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FIC Reveals More Suspicious Deals in 2018

The 2018 Financial Intelligence Centre Trends Report has revealed an increase in suspicious transactions involving politically exposed persons (PEPs) and others, totalling K6.1 billion.

The report launched in Lusaka on Friday by Attorney General Likando Kalaluka and Financial Intelligence Centre director general Mary Chirwa, further reveals that some law firms have been used to mask money laundering activities by the PEPs.

Corruption topped the list of suspicious transactions for 2018 with K4.9 million involved while tax evasion came second at K1 billion followed by theft (K110 million) and fraud (K54 million).

These figures signify a 30 per cent rise in suspicious transactions since in 2017, the activities totaled K4.5 billion.

“In 2018, the Centre analysed 176 suspicious transaction reports, of which 80 were disseminated to Law Enforcement Agencies on suspicions covering: tax evasion, fraud, corruption and money laundering. The total value of the suspected offences in the disseminated cases was estimated at ZMW 6.1 billion (or about USD 520 million) which includes tax assessments by ZRA amounting to ZMW 62 million. The assessment period was from 1st January 2018 to 30th September 2018,” the Report states.

A total of nine law firms are said to have been involved in suspicious transactions amounting to K365 million in 2018.

The law firms assisted suspected criminals to mask the source of funds and aided its reinvestment or movement to foreign jurisdictions, the report states.

Most of these cases involved illegally obtained funds transferred to law firms who then facilitated the acquisition of property such as land and motor vehicles on behalf of the launderers.

On corruption, abuse of office and money laundering, the report that some individuals amassed huge wealth that was not commensurate with their incomes .

These individuals also had several properties built through suspected corrupt activities and the FIC has so far reported these unnamed individuals to competent authorities  for possible prosecution.

 

In the report, PEP N was alleged to have amassed wealth that was not in line with his expected income within a short period of time.

The PEP was alleged to have amassed wealth through suspected corrupt practices with the aid of two other PEPs, his associates (PEP D) and (PEP C) and PEP N influenced the awarding of contracts to foreign construction companies.

In return, these companies constructed 49 residential properties for him valued at K70 million, the report states, and they further purchased two luxury vehicles for him valued at K4 million.

“With respect to PEP C and PEP D, it was noted that they had acquired four (4) properties valued at ZMW 61,000,000.  A review of the bank accounts of PEP N and PEP C for the period 1st October 2015 to 30th April 2018 revealed the following credit turnover: PEP N: ZMW 12,000,000; PEP C: ZMW 35,000,000,” the report states.

Other key cases highlighted involved suspected terrorist financing where two foreigners identified as X and Y incorporated company D in Zambia.

Company D, according to FIC, held bank accounts with bank B and Mr. X requested the bank to amend his name, date of birth and nationality.

Upon receipt of this request, the bank performed customer due diligence and adverse information on the new credentials was revealed.

The new name was linked to a terrorist group in Country Q within Africa, it states.

“Mr. X made multiple forex purchases using his company account to fund his travel from Zambia to the African Country where terrorist activities are rampant. The forex purchases by Mr. X were suspected to be funding terrorist activities in Country Q,” the report reveals, adding that the matter has been disseminated to competent authorities for further investigation.

The report also reveals that company ZD and its proprietor PQ, a PEP, allegedly received funds from foreign construction companies who were awarded contracts by the public institution.

These funds were remitted to company ZD which operates as a financial institution without any economic rationale.

The shareholder also received cash deposits in his personal account (Account 2) amounting to K1.4 million.

The funds received amounted to K6.5 million and PEP PQ subsequently transferred the funds to third parties of a Non-Profit Organisation (NPO) and K750, 000 was transferred to the account of PEP J who purchased property.

A further K5 million was withdrawn in the form of cash by shareholders, the report states.

The report further notes an increase in purchase of property allegedly using laundered money.

“The Centre observed a discrepancy between the mortgage market and the rising number of housing and office infrastructure. This rise can partly be attributed to an increase in the number of Property Developers. Currently, there is no regulator that oversees the activities of property developers for AML/CFT purposes. Construction provides an easy and undetectable avenue for criminals to launder funds. The placement and layering of the illegal proceeds occur during the construction of property. The Integration of the proceeds of crime occurs when either the property is sold or leased for rental income,” it stated.

On Casinos, the FIC report also notes that most these gambling businesses were non-compliant with local law requirements and some of them do not hold bank accounts in Zambia.

However, persons, especially from foreign jurisdictions working for these casinos, had bank accounts in Zambia that received large cash deposits which were followed by large outward transfers, mostly to their home jurisdictions.

Further, some casinos were using employees and shareholders as cash couriers, it stated.

