The Little Devils lurking in a Christian Country called Zambia

Although Government of the Republic of Zambia (GRZ), Ministries, Departments, Agencies (MDAs), Parastatals, and other Institutions like the Zambian Banking Sector would like a situation where fraud and financial crime could happen to other financial institutions like the Pensions and Insurance, Mining and Retail Sectors, Agricultural and Tourism Sectors, it is an undeniable fact that all GRZ, commercial and financial sectors in Zambia are potential victims. Fraud is among the oldest human occupations.

Ever since Jacob obtained Isaac’s (his father’s) blessings by impersonating his brother Essau, the efforts and energies spent by some human beings to get something for nothing has been a recurring theme in literature.
For this Christian Nation of Zambia, those who went to Sunday and Sabbath Schools or have read the Holy Book called the Bible, are reminded that the oldest fraud is told in the Book of Genesis Chapter 27.

Under modern Zambia and using the current Statutes, Jacob and his mother Rebecca depending on so many factors including political will at the top could have been charged with conspiracy, impersonation with intent to defraud and indeed obtaining blessings by false pretences. Other professional colleagues may also argue that under the current Zambia penal and judicial system the duo would have been acquitted due to unending court gymnastics, adjournments, legal technicalities and political inclines.

Fraud is a generic term for behaviour, which involves deception by one party of another. Although the law relating to fraud differs in separate jurisdictions there are common threads, which identify behaviour as fraudulent. These will include the practising of a deception, the dishonesty of the person practising the deception, the obtaining of property and/or the intention of interfering with another person’s lawful right to deal with property as he wishes.

The number and variety of legal definitions of fraud and like criminal offences are too voluminous to repeat here and those can be discussed later.

Fraud involves deliberate criminal intent and deception. Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain. Some of the salient elements in Fraud are;

1. Knowing submission of false representation or concealment (knowledge)
2. Specific intent to deceive (deception)
3. Detrimental reliance (losing money or assets)
4. Potential/Damage/loss to the Bank or financial institution or organisation.
Fraud is defined as any loss or attempt to cause loss involving deception.
The nature of the deception may include, inter alia:
• verbal or written statements which are false or misleading in
 applications for personal/corporate credit or current/savings account facilities;
 Letters of Credit, Bills of Lading or other trade documents;
 Supporting documents (e.g., audited/management accounts); or
 Internal vouchers or other documentary records such as Local Purchase Orders.

A deception can also involve the deliberate input, alteration or destruction of data on any computer or communication systems and/or involve the use of forged documents. A deception can assist in perpetrating a fraud and also to conceal a fraud or simple negligence.

Some of the practical examples of Fraud experienced in Zambia have been broken down into the following categories:
• Sheer Theft of cash. Deeping fingers in the till or cash box
• Internet Fraud (on customer’s accounts)
• Customer Identity Thefts. Details from the epitaph
• Card Fraud (credit/Debit/ATM)
• Loan Application Fraud
• Card Merchant Fraud
• Funds Transfer Fraud
• Lending Fraud
• Advance Fee Fraud

This involves fraudsters persuading innocent victims to part with funds in advance of securing what appear to be attractive jobs or investment opportunities, or loans, which never materialize.
• Account Fraud
This includes false entries on accounts, fraudulent applications including loan applications and
fraudulent instructions.
• Card Fraud
This includes card skimming, counterfeiting and disputed transactions.
• Cheque Fraud
This includes counterfeits, alterations, forgeries, raising, cheque- kiting.
• Trade Fraud
This includes forged, altered or fake trade documents.
The list goes on and on. Fraud involves deliberate criminal deception and is committed by people of all shapes, sizes, heights, hues and from all walks of life. Pastors, Bishops, Clerks, Ministers and Presidents (of clubs and Associations or for the Republic) have been accused of committing financial crimes such as corruption, fraud, money laundering etc.

I wish to submit that just like in corruption cases sheer dishonesty and greed, not necessarily the amount of salary or wages one gets per month counts. When it comes to the question of money, do not trust anyone, and not even yourselves. This is the reason we can have a very honest and trustworthy Government Office orderly and or messenger but have a greedy, craft and dishonest Church Bishop and Government Minister. In Zambia, we have heard of several high ranking people involved in what my grandmother would only term as embarrassing and shameful activities.

