The Frequently Asked Questions to the Centre include, but not limited to, the following:
What is money laundering?
Money laundering is the process of making dirty money appears clean. Criminals clearly wish to secure the profit of their nefarious activities. Through money laundering, criminals process the criminal proceeds in order to disguise their illegal source.
How is money laundered?
In the initial - or placement - stage of money laundering, the launderer introduces his illegal profits into the financial system. After the funds have entered the financial system, the second - or layering - stage takes place.
In this phase, the launderer engages in a series of conversions or movements of the funds to distance them from their source. Having successfully processed his criminal profits through the first two phases, the launderer then moves them to the third stage - integration - in which the funds re-enter the legitimate economy.
What is terrorist financing?
Terrorist financing is the process of financing terrorist acts. One of the main differences between this and money laundering is that the source of the money used in terrorist financing may be perfectly legitimate. The source of money in money laundering is always an illegal source.
What is the Financial Acting Task Force (FATF) and the 40 Recommendations?
The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing. FATF is therefore a "policy-making body" which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
What is the ESAAMLG?
ESAAMLG is an organization, which has agreed to implement common countermeasures to address the problem of criminal money laundering and terrorist financing. Zambia is a founder member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF- Style Regional Body that is an associate member of the FATF.
What is an FIU?
A Financial Intelligence Unit (FIU) is a central, national agency responsible for receiving (and, as permitted, requesting), analysing and disseminating to the competent authorities, disclosures of financial information:
- Concerning suspected proceeds of crime and potential financing of terrorism, or
- Required by national legislation or regulation, in order to counter money laundering and terrorism financing.
What are the different models of FIUs?
The Judicial Model is established within the judicial branch of government wherein "disclosures" of suspicious financial activity are received by the investigative agencies of a country from its financial sector such that the judiciary powers can be brought into play e.g. seizing funds, freezing accounts, conducting interrogations, detaining people, conducting searches, etc.
- The Law Enforcement Model implements anti-money laundering measures alongside already existing law enforcement systems, supporting the efforts of multiple law enforcement or judicial authorities with concurrent or sometimes competing jurisdictional authority to investigate money laundering and terrorist financing.
- The Administrative Model is a centralized, independent, administrative authority, which receives and processes information from the financial sector and transmits disclosures to law enforcement authorities for prosecution. It functions as a “buffer” between the reporting entities and the law enforcement agencies.
- The Hybrid Model serves as a disclosure intermediary and a link to both judicial and law enforcement authorities. It combines elements of at least two of the FIU models.
What model is the Zambia’s Financial Intelligence Unit?
The Zambian Financial Intelligence Unit is an administrative Financial Intelligence Unit. It is called the Financial Intelligence Centre.
When was the Zambian FIU established?
The Financial Intelligence Centre was established in November, 2010 by an Act of Parliament i.e. the Financial Intelligence Centre Act. No.46 of 2010.
When did the Centre become operational?
The Centre became operational in September, 2013.
Which entities must report Suspicious Transactions relating to Money Laundering and terrorist Financing?
All those entities regulated by the supervisory Authorities hereafter called reporting entities as per section 2 of the Financial Intelligence Centre Act, No. 46 of 2010.
Can individuals forward information relating to Money Laundering or Terrorist Financing to the Centre?
Yes. The Centre would receive information from anonymous individuals with respect to money laundering and terrorist financing. There is however, no obligation for the Centre to provide feedback in such circumstances.
Is there a Reporting Form?
Yes. It is known as the Suspicious Transaction Report (STR) Form. The Form can be downloaded from the Financial Intelligence Centre website.
How are STR filed with the Centre?
STRs can be forwarded to the Financial Intelligence Centre mailing address reflected on the STR Form. Alternatively, one may forward the report by Courier.
Can reporting entities disclose that an STR was filed with the Centre?
No. There are legislative provisions under the Financial Intelligence Centre Act. No. 46 of 2010 prohibiting reporting entities from informing anyone including the customer of the filing of the STR. Penalties or imprisonment accrue for failure to adhere with these legislative provisions.
If a reporting entity files a Suspicious Transaction Report voluntarily to the Centre, will it be protected from civil liability?
Yes. Pursuant to section 35 of the Act : “Criminal, civil, disciplinary or administrative proceedings for breach of banking or professional secrecy or contract shall not lie against a reporting entity, its directors, principals, officers, partners, professionals or employees who, in good faith, submit reports or provide information in accordance with the provisions of the Act.
What methods does the Centre employ to protect the information filed in the STR?
The Centre's processes to protect the information in the STR are inter alia:-
- The maintenance of high standards relating to confidentiality, security and integrity within the Centre and with its stakeholders.
- Access to the Centre and its information is monitored and controlled .
What is the scope of unlawful activities?
These include among others:
- Participation in an organized criminal group and racketeering;
- Terrorism, including terrorist financing;
- Trafficking in human beings and migrant smuggling;
- Sexual exploitation, including sexual exploitation of children;
- Illicit trafficking in narcotic drugs and psychotropic substances;
- Illicit arms trafficking;
- Illicit trafficking in stolen and other goods;
- Corruption and bribery;
- Fraud;
- Counterfeiting currency;
- Counterfeiting and piracy of products;
- Environmental crime;
- Murder, grievous bodily injury;
- Kidnapping, illegal restraint and hostage-taking;
- Robbery or theft;
- Smuggling;
- Extortion;
- Forgery;
- Piracy; and Insider trading and market manipulation
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