The Centre also noted that some of these casinos are not compliant with the local law requirements prescribed by the Zambia Revenue Authority or the Licensing Committee under the Ministry of Tourism and Arts, it stated.

Under public procurement, a manipulation of certain specifications to disadvantage other bidders was noted in the FIC report.

It states that procurement corruption has led to the crowding out of legitimate businesses and increased the cost of public projects and has recommended a review of the Public Procurement Act to prohibit participation of shell corporate vehicles in public procurement.

Under tax evasion, the report reveals that small and medium scale enterprises were cited as the main culprits.

“Most of these entities were either not registered for tax purposes or were not tax compliant while some of the cases analysed were based on the following false accounting; some companies overstated their expenditure and this reduced their profits and hence their tax obligations,” the report states.

Some companies externalized funds to their parent companies, and the same companies would then receive the funds in the form of loans.

“This reduced their tax liability as interest on the loans received tax relief. Use of personal accounts for business: it was observed that individuals were using personal accounts for business purposes. This affected the completeness and accuracy of business records hence compromising their tax compliance,” the report states and recommends that presumptive tax is extended to other sectors, especially small enterprises such as barber shops, salons and micro retail stores.

The report has further revealed that some private companies that were awarded public contracts were funding some named political parties in the country.

“The funds would move from these private companies to prominent individuals linked to the political parties. The cases analysed amounted to ZMW10 million.  It is recommended that the Registrar of Societies makes it a requirement for all political parties to disclose their sources of funding and submit audited annual financial statements which should also be available for public scrutiny through the appropriate Parliamentary Committee,” states FIC report.

20 Comments

  1. Dude

    Uko….kwaletwa…..name the pupulus!!!

  2. SONTA DONATION YOBE

    I NEED OUR LEARNED LAWYERS TO MAKE ME UNDERSTAND THIS FRACAS ~IS THERE A WAY THE POLICE CAN ARREST THE CULPRITS INVOLVED OR OUR LAW ENFORCERS JUST ARREST POLITICAL OPPONENTS.MR CHANDA FIMO FIMO PLEASE RESPOND.

    • Idiocy Detector

      There is no way investigations and arrests can be prudent under this masquerades, did you not hear that the chief masquerade is proposing to change the law to silence the FIC? How can you get annoyed when asked a question as a leader instead of being calm and show that you are not part of the scandal? Even an unborn child can see through your anger that there is something you are not comfortable with unless it was swept under carpet.

  3. Sylvester Moomba

    Zambia will reduce the rampant financial crisis only when the head of state will not be the appointing person for those in charge of financial crimes and judges period.

  4. Man of feel words

    FIC even if you reveals misused of fund nothing will change, above all no one will be prosecuted.

  5. K.29

    JUDGES 21:25 The holy bible says; There was no king in Israel at that time.All the people did just as they pleased. Since the death of MICHAEL CHILUFYA SATA m.h.s.r.i.p ZAMBIA HAS NO PRESIDENT. this amount of money is enormous. thank you people for your and patriotism in making this effort on informing a Nation. ecl lost his good reputation the time when he robbed the widow. This is too much.

  6. Papa 1

    The report talks about a lot of crimes ranging from theft,fraud,corruption and money laundering activities, why don’t the police, ant_ corruption unit and Dec anti money laundering unit take up these cases? if they can’t why publishing such stories? And the Financial intelligence Commissioner why not given the mandate to prosecute those cases than publishing such stories and ends there?who is paying them to do such good work which is not being used by the state?

    • Future President

      I blame the poor people here in zambia we sit fold our arms and watch rich people steal from us,when they are sick they travel abroad for special treatment,u and I go to our local hospitals to die because there are no medicines,we wake up at 4 in the morning just to vote for people who end up abandoning us,they buy us beer and pangas so that we kill our fellow poor man whilst them are busy enjoying with their families,really some people are evil.in Lusaka here just a few meters from state house people are using pit latrines no piped water and yet individuals are pocketing millions of our money.for how long are we going to allow this to continue?

  7. Corruption now will be worse

    This money laundering thing has been going on for a long time now in Zambia. The question of prosecution is still never answered adequately , WHY? The government should be seen to be working or else we are going nowhere . Any way what more can one say when things are in reverse gear!!

  8. Gangsta grabs

    In zambia you use too much bible.Just kill and fuck.The world is changing,fuck all fuckers.And your money and where u got it from.I will fuck your wife.

  9. Marker

    This is serious where is the president in this country?

  10. Frank

    This is serious than I thought and these individuals are still in offices,I am interested to see the reaction from our president am sure he has the names of the culprits on his desk,this is too much.