Why would such a situation arise? In white – collar crime, the potential rewards are much greater than in blue collar crime. The risk of detection is lower, successful prosecution is more difficulty as one is able to summon the whole mighty platoon of the best Legal brains in the Country, state counsels and Senior Legal men and women to raise preliminary issues in courts of law, apply a dozen of injunctions, a couple of Legally challenging objections and adjournments for years on end whilst the loot is diminishing and being shared. The resultant effect is that the penalties are less severe.

What do you expect with “deliberately ill equipped and with no adequate logistical, technological and financial resources” and largely ALLEGED and presumed to be often corrupt Law Enforcement Agencies and Officers who would rather have a drought and poverty stricken but hungry villager who has stolen a cob of maize or a village chicken (free-range chicken) be convicted for five years in prison with hard labour than let the twit swindler of colossal sums of money go scot-free under the pretext of the case being technical?

These are all sound “business” propositions and reasons for fraudsters to put their efforts into fraudulent activities. Those engaged in such criminal activities are many. It is BIG business.
Loses through fraud in all GRZ MDAs and financial institutions have increased significantly over the years. There are many changes which have impacted adversely on the socio-economic wellbeing of the Country including;

• fluctuation and falling world price of copper which is Zambia’s main export,
• high population growth from 3million to more than 13million within 50 years,
• Unsupported population drift from rural to urban areas putting strain on public utilities
• Unplanned mushrooming of squalor and squatter compounds with very few social amnesties
• Exponentially rising unemployment levels as more GRZ and Private Universities and colleges channel out thousands of graduates on the streets with no assurance or promise of jobs insight
• Mismanagement, abuse of office, power, authority and corruption in the echelons and corridors of power starting from the 20 year MMD rule
• High poverty levels (60 to 70%) of Zambian population live below poverty datum line.
• Steep decline in traditional values/morals leading to all nature of vices;
• Unexplained failure by Government workers and authorities to make meaningful stand against crime. If there are some, the general populace see those as Empty rhetoric.
• Those failing to be transparent and accountable (according to numerous Auditor General’s annual reports) since they are alleged or suspected to be actively taking part in economic plunder themselves.
• The wrong notion of hero-worshipping and admiration of the fraudsters and the corrupt means used to acquired assets and money through dubious means.

Suffice to state that control systems and framework in various institutions are generally satisfactory, but they are not fool proof against attack from the Little Devils in this Christian nation called Zambia. The “enemy within” – members of staff and their outsider ca-hoots and collaborators. Those who predominantly perpetrate these types of crime can be profiled among many others in one of the following categories;
• Intelligent and Inquisitive but misdirected energies for wrong intentions​
• Too Friendly and charming – familiarity breeds contempt
• Hardworking, Very confident and convincingly capable of coning
• Too much exaggerations of their perceived achievement
• Knows the systems and procedures well but for bad intentions
• Articulate and may be able to speak in tongues.
• Risk takers and rule breakers
• They think they are sophisticated and appears to be wealthy but there is no way to trace their source of wealth
• They pose as big spenders, (Zambian musician Mozegator would call them “BIG BUYER” in Social Clubs). If the big buyer support Manchester United Football club, all followers would support “Man U” on that day.
• Portray an expensive life style​ and show-off with perishable assets like cell phones, ipads, galaxy, Nokia and expensive cars.
• Aggressive; in a hurry ; Greedy or has genuine financial needs
• Name dropper – smart and wearing expensive perfumes, Brazilian or Peruvian wigs, designer clothes, shoes etc.
• Disgruntled at work, a complainer – chief complainants
• Friendly and charming. Very confident and convincing
• Thrive in an office with no segregation of duties
• They rarely take vacation or off sick days. Even with a running nose/flu/fever, headache, coughing uncontrollably, they are still on Company desk.
• They work excessive Over Time – late at night or weekends
• They make excessive adjusting entries/ white-outs
• They Request excessive deadline extensions during monthly closeouts or other accounting cycles
• They will usually exhibit a drastic change in life style, throwing parties and drive expensive cars
• Will go to great extents to disguise their ill-gotten gains
• They refuse promotions, job rotations or changes
• Excessive debt, Alcohol or drug abuse; Gambling in casinos, Clubbing; Zenon, Chez Ntemba,
• Sudden change in lifestyle and spending habits
• Failed outside business ventures – kantemba/taxis
• Sense of despair over current ‘life experiences’ e.g. severe illness in family
 Change in behavior; Constantly working late alone
 Unusual occurrences of mistakes
 Returns to work even on sick leave
 Unusually close relationship with certain customers giving them special service

