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Monday, May 25, 2020

Making the Case for Zambia’s FIC and its recent trends report:

Columns Making the Case for Zambia's FIC and its recent trends report:

By Savior Mwambwa

There are many varieties and ways that FICs can be set up to carry out there mandates and i believe like many others that our own FIC here in Zambia is very much set up and operates within our laws as well as the internationally accepted customs and practices of other FICs.

Remember, its not madam Mary Chirwa or Mr John Kasanga that formed FICs, it was very much a creation of the Zambian government particularly the PF government at the behest of the international community. It also was driven by the desire to satisfy international standards and various conventions as part of international efforts to fight money laundering specifically related to “terrorist financing” and I guess to escape the much dreaded FATF black list box.

I remember back then our process in Zambia was with full participation and endorsement of other law enforcement agencies such as DEC, ACC and the Fraud and Anti money laundering units within the ZP and in consultation with stakeholders like private sector banking institutions. In other words the FIC and its creation, Financial Intelligence Act did not just drop from the air as we are being made to believe by some of the reactions to its recent trends report.

Across the globe, Financial Intelligence Centres (FICs) also known as Financial Intelligence Units (FIUs) have been set up in most countries for the general purpose of combating money laundering and have generally given them the three core functions that are part of the accepted definition of an FIC. The administrative arrangements by which these functions are carried out, however, vary considerably from country to country. These variations arise from different country circumstances, together with the lack of an internationally accepted model for the functions of an FIC in the early 1990s, when the first such units were established. For example, in some countries, the function of the FIC as an additional tool for law-enforcement organizations in combating money laundering and associated crimes was emphasized, and this led to the establishment of the FIC in an investigative or prosecutorial agency. Other countries emphasized the need for a “buffer” between the financial institutions and the police, and consequently their FICs are established outside these agencies.

Types of FICs

According to the IMF and World Bank overview on FICs across the world, there are various types of arrangements for FICs summarized under four main general headings: the administrative-type FIC, the law-enforcement-type FIC, the judicial- or prosecutorial-type FIC, and the “mixed” or “hybrid” FIC. It should be emphasized, however, that such classification is, to a certain degree, arbitrary and that other ways of classifying FICs are possible. Nevertheless, these categories illustrate the wide variety of administrative arrangements under which FICs are established. Like with most structures there are advantages and disadvantages of each type of FIC but I shall not go into this for now.

Let us now turn to each one of the four types of FICs in a bit more detail below:

(1) Administrative-type FICs

Administrative-type FICs are usually part of the structure, or under the supervision of, an administration or an agency other than the law-enforcement or judicial authorities. They sometimes constitute a separate agency, placed under the substantive supervision of a ministry or administration (“autonomous” FICs) or not placed under such supervision (“independent” FICs). The main rationale for such an arrangement is to establish a “buffer” between the financial sector (and, more generally, entities and professionals subject to reporting obligations) and the law-enforcement authorities in charge of financial crime investigations and prosecutions.

Often, financial institutions facing a problematic transaction or relationship do not have hard evidence of the fact that such a transaction involves criminal activity or that the customer involved is part of a criminal operation or organization. They will therefore be reluctant to disclose it directly to a law-enforcement agency, out of a concern that their suspicion may become an accusation that could be based on a wrong interpretation of facts. The role of the FIC is then to substantiate the suspicion and send the case to the authorities in charge of criminal investigations and prosecutions only if the suspicion is substantiated.

The actual administrative location of such FICs varies: the most frequent arrangements are to establish the FIC in the ministry of finance, the central bank, or a regulatory agency. A few have been established as separate structures, independent of any ministry (CTIF/CFI in Belgium, for example). In most cases, the decision to establish the FIC outside the law-enforcement system also leads to the decision that the FIC’s powers will be limited to the
receipt, analysis, and dissemination of suspicious transaction and other reports, and that they will not be given investigative or prosecutorial powers. Similarly, the powers of the FIC to disclose the information contained in transaction reports is usually defined narrowly, to preserve the confidential character of the information provided to it.

