By Melody Chikono
THE insurance and Pensions Commission (Ipec) says it is reviewing licensing mechanisms for local insurers to ensure that they comply with international anti-money laundering regulations after Zimbabwe was placed on the Financial Action Taskforce (FATF) watch list.
Zimbabwe’s compliance to anti-money laundering (AML) and combating the financing of terrorism (CFT) requirements was found to be lacking and the country was put on the FATF list last month.
This followed lack of progress in addressing deficiencies that were first flagged in 2016.
Ipec commissioner Grace Muradzikwa said the local insurance regulator was considering tightening regulations to ensure that players meet the AML/CFT requirements.
“It’s been embarrassing to see the country being downgraded,” Murdzikwa told the just ended Institute of Insurance in Zimbabwe (IIZ) conference in Victoria Falls.
“Issues that came up include that AML/CFT supervision has been weak on the part of Ipec.
“That is why we think we should be giving it focus. There is generally an absence or lack of awareness on the strategic importance of AML/CFT compliance, absence of AML/CFT policies and frameworks that are approved at board level and weak AML/CFT internal controls and systems, among other issues.
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She said failure to comply with AML/CFT regulations posed a threat to Zimbabwe’s financial system.
“Sanctions on non-complying jurisdictions pose a risk to the global financial system,” Muradzikwa said.
“All countries will be urged to exercise caution when transacting with Zimbabwe.
“Failure to timeously address the deficiencies within the stipulated timeframe will result in further downgrading from the current grey list to dark grey list or black list.”
Other consequences for non-compliance include the country’s removal from international payment platforms through termination of relationships with correspondent banks and delays in the settlement of international payments due to protracted scrutiny as well as an adverse impact on foreign direct investment and portfolio investment due to limited crosss border movement of funds.
Zimbabwe was found to have insufficient processes for feedback among competent authorities and financial institutions, a report by the global anti-money laundering watchdog says.
“Based on this, it was recommended that the Securities and Exchange Commission of Zimbabwe and Ipec should develop capacity to issue guidance to their respective reporting entities as part of their supervisory functions,” the report added.
Finance minister Mthuli Ncube said Zimbabwe had implemented 33 out of the 44 recommendations made by the FATF.
Outstanding recommendations include the need to ensure full understanding and comprehensive assessment of money laundering, terrorism financing and proliferation of financing risks across all sectors.
“Implementation of the risk-based approach across all financial institutions and designated non-financial businesses and professions (DNFBPs) particularly real estate, lawyers, casinos, and dealers in precious stones and minerals, among others, is also key,” Ncube said while presenting the 2020 budget last week. “Zimbabwe will address all its deficiencies by 2021 in order to fully comply with the FATF, and avoid facing financial sanctions.
“As we continue to strengthen anti-money laundering and combating financing of terrorism, it has become urgent that we embrace a framework for an independent financial intelligence centre outside the central bank and MDAs.
“This enables better realisation of effectiveness in AML/CFT/PF.”