Third party crime has been perpetrated by various types of fraudsters, ranging from unemployed ex-officials (armies of these were created by the closure of several major local banks like Meridien, Commerce, Union, ACB etc), whose number has swelled by constructive dismissals and downsizing by the remaining Banks, GRZ, MDAs, and Government wings through Voluntary separations and resignations to professional gangs and cartels with connections outside the Country.

De-regulation of foreign exchange Controls, abolishing of SITET, Liberation of the economy, even with the Balance of Payment (Statutory Instrument – S.I. 55) in place has made it possible for criminals to remit fraudulently obtained money, which hitherto had been prevented under the exchange control regulations.
In Government Ministries, Parastatals, Departments and Agencies, including private sectors, Internal and external Auditors, Internal Investigations teams have been able to identify, apprehend and effect a “citizens’ arrest” of the culprits in most of the criminal cases.

Whilst some of the demoralised and frustrated Police Officer’s action has been lethargic, institutions have had no problem in getting them to the scenes of the crime (often by cajoling, providing transport and lunch allowances). Culprits have been surrendered to the Zambian Law enforcement Agencies, the Director of Prosecutions and his team members and subsequently to the Courts of Law.

However these three arms of Government are increasingly failing to inspire the Zambian people, failing to deliver or are painfully slow to reform and administer justice and subsequently fraudsters are left scot-free. Clearly the penal system has not moved with times and the Patriotic FRONT (PF) government which assured the general populace should not fall into the trap of paying a lip service to resolving the numerous Law Enforcement Agencies, DPP and Judicial ills Zambians have been crying over since independence.

Fraud prevention is like running a race with no finishing line. As criminals become more sophisticated in their attempts to steal money from financial institutions and Government Coffers, so must the effort to create better security features and prevention strategies increase thereby slowing fraud proliferation.

We all as Zambians need not sit on our laurels and wait for a fraud to occur within our work places and then we start calling on Law enforcement Officers or the Auditor General’s Office to investigate and establish what was happening within our sphere of influence. We can avoid the proverbial closure of the pain when the horse has already bolted.
It is a zero option, we just have to painfully realise sooner rather than later that in Zambia, punishment of fraudsters and recoveries of stolen funds are so rare that prevention is the only viable course of action. Effective preventative measures are much cheaper and far less painful than post-fraud investigations and litigations. It is better to drain the swamps than to fight the alligators. The extent of preparedness for this growing challenge to all Zambians cannot be overemphasized.

Never stand aloof, whenever you smell a fraud or whenever a fraud occur, take keener interest in reading the red flags in staff members activities, and taking appropriate remedial steps to either pre-empty or sanction any untoward actions part of staff and fraudsters, take positive action. SPEAK UP, Whistle blow, Tell the Transparency International. Call Anti-Corruption Commission, Phone the Police Station. Inform your boss. Decline to authorise. Take keen interest in reading the red flags in your staff and customer behaviour, conduct and take appropriate remedial steps to either pre-empt or sanction any untoward actions on the part of staff and fraudsters.
While it may be difficult to prevent all incidences of fraud, it is possible to reduce their impact by performing a fraud risk assessment within your branches. You should aim to understand the methods of frauds which can be perpetrated by and applicable to each job function. We have lessons learnt from other colleagues and institutions in Zambia. They are usually reported in the media both electronic and print media. Learn Lessons and avoid being defrauded.
Let us realize that fraud is a big industry and there is specialization of labour. Those who specialize in forging of signatures, skimming and cloning Visa Cards, stealing of blank cheques, in impersonating others and masquerading as bonafide customers, known agents etc. Fraudsters are busy scheming, planning and submitting project proposals on which institution, which Agency or Ministry with weaker controls they can penetrate and attack.
Fraudsters have needs and wants. Fraudsters are planning to celebrate the Christmas and the New Year – 2014 in style. They want to throw big and lavish parties. They have a long list of invited guests to attend their wedding or party celebrations. Fraudsters have ZESCO, Water bills, DSTV, Ground rent, Rates, House rentals, school going children and dependants to look after; they have increased school fees for the year 2014 and probably house construction in Chalala or Meanwood to be completed, a big car to import etc. Fraudsters have to project cash flows and devise means and ways of fund-raising. Fraudsters with misdirected energy and intelligence are smart people who know that Money is in the Road Sector, Construction, Tourism, Agricultural Sector, Revenue Collections and Authority, money is kept in Bank accounts and the Big Banks. They will carefully plan and identify the weakest link among the staff and strike. You obviously do not wish to be the weakest link.
There is no honour in committing fraud. Do not connive and collude with fraudsters, they will damp you and leave you in deep trouble because they can’t keep their word. That is their nature. Be alert! Be vigilant! Wake up and speak up! Defend your territories from the yoke of impostors, conmen and conwomen masquerading as bonafide customers and middle men.
All organizations are subject to fraud risks. Large frauds have led to the downfall of entire organizations, massive investment losses, significant legal costs, incarceration of key individuals, and erosion of confidence in capital markets. Publicized fraudulent behaviour by key executives has negatively impacted the reputations, brands, and images of many organizations around the globe.