By making an administrative authority a “buffer” between the financial institutions and law-enforcement sectors, authorities can more easily enlist the cooperation of reporting institutions, which are often conscious of the drawbacks vis-à-vis their clients of having direct institutionalized links with law-enforcement agencies. Administrative-type FICs are often preferred by the banking sector. They may also appeal to other institutions and professionals that have been added to the list of reporting entities for the same reasons.

(2) Law-enforcement-type FICs

In some countries, the emphasis on the law-enforcement aspects of the FIC led to the creation of the FIC as part of a law-enforcement agency, since this was the easiest way to establish a body with appropriate law-enforcement powers without having to design from scratch a new entity and a new legal and administrative framework.

Operationally, under this arrangement, the FIC will be close to other law-enforcement units, such as a financial crimes unit, and will benefit from their expertise and sources of information. In return, information received by the FIC can be accessed more easily by law-enforcement agencies and can be used in any investigation, thus increasing its usefulness. Exchange of information may also be expedited through the use of existing national and International criminal information exchange networks.

In addition, a law-enforcement-type FIC will normally have the law enforcement powers of the law-enforcement agency itself (without specific legislative authority being required), including the power to freeze transactions and seize assets (with the same degree of judicial supervision as applies to other law-enforcement powers in the country). This is likely to facilitate the timely exercise of law-enforcement powers when this is needed.

(3) Judicial or prosecutorial-type FICs

This type of FIC is established within the judicial branch of the state and most frequently under the prosecutor’s jurisdiction. Instances of such an arrangement are found in countries with a continental law tradition, where the public prosecutors are part of the judicial system and have authority over the investigatory bodies, allowing the former to direct and supervise criminal investigations. Disclosures of suspicious financial activity are usually received by the prosecutor’s office, which may open an investigation if suspicion is confirmed by the first inquiries carried out under its supervision.

The judiciary’s powers (e.g., seizing funds, freezing accounts, conducting interrogations, detaining suspects, and conducting searches) can then be brought into play immediately.
Judicial and prosecutorial FICs can work well in countries where banking secrecy laws are so strong that a direct link with the judicial or prosecutorial authorities is needed to ensure the cooperation of financial institutions. It may be noted that the choice of the prosecutor’s office as the location of an FIC does not exclude the possibility of establishing a police service with special responsibility for financial investigations. In addition, in many countries, the independence of the judiciary inspires confidence in financial circles. The principal advantage of this type of arrangement is that disclosed information is passed from the financial sector directly to an agency located in the judiciary for analysis and processing.

(4) “Hybrid” FICs

This last category encompasses FICs that contain different combinations of the arrangements described previously. This hybrid type of arrangement is an attempt to obtain the advantages of all the elements put together. Some FICs combine the features of knadministrative-type and law-enforcement-type FICs, while others combine the powers of the customs office with those of the police. For some countries, this is the result of joining two agencies that had been involved in combating money laundering into one.

It may be noted that in some FICs listed as administrative-type, staff from various regulatory and law enforcement agencies work in the FIC while continuing to exercise the powers of their agency of origin. Among the countries that have established “hybrid” FICs are Denmark, Jersey, Guernsey, and Norway.

Although the international community quickly developed standards on combating money laundering in general, mostly through the work started by the FATF in 1989, formal recognition of the FIC as a crucial element in anti-money- laundering strategy is more recent. In the 1990 FATF Recommendations, mention was made of the need for financial institutions to report suspicious transactions to “the competent authorities,” but these “competent authorities” were not defined, and could be any government agency designated for the purpose. It was only in 2003 when FATF recommendations recognized the need for an FIC in the sense defined by the Egmont Group.

The key message is that those attacking the FIC are aiming at the wrong targets and are clearly misguided on what the FICs function in relation to other LEA should be.

Maybe this is a good lesson for all of us to read and comprehend the real implications of what we sign on and not have selective accountability.

Savior Mwamba is a Programmes Officer at Open Society Foundations

[Read 2,004 times, 1 reads today]


    • Zambians are gullible…there is a case that caught my eye this morning in Lusaka court about Tasila’s garden-boy who charged with stealing K200,000 from the President daughter’s kitchen…I was wondering to myself who the bigger thief is in this case Tasila or the poor gardenboy? I mean Tasila’s ward councillor’s allowances do not come anywhere near to K200,000 in a year how is it that she has excess money laying around the house, I think it must have been more than that and the worker helped himself to what was on top.
      That case further drives home the need for such independent agencies such as FIC and the need for lifestyle audits on PEPs…in any other country Tax office would have started investigations, summoned her to their office but we have a corrupt Kingsley Chanda in…

    • What other businesses does wasila do apart from just been a ward councillor for some ward in chawama, HOW DOES a garden boy have access to your K200,000? If a garden boy can lay his eyes on a carelessly starshed K200,000, i wonder what else is mukasaka kandalama.

