and the CIA itself collects human intelligence – essentially a whole lot of stories from people.
When Zambia’s lawmakers enacted the law to provide for FIC, they understood that raw data on its own is useless until it is made useful by law enforcement agencies, the courts, and the policy makers. The process of putting data to good use begins with its acquisition of data to interpretation of this data by other institutions or experts interpret so it can become information. None of this actually matters for purposes of a decision yet, it’s just more refined than raw data.
Once a significant amount of information is organised by FIC or indeed any other intelligence body, it is then that these institutions arrive at knowledge of what is really is happening. Combining this with a much bigger part of the story, institutions like FIC do, at that point, shape up what is called an intelligence assessment. Ordinarily, data in its raw format is become increasingly refined by intelligence analysts who come together to see a picture form. That is not an investigation but intelligence assessment.
The Zambian law is quite clear at this point. The function of FIC as provided in Section 5(2)(a) would be ‘to make a suspicious transaction report and determining whether there are reasonable grounds to transmit reports for investigation by law enforcement agencies or foreign designated authorities.’ Further, Section 5(2)(b) categorically states that the FIC “shall disseminate information to law enforcement agencies where there are reasonable grounds to suspect money laundering or financing of terrorism or proliferation.”
It is clear that while Zambia’s financial intelligence Centre can make an intelligence assessment that reasonable grounds exist to suspect money laundering or financing of terrorism or proliferation, this task does not extend to further carrying out the necessary investigation to establish criminality or otherwise; the law does not permit or authorise the FIC to undertake investigations. Rather, the FIC is under a legal obligation, stipulated by the Financial Intelligence Centre Act itself, to hand over their suspicious activity report, to law enforcement agencies.
But what obligation does the FIC have to the public? Does such an obligation include giving details to the public on matters which are under investigation by law enforcement agencies?
The FIC has an obligation to the public as stated in Section 5(2)(e), that is, “to educate the public and reporting entities of their obligations and inform them of measures to detect, prevent and deter money laundering and financing of terrorism or proliferation.” It should be abundantly clear, therefore, that the FIC does not have the mandate to make public its Suspicious Activity Reports, not even when names of the persons or entities under suspicion, are removed and replaced with X or whatever wannabe identities they choose to use.
The presumption of innocence, as guaranteed and enshrined in our Constitution, comes into operation here: the fact that a person, either natural or corporate, receives or sends a large amount of money, does not constitute a crime even if the person does not ordinarily receive or send! Such large amounts of money may be a matter of routine or convenient business practice.
As a matter of fact, it is this unusual activity which the FIC is mandated to look out for, but once it is detected, the FIC is by law required to pass the information on to law enforcement agencies who have the power to investigate and, where appropriate, to prosecute any person suspected to be engaged in illegal financial activities.
In sum, the FIC is not obliged to disseminate to the public, any of the information which it collects because such information is of a preliminary nature and affects persons who are protected by or under the constitutional presumption of innocence. The fact that no names are mentioned, is immaterial; the law clearly stipulates to whom such information is to be made available, and it does not include the public.
On the other hand, when such information leads to action by the law enforcement agencies, such as an arrest and possible prosecution, the law enforcement agencies are empowered, at the point of arrest, to publicly name the culprit and state the charge(s) against such a person.
Does Zambia need to reform the FIC?
The answer is that Parliament must, as a matter of urgency, reform the FIC by amending the Act that establishes the FIC.
As stated earlier, the US Financial Crimes Network is a bureau of the United States Department of the Treasury. It would not hurt to make the FIC a specialised department, either under the direct oversight of the Treasury or the Drug Enforcement Commission which will soon be changing its name to the Anti-Narcotics, Economic and Financial Crimes Agency (ANEFA) or better still as a Financial Unit under the Zambia Security Intelligence Services (ZSIS).
The advantage is that, by placing it under the DEC which is responsible for investigation of crimes related to money laundering and part of the National Intelligence Centre, its reports will be handled carefully to avoid jeopardising any investigations by any law enforcement agency through disclosure of details.
The disclosure of details by FIC, in whatever form, does easily alert sophisticated wrongdoers who may then take steps to destroy evidence, or to hide their actions or to flee the country, thereby defeating the ends of justice, as noted by the Commissioner of the Drug Enforcement Commission in her statement on this issue.
Secondly, the reports published by FIC are – without any recourse to aggrieved entities – lowering the standing of individuals who do not have the opportunity to howsoever explain themselves before their details, in whatever form, find themselves around social media blogs where shrewd individuals with scores to settle, begin to put names of real people to these reports on pure speculation.
The FIC Trends reports are also gravely putting State institutions in bad light to the world at large. This was not the essence of creating the FIC, to have a government wing put other State institutions on their defence for no reason at all.
The most useful part of the FIC Trends Report – no doubt – is its ability to excite the public and as a weapon for eroding public trust and confidence in their Government and its elected leaders. For some diplomats, this may soon become a tool to justify the withholding of developmental support to the current administration and ushering a puppet administration.
The FIC Trends report is also a useful tool for any person or entity or groups of persons or entities, usually in the political realm, to score points against their opponents by linking these FIC Trends Reports, to individual persons in the government, or to government officials or, more broadly, to the government itself. This is a gross abuse of FIC data, but we have already witnessed the damage that these speculative reports can do.
The Auditor General – in 2018 – made more reports to DEC (45 reports) than FIC (which made 16) but it is the sensationalisation of the FIC report that attract the public eye because of its ability to create a negative narrative for the current regime and Government. If not handled with care, these reports will cause the public to lose confidence in the civil service – which is the engine which runs the Government. The reports, untested and unverified, will also increase voter discontent against their own Government with a very sad ending: revolts caused by a well-calculated scheme executed through a governmental body for the eventual downfall of the Government.
Article 88 (1) of the Constitution of Zambia reads,
“A citizen may petition the National Assembly to initiate the enactment, amendment or repeal of legislation.”
We need to amend the legislation that provide for the work of the FIC by placing it as a specialised agency under the DEC or a unit of the ZSIS.
The creation of the Financial Intelligence Centre was done in good faith and still has a role to play in our country’s quest to fight against financial crimes and terrorism. This noble task must be done in good faith where the Centre must be providing information, advice and assistance to law enforcement agencies in furtherance of an investigation by these agencies rather than publicly exposing its raw data which is subject to investigation by law enforcement agencies. The Centre was created as an arm of government, and not an adversary of Government or its institutions. It cannot also be used as a vehicle for spreading formalised gossip which only be useful for the political ends.
Disclaimer: The views in this article do not necessarily represent the views of this media nor the institutions the author is affiliated to or has membership on but represent the views of the author who is a governance and legal expert