Reactions to recent Institutional and corporate scandals have led the public and stakeholders to expect organizations to take a “no fraud tolerance” attitude. Good governance principles demand that an organization’s board of directors, or equivalent oversight body, ensure overall high ethical behaviour in the organization, regardless of its status as public, private, government, or not-for-profit, NGOs and NGIs (Non Government Individuals); its relative size; or its industry.

The board’s role is critically important because historically most major frauds are perpetrated by senior management in collusion with other employees. Vigilant handling of fraud cases within an organization sends clear signals to the public, stakeholders, and regulators about the board and management’s attitude toward fraud risks and about the organization’s fraud risk tolerance. What we heard about Zambia Railways Limited was never inspiring.

In addition to the board, personnel at all levels of the organization — including every level of management (CEO/Managing Directors and Executive Management Committee members), staff, and internal auditors, as well as the organization’s external auditors — have responsibility for dealing with fraud risk. Particularly, they are expected to explain how the organization is responding to heightened regulations, as well as public and stakeholder scrutiny; what form of fraud risk management program the organization has in place; how it identifies fraud risks; what it is doing to better prevent fraud, or at least detect it sooner; and what process is in place to investigate fraud and take corrective action.

This guide is designed to help address these tough issues.
This guide recommends ways in which boards, senior management, internal auditors, Fraud preventions/Fraud Risk Management teams, Fraud investigators can fight fraud in their organization. Specifically, it provides credible guidance from leading professional organizations that defines principles and theories for fraud risk management and describes how organizations of various sizes and types can do the same.

Given the alluded to shortcomings, Zambians need to take concrete steps to arrest the scourge of Financial crime risks in all sectors of the economy. We need to learn lessons and have a deeper understanding of the concepts and theories or typologies of money laundering, terrorism financing, corruption and various operations of fraudsters so that knowledge acquired can further enhance our capabilities to review systems and controls which are breached and recommend remedial measures resulting in tighter controls being adopted which will subsequently thwart further fraud attempts in many organisations. We need to develop comprehensive and coherent strategies to address various forms of malpractices by all stakeholders.

I strongly believe in mother Zambia and the great people of this Country. I’m very confident that if managerial accountability and transparency is embodied in the financial sector coupled with good corporate Governance, MDAs, law enforcement, the DPP and Judiciary, the corporate governance of such institutions would be easier thereby reducing criminal activities which inevitably bring about lack of investor confidence, capital flight, closures of companies and industries and consequently create untold misery on the already helpless citizenry who will have little to do apart from engaging themselves in criminal activities.

Fighting money laundering and fraud – A Zambian perspective back then. An old Post. 

In a Zambian context, “Financial Institution” is any legal entity registered by the Patents and Company Registration Agency (PACRA) and licensed and regulated by the Pensions and Insurance Authority and, for Commercial Banks, by the Central Bank of Zambia -BOZ.

