SecZim unveils new guidelines for securities dealers

The Securities and Exchange Commission of Zimbabwe (SecZim) has introduced transaction monitoring, screening, and suspicious reporting guidelines for market intermediaries (SMIs).

SecZim said the guidelines were meant to clarify and provide practical assistance to securities market intermediaries in monitoring and identifying suspicious transactions. In addition, the guidelines will now be part of the targeted entities reporting obligations under section 30 of the Money Laundering and Proceeds of Crime Act (MLPCA) [Chapter 9:24].

The guidelines outline the reporting requirements and procedures for submitting Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs) to the Financial Intelligence Unit.

They set out the framework for transaction monitoring, screening, reporting timelines, information that must be included when reporting, and the procedure for reporting to the FIU using the goAML platform.

SecZim said SMIs should closely examine their customers’ transactions to ensure they align with their commercial or personal activities, and monitoring processes.

“Since transactions will not all be suspicious, SMIs should also have processes to analyse transactions, patterns and activity to determine if they are suspicious and meet the reporting threshold,” reads part of the report.

SecZim said SMIs should look out for several issues when monitoring transactions.

These include size, frequency or patterns of transactions that may indicate unusual or suspicious activity, such as suspected fraud or identity theft, and transactions that are sent to or received from a high-risk country or region.

Others are payments sent to or received from a person or organisation on a sanctions list, activities inconsistent with a customer’s risk profile or history, and activities of higher-risk customers previously suspected of or investigated for potentially suspicious activity.

According to SecZim, geography in terms of where the transaction is, frequency of the transactions and size, for example, also requires monitoring.

If an SMI suspects or has reasonable grounds to suspect that the funds are proceeds of criminal activity, related or linked to terrorist financing they should promptly report the transaction to the authorities.

The report should be made within three working days after forming the suspicion, the regulator said in the report.

SecZim said all suspicious transactions should be reported to FIU regardless of the amount involved.

“SMIs, their directors, officers, and employees (permanent and temporary) are protected by law from both criminal and civil liability if they report their suspicions in good faith to the FIU.

“The FIU has mechanisms to ensure that names and personal details of the staff of the SMIs that made the STR are kept confidential,” reads another part of the report.

SecZim said SMIs, their directors, officers, and employees were prohibited by law from disclosing that an STR or other related information is being reported to the FIU; as this could prejudice investigations.

“However, sometimes a risk exists that customers may be unintentionally tipped off when an SMI is seeking to perform its customer due diligence (CDD) measures, therefore, the institution and their employees should be aware of and adequately trained on how to efficiently handle these sensitive issues when conducting CDD measures,” SecZim said.-herald