Ronald Zvendiya MONEY Laundering (ML) is the conversion or transfer of property knowing that such property is derived from a criminal activity to conceal or disguise the illicit origin of such property or for assisting any person who is involved in the commission of such activity in evading the legal consequences of his or her activity.
To ensure that law enforcement agencies effectively play their role in combating money laundering, Zimbabwe should implement the relevant Financial Task Force (FATF) recommendations relating to capacitating the law enforcement agencies to fight against money laundering. Some of the relevant FATF recommendations include recommendations 30, 31, and 40.
Recommendation 30 Responsibilities of law enforcement and investigative authorities — the recommendation requires countries to designate law enforcement authorities that have responsibility for money laundering and terrorist financing investigations within the framework of national AML-CFT policies.
At least in all cases related to major proceeds-generating offences, these designated law enforcement authorities should develop a pro-active parallel financial investigation when pursuing money laundering, associated predicate offences and terrorist financing. This should include cases where the associated predicate offence occurs outside their jurisdictions.
Countries should also make use, when necessary, of permanent or temporary multi-disciplinary groups specialised in financial or asset investigations.
Countries should ensure that, when necessary, cooperative investigations with appropriate competent authorities in other countries take place.
Recommendation 31 Powers of law enforcement and investigative authorities — when conducting investigations of money laundering, associated predicate offences and terrorist financing, competent authorities should be able to obtain access to all necessary documents and information for use in those investigations, and in prosecutions and related actions. This should include powers to use compulsory measures for the production of records held by financial institutions for the search of persons and premises, for taking witness statements, and for the seizure and obtaining of evidence.
Countries should ensure that competent authorities conducting investigations can use a wide range of investigative techniques suitable for the investigation of money laundering, associated predicate offences and terrorist financing.
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These investigative techniques include undercover operations, intercepting communications, accessing computer systems and controlled delivery.
In addition, countries should have effective mechanisms in place to identify, on time, whether natural or legal persons hold or control accounts.
They should also have mechanisms to ensure that competent authorities have a process to identify assets without prior notification to the owner. When conducting investigations of money laundering, associated predicate offences and terrorist financing, competent authorities should be able to ask for all relevant information held by the Financial Intelligence Unit.
Recommendation 40 International cooperation — Countries should ensure that their competent authorities can rapidly, constructively and effectively provide the widest range of international cooperation concerning money laundering, associated predicate offences and terrorist financing. This can be done spontaneously and upon request, and there should be a lawful basis for providing cooperation.
Countries should authorise their competent authorities to use the most efficient means to cooperate. Should a competent authority need bilateral or multilateral agreements or arrangements, such as a Memorandum of Understanding (MOU), these should be negotiated and signed in a timely way with the widest range of foreign counterparts.
Competent authorities should use clear channels or mechanisms for the effective transmission and execution of requests for information or other types of assistance and should have clear and efficient processes for the prioritisation and timely execution of requests, and for safeguarding the information received.
Role of law enforcement agencies Law enforcement agencies are responsible for an enquiry into the financial affairs related to criminal conduct. The major goal of their financial investigation is to identify and document the movement of money during criminal activity.
They also establish a link between the origins of the money, beneficiaries, when the money is received and where it is stored or deposited in order to provide information concerning proof of criminal activity.
Furthermore, law enforcement agencies have the mandate to identify the extent of criminal networks, the scale of criminality, trace proceeds of crime, terrorist funds and other proceeds subject to confiscation, and develop evidence that can be used in criminal proceedings to enhance the overall effectiveness of national AML/CFT regime.
Law enforcement should seek to prevent, deter and disrupt money laundering, associated predicate offences, the financing of proliferation of weapons of mass destruction and TF activity.
The law enforcement agencies have a role to undertake parallel investigations focusing on the predicate offences and the money laundering offences simultaneously.
The financial information obtained from investigations can assist in identifying motives, associations and links to people and places; use of other services such as phones, transport, and amenities relevant to the case; locating or identifying suspects, witnesses, or victims; and providing information on a suspect’s movements.
The law enforcement agencies should visit different sources of information when making investigations.
Recommendation 33 The investigations should also make use of statistics kept in line with FATF recommendation 33.
The recommendation requires various entities to maintain comprehensive statistics on matters relevant to the effectiveness and efficiency of their AML-CFT systems.
This should include statistics on the Suspicious Transactions Reporting (STRs) received and disseminated; on money laundering and terrorist financing investigations, prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance or other international requests for cooperation.
Some of the sources of information include:
- Criminal records and intelligence: law enforcement information related to the subject and/or criminal activity. For example, previous arrests, indictments, convictions, and links with known criminals. However, the criminal information can also typically be gathered from surveillance, informants, interviews or interrogation, and data research, or maybe just picked up “on the street” by individual law enforcement officers.
- AML-CFT disclosures: suspicious transaction reports, cash transaction reports, wire transfer reports and other threshold-based declarations or disclosures.
- Financial Information: Bank accounts, financial accounts, other records of personal or business financial transactions and information collected in the context of meeting customer due diligence obligations.
- Classified information: Information that is gathered and maintained for national security purposes including terrorism financing information. Access is typically restricted by law or regulation to particular groups of persons.
- Regulatory information: Information that is maintained by regulatory agencies; access is typically restricted to official use only (central banks, tax authorities, and insurance and pensions industry regulator).
- Open source: Available through open sources such as the internet, social media, print and electronic media, and registries.
Since combating money laundering is a continuous process, there is a need for enhancing the skills of law enforcement agencies to effectively conduct offences relating to money laundering and other financial crimes, regular training should be conducted by the Financial Intelligence Unit. The training sessions will sensitise the law enforcement agencies on emerging ML/TF typologies across various sectors.
In conclusion, law enforcement agencies play a key role in investigating ML/TF cases diligently. Therefore, it is imperative to note that joint investigations are required to augment the use of resources and skills gaps.
Furthermore, a framework is required to guide the investigations in circumstances of both domestic and international boundaries for arrangements to cooperate with counterparties. The framework is then complemented by appropriate legal measures to confiscate and forfeit the proceeds of crimes to the state.
- Zvendiya is an independent economist. These weekly New Perspectives articles published in the Zimbabwe Independent are coordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zimbabwe). — [email protected] or mobile: +263 772 382 852.