The Banking and Financial Services Act under Section 8 stipulates what a bank operating in Zambia can do. These financial institutions, commercial banks in particular, conduct one or more of the following activities or operations on behalf of customers;

•    Accept deposit of funds, lending, leasing, transfer of money or value
•    Issue and manage means of payment (credit and debit cards, checks, IMOs, drafts, guarantees
•    Money and currency changing, safe keeping and administration of cash
•    Trading in money markets instruments, checks, bonds, treasury bills, Forex, etc.

Cognizant of the fact that financial institutions in Zambia are governed and regulated by laws, regulations and rules which have been put in place by the Zambian government, regulatory and legislative bodies, there is no doubt that the challenges facing the banks are considerable and growing. Externally, the regulatory environment is constantly changing and becoming ever more demanding. Whilst internally, as commercial banks within the country expand into more complex products and new markets, all banks without exception are faced with a wide range of risks that must be managed prudently and diligently.

Zambian banks, therefore, should be committed to ensuring full compliance to all local laws and regulations of the land if they are expected to survive longer. All employees, from executives to bank tellers alike, must undertake serious commitments to compliance which should be declared as one of the zero tolerance items that the bank must hold in  high priority.

The board and senior management must demonstrate great ability to identify, measure, monitor and control risk in the different functions of the bank. In that spirit, all banks must have a fully dedicated compliance department or function whose role is to ensure regulatory compliance, conduct compliance monitoring activities on a regular basis, as well as provide compliance functions to all bank departments and staff. Banks should not therefore compromise compliance issues in their greater pursuit for more customers and company revenue by growing the balance books.

Among the risks compliance teams need to manage are the Anti-Money Laundering (AML), Financial Crime Risk (FCR) and Counter Terrorist Financing (CTF).

As Zambian nationals may be aware, banks in Zambia face not only banking regulators, but also specialized regulators among which are the Central Bank of Zambia – (BOZ), the AML Authority/ AML Investigations Unit (AMLIU) currently under the auspices of the Drug Enforcement Commission (DEC). Also the Anti-Corruption Commission (ACC) and Zambia Police Service (ZPS) feature prominently.

The latest agency on the block is the Financial Intelligence Centre (FIC). Financial Intelligence Centre Act (FICA) No. 46 of 2010 is another great Zambian government initiative and process of establishing additional regulations to create a stronger environment of compliance in Zambia. 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.  GRZ is attaching critical importance to placing a strong oversight mechanism and developing a comprehensive and integrated approach to combat ML, TF and serious FCR.

Notable changes under FICA

•    FIC is the sole designated agency for the receipt, requesting, analyzing and disseminating of Suspicious Transaction Reports (STRs) to relevant Law Enforcement Agencies (LEA) and other regulators.  Now all STRs will have to be submitted to the FIC instead of AMLIU at DEC as was the case under the Prohibition and Prevention of money Laundering Act of 2001 (PPMLA)
•    Definition of reporting entities has been expanded to include among others  banks, financial institutions, real estate agents, lawyers, accountants and casinos
•    Report & submit STRs on suspected and attempted ML, FT & FCR
•    List of supervisory authorities has been expanded
•    The LEA to which FIC will have to disseminate STRs has been expanded to include ZPS, ACC, Zambia Revenue Authority (ZRA), Department of Immigration (DOI), AMLIU and DEC

Reporting obligations

•    STR must be given to FIC if any bank and other reporting entity suspects or has reasonable grounds to suspect that any property was a proceed of crime or related to or linked to crime
•    Currency Transaction Reports (CTR) above certain proscribed limits will have to be reported. The threshold to be advised in due course bearing in mind that Zambia is a cash economy.

•    Banks and other reporting entities are required to ensure policies exist in which said entities are expected to comply with record retention of ten years after termination of a relationship.
•    FIC will soon introduce the prescribed threshold amounts which will be shared to all stakeholders before the end of the year – 2011.

Way forward

•    For now, banks will continue submitting STRs to AMLIU
•    FIC will advise in writing as to the actual date when banks will be required to commence submitting STRs to the FIC
•    FIC is finalizing the draft STR form  which they have already shared with various stake holders for comments
•    FIC finalizing reporting guidelines on the FIC Website and will advise when they are  ready
•    CTR form will be finalized by FIC and submitted to banks for comments once the threshold has been established
•    FIC will be meeting with all reporting entities for further consultations on STRs and CTR forms.