  11. Kings

    Zambia Has A President, But We People Of Zambia Have No President. I Have Said So Because Of The Way We Are Negrected In Our Own Mother Land By Selfish And Greed Leaders. No One Is Positive To Our Problems. I ‘ll Imform De Nation What One Of Dcs Told Me When I Confranted Him With A Very Sansitive Issue, His Response Was, “Sorry The Government Has No Money”. So I Want To Meet The Area Mp And Hear What He Is Going To Say Before I Sue The Culprits, Because I See No Reason For Starving. Criminals Should Be Brought To Book, Not Just Story Telling.

  12. Children Of Israel

    Are The Ant Corruption, DEC, Auditors, Blind Or Sleeping Such That They Can Not See These Theft Activities At Early Stage Before The Nation Is Robbed Huge Amount Of Money. In Ministry Of Community Development, It Took Donors To See That Millions Of Us Dollars Where Missing While Responsible Officers For Auditing Did Not See Anything.

    • Njekwa wa lubinda

      Jungle law,survival of the fittest, natural selection, animal farm; these are but a few phrases to describe the whole scenario in our country. Let the law take its course and bring to book all who are involved in plundering the economy of our beloved country. FIC must act boldly and insure that all those mentioned in the financial plundering of our economy are reported to the relevant institutions for prosecution. How long shall we stand and watch our God given country go to the dogs. God help mother Zambia.

  13. Yamustraight

    I do believe the author of this article have the real names of the culprits,report them to the law enforcement that can deal these people.

  14. mwamba

    Every year such reports are generated, but little or no action at all is taken. This why we are experiencing an increase in such crimes. We are talking more than acting which is a syndrome in Zambia.

  15. House of Commons

    FIC thanks for the report now my question is what is the way forward? Because you know the people involved in all illegal activities and reported them to relevant authorities which is good. These authorities without fear or fever do justice and expose them publicly our economy is performing badly because of the same people and the majority Zambians are wallowing in poverty because of certain selfish individuals enough is enough. We want leaders who can fight corruption .

  16. Wezzy Banda

    So,my Question Is; When Are You Going To Prosecute These PEPs? cause it sounds as though they are part of a terrorist group. something has to be done about this

  17. Explorer of Fianancial Crimes Spiritied through Judiciary

    Great job FIC. Congrats Mary..President ECL just needs to incept an Independednt Investigations team, like for the former TFC, to inquire into the suspicious transactions and arrest those found wanting. The report ought not to be rubbished , but the state can also be held accountable if it sweeps the dirt under the carpet. DEC and ACC have proved not capable of handling all what the FIC has revealed. But enhancing their job with an Independednt team,Mwill be much more effective. I wish the international community can advise ECL on this fact. We have experts who are victims of transnational fraud, tax evasion, corruption and money laundering ,mfunneled and spirited through the judicial process by more than 13 Zambian lawyers and these were dragged up to the Constitutional Court, and are already criminal suspects in such criminal suspects of such vices.. LAZ, ZUALE and JCC were also pooled as Respondent’s to the Concourt Petition involving the alleged contraventions by the lawyers and some members of the judiciary. But interestingly, all these lawyers committed fraud upon the Concourt and allegedly induced it to cover up the lawyers from answering to the allegations and gross rights infringements. But it joins them in the need to criminally account. I will not be suprised to hear that the list of lawyers I caught, are the same ones mentioned in the FIC report.. and I already reported them to LAZ and President ECL himself. You see some even used tribalist Judges to help them with legitimizing such crimes, but the acts just constituted money laundering acts. A prominent Minister, after committing fraud, motor vehicle theft, tax evasion, he allegedly induced members of the judiciary to main such crimes through civil litigation.. But that just amounts to money laundering and abuse of the judicial process too..,The ACC and Police were given this information but they failed to react. I then filed criminal complaints and Charge sheets directly at the Magistrates Court, and the matter was allocated to Magistrate, pending allocation of prosecutors to prosecute the matter. I sent them to the DPP. But the wait has been long, so I k formed the international community and all global bodies about the crimes and need for Independednt prosecutors.. Pray they incept a tribunal soon. So looking at how my cases failed to proceed in criminal courts but the lawyers have tirelessly abused the civil courts in trying to legitimize their crimes.. But I already caught them and I am aware that courts have no jurisdiction in criminal maintanance.. Releasing the FIC report to the population is good for Zambians to press the state to take action. We must all ask President ECL to incept an independent team to probe the FIC revalations. We cannot rely on DEC and ACC, Police are accomplices in some of the vices and their incompetence is overwhelming. They instead engage in committing more crimes to distract the public from their incompetence. They simply cannot deal with the FIC revalations.

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