  1. We the general masses like FIC.we celebrate it in full.we know those fidgeting have something in common among them.The truth is that when loot is shared the commoner isn’t playing a part

    • @ 5.4 emphraim mbao
      @ 5.5 bo’ mulife

      No one is above the law, including the president of zambia. What we want from the report is to have a true reflection and bring the culprits before justice.

      @ 5 SPAKA
      Is correct to spot on asking the question to lungu.

  2. FIC type units exit in over 160 countries worldwide, they release the same format of report to the public, they follow the same procedures of releasing the report to relevant authorities before the public in all the over 160 countries….

    Now , why is lungu the only leader amongest the over 160 leaders , not comfortable with the public release of the report ?

    Why is lungu the only leader among the over 160 leaders world wide that have FIC reports not supporting the report ?????

    • The FIC has its good intention globally and it must be supported including in Zambia. However, at times they have got it wrong in the past.

      The following nations have in the past strongly criticised the FIC Reports having noted that the data the organisation used was manipulated, toxic and not raw. Among these nations are:

      1. Belgium
      2. Canada
      3. Israel
      4. Italy
      5. Kenya
      6. Norway
      7. South Africa
      8. USA
      9. Poland

      There has been verified instances where people have been wronged accused only for the FIC to withdraw the claims and take the reports offline. ( this in relation to Israel )

      We should not discount or down grade its Works, Efforts, Objectives to bring accountability and thieves to justice.

      Just because the police can charge an…

    • Cont….

      Just because the police can charge an individual with crime, it does not mean that person is 100% guilty. Sometimes the police can follow a wrong #hunch, based on wrong information, collected or gathered.

    • Independent Observer 5.3

      I guess you have a point, referencing the police example. But should Edgar Lungu discounting the report.???


      Yes in case of Isreal, Benjamin Nyatanahu was accused of financial dodge deals by the FIU, which was withdrawn about 15 years ago. But again he has been found wanting again and the cases are in courts. Lungu is dismissing the report.

    • @5.2 independent observer

      Stop lying , where and when did those countries criticise their FIC reports to the public ???

      All those countries work in coordination with FIC , not against FIC reports

    • Correction .. It meant to read

      @ 5 SPAKA: is correct and spot on, asking the question to lungu.

    • SPAKA 5.6

      Who said these nation work against the FIC. Read my comments again !!!

      In most nations, the Financial Intelligence Units, DO NOT release the information to the public, like they did in Zambia. Because it often jeopardises the investigations.

      If FIU find information that is of important, they just feed the security wings to do the rest of the work, for them charge those found wanting.

      In the case of Isreal, it was the Financial Intelligence Unit, that fed information to the Israel Intelligence Unit about Benjamin Netanyahu. Hence, the reason why Benjamin criticised them to working with thew opposition to remove from power.

      On what grounds have you called me a liar. Please do your homework.


      Please don’t waste your time responding to SPAKA.

      He is a frustrated, miserable, angry, loser and a waste of space. The only thing he knows is to pull everyone down. As far as he is concerned, he knows everything. I wonder if Edgar Lungu F***cked his mother and promised her a Diplomatic Job and the waiting has just taken too long for the job

    • TRUTH @ 5.9

      NO ! You cannot sink so low by calling someone mother names. In as much you compliment me, I cannot take your compliment from you.

      I have never used such language on lusakatimes. And I dont want to be associated with that. I have been called names in the past bcoz people did not agree with me. But in no way will I respond to demean another human being. Thats not what we are. This platform must be used to debate and share ideas. Enjoy the day !!!