Need to know and comply with the law

•    Banks  have to obtain a copy of FICA
•    Banks  have to study and note the proposed changes of reporting STR and CTR to FIC and not AMLIU – DEC
•    Banks  will await further guidance on effective date of reporting change and threshold to report
•    FIC, ZPS, ZRA, DOI, DEC, ACC are escalation agencies.

A good compliance relationship with all global and local regulators is fundamental to any bank’s success. It is crucial that all banks in Zambia are adequately equipped to fight these risks.

Since most Zambian banks carry out international transactions, all staff needs to be trained and become aware of certain international trends and requirements, as well as organizations such as the Financial Action Task Force (FATF). FATF is an independent, inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing. Recommendations issued by FATF define criminal justice and regulatory measures that should be implemented to counter these risks. These recommendations also include international co-operation and preventive measures to be taken by financial institutions and other organizations. Suffice it to say that the FATF Recommendations (40 + 9) are recognized as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard and bankers need to familiarize themselves with them.

In order to further strengthening the AML regulatory framework, Zambian Parliament passed a law known as the “Prohibition and Prevention of Money Laundering Act no. 14 of 2001.” In that Act, Part V Section 12, under the Duties of the Supervisory Authority, Subsection 4 states that “A supervisory Authority shall issue such directives as may be approved by the Anti-Money Laundering Unit which may be necessary for the regulated institutions to prevent and detect money laundering.”  It should be noted that the Supervisory Authority for all banks in Zambia lie with the BOZ.

In Section 13, Duties of Regulated Institutions, Section 1 (c) states that a regulated institution shall comply with any directives issued to it by the supervisory authority with respect to money laundering activities; all commercial banks in Zambia therefore are designated  ”regulated institutions.”

In exercise of the powers contained in Section 12(4) of the Prohibition and Prevention of Money Laundering Act number 14 of 2001, BOZ issued the Bank of Zambia Anti- Money Laundering Directives in 2004 (BOZ – AML Directives 2004).  Part III of the BOZ AML Directives pertains to Customer Due Diligence (CDD) and other obligations relating to customer identification and verification.

Directors from bank supervision at BOZ have on several occasions clarified and confirmed that identification of directors, beneficial owners and management of corporate entities is a requirement under section 8(1) and (2) of the said BOZ directives. This further clarifies that in terms of management, the banks will acquaint themselves with all key management decision makers in the company. Management would ideally refer to those in top management.  For listed companies on the Lusaka Stock Exchange (LUSE) and other equivalent markets like the New York Stock Exchange (NYSE), Johannesburg Stock Exchange (JSE), London Stock Exchange (LSE), information on shareholders is in the public domain and can easily be obtained to assist in the CDD process.

Banks, therefore, need to be in full compliance regarding the identification of directors, beneficial owners and management of private companies seeking to open transaction accounts with banks in Zambia. In fact, banks should go above and beyond to carry out the unwrapping process of the shareholding structures of certain complex entities. This is actually in line with BOZ clarification which is very categorical. BOZ has confirmed and advised the banks that AML BOZ directives only provide minimum standards and the banks should make every effort to obtain additional information that will enhance their knowledge of the clients. The unwrapping process is just one of the many ways the banks should demonstrate their efforts to obtain additional information that enhances their knowledge and understanding of their clients.

Banks in Zambia should emulate the advice of FATF, along with numerous member countries such as the United Kingdom and United States, which urge risk-based controls. The theory is that no financial institution can hope to detect all wrongdoing by customers, including money laundering and fraudulent transactions. But if an institution develops systems and procedures to detect, monitor and report the riskier customers and transactions, it will increase its chances of staying out of harm’s way from criminals and from government sanctions and penalties.

A risk-based approach requires institutions to have systems and controls that are commensurate with the specific risks of money laundering, terrorist financing and financial crime. Higher money laundering risks demand stronger controls than warranted by individuals or countries deemed to be of lower risk. However, all categories of risk — whether low, medium or high — must be mitigated by the application of controls, such as verification of customer identification (passports, National Registration Cards (NRCs), Know Your Customer (KYC) policies, and so on. Governments around the world believe that the risk-based approach is preferable to a more prescriptive approach in the area of anti-money laundering and terrorist financing because:
•    It is more flexible -money laundering and terrorist financing risk varies across jurisdictions, customers, products and delivery channels, and over time.
•    It is more effective – companies are better equipped than legislators to effectively assess and mitigate the particular money laundering and terrorist financing risks they face.
•    It is more proportionate – A risk-based approach promotes a common sense and intelligent approach to fighting money laundering and terrorist financing rather than a “check the box” approach. No tick-backs please!
•    It also allows firms to minimize the adverse impact of anti-money laundering procedures on their legitimate customers.

