Zimbabwe enforces anti money laundering, combat finance of terrorism guidelines on insurers

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THE Insurance and Pensions Commission is stepping up efforts to ensure that local players are compliant with anti-money laundering and combatting the financing of terrorism (AML/CFT) reporting obligations.

The insurance sector is typically vulnerable to white-collar crimes due to high levels of financial flows.

The local pensions and insurance industry is heavily invested in the Zimbabwe Stock Exchange (ZSE), on money and property markets, and is also expected to be a big player on the Victoria Falls Stock Exchange (VFEX), which can be dangerously exposed if linked to white-collar crimes

The drive comes as the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) Second Round Mutual Evaluation Report for Zimbabwe identified low AML/CFT awareness among non-bank financial institutions as major deficiency for the pensions and insurance industry.

IPEC Commissioner Dr Grace Muradzikwa, said they have already set up a dedicated unit in this regard, indicating that one of its key functions is to provide industry with the relevant information on AMT/CFT issues.

“As the regulator, we are now equipped to fully assume our role of supervising reporting entities to ensure compliance with AML/CFT reporting obligations. As such, we have established an AML/CFT unit, which will be headed by a manager.

“We are currently in the process of staffing the unit. For the industry, the starting point is for you to be aware of your obligations on AML/CFT, as well as the understanding of Money Laundering and Terrorism Financing risks that you face,” she told a recent engagement with industry players.
“Therefore, understanding risk is the cornerstone for an effective AML/CFT programme.”

Zimbabwe’s AML/CFT legal framework consists mainly of the following pieces of legislation: the Money Laundering and Proceeds of Crime Act [Chapter 9:24]; Bank Use Promotion Act [Chapter 24:24]; Suppression of Foreign and International Terrorism Act [Chapter 11:21]; Statutory Instrument 76 of 2014: Suppression of Foreign and International Terrorism (Application of UNSCR 1267 of 1999 and UNSCR 1373 of 2001) Regulations, 2014; and Statutory Instrument 56 of 2019: Suppression of Foreign and International Terrorism.

Because of the role and structure of insurance and pensions business, players in the sector typically operate by moving funds from parties with excess capital to parties needing funds.

All things being equal, this financial intermediation works to create efficient markets and lower the cost of conducting business. But it also makes the sector a target for money laundering.

According to IPEC director for insurance and microinsurance, Sibongile Siwela, “from a regulatory point of view, institutions are expected to have in place an AML/CFT compliance programme that is supported by policies, procedures and controls; compliance function and AML/CFT compliance officer at appropriate level; staff training programmes; and independent audit.”

In 2020, the regulator concluded a Sectoral Risk Assessment, which has helped to inform the current risk-based approach to Anti-Money Laundering and Combatting of Financing of Terrorism supervision.
Money laundering has over the years become a potent threat to economies across the globe due to the rising volumes and sophistication of white-collar crimes.

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