      Those are lies .
      Canada and the USA have never complained about the contents of the annual reports.FinCen and FINTRAC dont even make the news headlines like the Zambian FIC.
      You only hear about criminals being busted by the FBI or Canadian Police.
      In Zambia the Police,DEC,Anti-Corruption commission only act under the instruction of ECL and Kampyongo .Hence the ineptness and docility of the law enforcement in Zambia.

    • Independent observer

      But FIC reports are released to the public in all countries where they have FIC type units….and apologies for calling you a lier.

    • @5.2 Independent – I think you are wrong to include South Africa as one country that had issue with “their FIC”. Zuma and his Guptas were called out on corruption, money laundering and daylight stealing, etc by the RSA FIC. You cannot therefore conclude from this that SA as a state had issue FIC. Just to reaffirm that the FIC has been correct along evidence in the State Capture is abundantly clear for all to see

  3. Mr.Mwamba,when writting articles for public,never use abbreviations before describing them in full.Do not make assumptions that everyone knows what you are referring to.What FATF,LEA etc?

  4. Great article. Great contribution to building a formidable economic and financial consolidation process. The country is rich, with or without any individual. If you do not like the heat, just get out of the kitchen. terrorist financing will be exposed, punished and eliminated. Corruption will be dismantled, destroyed and buried. Tax evasion will be thwarted, prosecuted and punished. Information is better than darkness. Criminal, you can run but you cannot hide.

  5. The problem with our politicians is that they only support institutions that they can use against their opponents. When KK created SITET he saw an opportunity to intrude in people’s privacy and settle political scores. It later became a nuisance. I can assure you that the moment the FIC will mention Hichilema the entire PF will experience an orgasm

  6. My worry is that lung has been misunderstood. Journalists asked him to dismiss and prosecute those mentioned in fic report and I his response he argued that none was mentioned and investigations are underway. We are very impatient here. Let us wait. A lesson here kambwili was dismissed for wrong doing and the opposition was happy. Who is dinning with kambwili now. As a nation we need to be careful thieves do have many lives

    • We are still waiting the results of the 2017 FIC reports and the AG reports of misappropriating GRZ money from preceding years ????

  7. (SPAKA) is dog. galu and imbwa. I wonder what eats this man or woman. he/she is not smart but keeps pretending to be one. Chiwelewele, Chipuba, Shonongo

    • Sorry you dislike me for fighting and speaking up against sh.it governance by lungu……….

      That just encourages me more that the looters are feeling the heat of the discussions…..

    Those are lies .
    Canada and the USA have never complained about the contents of the annual reports.FinCen and FINTRAC dont even make the news headlines like the Zambian FIC.
    You only hear about criminals being busted by the FBI or Canadian Police.
    In Zambia the Police,DEC,Anti-Corruption commission only act under the instruction of ECL and Kampyongo .Hence the ineptness and docility of the law enforcement in Zambia.

    • 10 @ Independent

      Yes they have. Just say you don’t know or you are not aware about.

      I also gave you an example Israel. The Security Intelligence system got information about Benjamin Natanyehu from the same organisations such as FIC.

      The FIC had passed the info to the opposition party. Benjamin accused FIC Units to be politically biased, working with the opposition party, who wanted him out by all means.

      Natanyehu, as a prime minister had criticised the Financial Intelligence Unit to be politically motivated. That itself is criticising the Unit. Which part don’t you understand ??

      In another case and just today. Sara Netanyahu (wife) has agreed to pay back a fine of $15,000 for misusing state funds on lavish meals. These…

    • cont….

      These were originally works of the FIC Analysis, which ended in courts for her.

  9. Independent observer

    Netanyahu and his wife have made corruption issues surrounding them , but this was not due to revelations by FIC in isreal. Isreal has already very strong anti corruption and pro good governance bodies to relay on FIC, who’s reports mearly compliment the countries crime fighting agencies.

  10. Ba Lusaka Times, this is disappointing and unprofessional journalism or blogging. I posted this as a post on my personal facebook page with a reference to an IMF publication where i got most of this material in response to my FB friend comments. I wrote that FB post in my personal capacity. And yet you ( LT) goes ahead without even checking with me to copy and paste and insert my name and work title and make it look like i wrote it as a newspaper or blog article for them. This is unethical journalism. The way we write FB posts for our personal and friends consumption is different from the way you write official formal articles or blogs…..

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