Banks need to assure the Central Bank of Zambia – Directorate of Bank Supervision their unflinching support and assurances that banks are fully compliant in terms of on-boarding of both individual and corporate customers in as far as CDD, documentation requirements, identification, verification, record keeping, storage and retrieval are concerned.

Devastating Social Impact of Bribery, Corruption, Money Laundering & Financial Crimes

For the past quarter of a Century, I have seen, observed, experienced and dealt with various Financial Crimes on this earth. My first professional assignment entailed ëxamining the practices and procedures of client organizations and facilitating the discovery of all forms of malpractices and giving professional advice to organizations and institutions on ways and means of promoting accountability, transparency, reducing and preventing opportunities for corruption, fraud and such criminal malpractices. It is always cheaper to drain the swamps than fight the alligators and crocodiles. I will continue sharing the financial typologies on this forum and several others. I will be more inclined to touch on some high level Legal and Compliance, Financial Crime Risks, Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF), Sanctions, Anti-Bribery & Corruption (ABC), Fraud Examination – Prevention, Investigations and prosecution, Banking Security whilst at the same time promoting Good Governance, Transparency, Integrity and Accountability. You are cordially welcome. Let us begin with Africa.  There is a paper entitled “The Devastating impact of Money Laundering and other Economic and Financial Crimes on the Economy of Developing Countries: Nigeria as a Case Study by Yusuf and Ibrahim from the International Islamic University Malaysia. The paper makes very interesting reading. You are encouraged to read, if you have a moment to spare. You can google it up in PDF. The paper argues that Economic and financial crimes represent a dangerous form of criminal behaviour that affects not only individual member of a society but also having deleterious effects on the economic, health and material welfare of the community as a whole. Economic and financial crimes are non-violent criminal practices which are tantamount to sabotage of the national economy. This is because of the impact of these offences on the social well being and economic foundation of any nation. This paper examines the general consequences of economic and financial crimes especially money laundering on the economy of the developing countries using Nigeria as a case study. The study finds that the common characteristic of the effects of economic and financial crimes in the developing countries is its tendency to undermine a nation economy which in turn often results in decelerated improvement in the quality of life of citizens and paving way for economic cum political stagnation. This finding represents a major problem Nigeria like many other developing countries is presently grappling with as a result of the prevalence of economic and financial crimes. The paper concludes by recommending a strong legal regime coupled with political will to combat the menace and minimise its devastating consequences. In Section 3.1 CONSEQUENCES OF ECONOMIC AND FINANCIAL CRIMES IN NIGERIA, some very alarming figures are mentioned. The gloomy picture reminds us of Zambia and our God Given Natural Resource of “COPPER”. The paper states, “In spite of Nigeria’s enormous oil and gas deposit and abundant human resources, the nation is still a poor country with 80-90 million Nigerians out of the 140 million population living in abject poverty. For the past four decades, over $300 Billion was earned from oil exports but paradoxically Nigeria’s current per capital income is about 20% less than the 1975 level while the nation suffers under an excruciating external debt burden of about $33 Billion, equivalent of 60% of the nation’s GDP. The pathetic consequences of economic and financial crimes in Nigeria is well captured by Nuhu Ribadu, the former Executive Chairman of the Economic and Financial Crimes Commission (EFCC) Nigeria, when he disclosed thus; ” Without seeking to befog you with statistics, let me share a few example of what corruption has cost us as a people and as a nation. My pet example is the £ 20 Billion Pounds (about $500 Billion) of development assistance that has been stolen from this country since independence to date by past leaders of our country …the money could create the beauty and glory of Western Europe six times all over Nigeria. Nigerians line at the gate of Western Embassies daily in search of visas to flee the country, but the best way to appreciate this figure is to recall that it represents six times the value in money that went into rebuilding Europe via the famous Marshal at the end of the 2nd World War. We need to seriously introspect, reflect on the African Countries and Zambian current and future state. Stay well and be blessed