3 October 2023

Anti Money Laundering Comparative Guide

Anti Money Laundering Comparative Guide for the jurisdiction of Zambia, check out our comparative guides section to compare across multiple countries
Zambia Government, Public Sector
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1 Legal and enforcement framework

1.1 Which legislative and regulatory provisions constitute the anti-money laundering, counter-terrorist financing and general financial crime prevention (collectively, ‘AML') regime in your jurisdiction, from a regulatory (preventive/sanctions) and enforcement (civil/criminal penalties) perspective? Are there any legislative and regulatory requirements that apply below the national level (ie, at a state or regional level)?

The following legislative and regulatory provisions constitute the AML regime in Zambia:

  • The Prohibition and Prevention of Money Laundering Act (14/2001) (as amended by Act No.44 of 2010) is the primary act that deals with money-laundering activities and restrictions.
  • The Anti-Terrorism Act (21/2007) and Anti-Terrorism and Proliferation Act No. 6 of 2018 deals with the restriction of terrorist activities in the jurisdiction.
  • The Forfeiture of Proceeds of Crime Act (19/2010) provides for the circumstances and instances of the civil and criminal forfeiture and seizure of the proceeds of crime.
  • The Financial Intelligence Centre Act (46/2010) (as amended by Act 4/2016) establishes the Financial Intelligence Centre and sets out the duties of both supervisory authorities and reporting entities.
  • The Public Interest Disclosure (Protection of Whistle-blowers) Act (4/2010) provides a framework within which persons that make a public interest disclosure will be protected. Its objective is to provide for the disclosure of conduct that is adverse to the public interest in the public and private sectors.
  • The Mutual Legal Assistance in Criminal Matters Act, 1993 provides for the implementation of treaties for mutual legal assistance in criminal matters.
  • The Plea Negotiations and Agreements Act (20/2010) governs the plea negotiations that may be entered into by accused persons.
  • The Anti-Corruption Commission Act (3/2012) deals with corrupt and provides for the establishment of the Anti-Corruption Commission, which is mandated to deal with corrupt activities.
  • The Narcotic Drugs and Psychotropic Substances Act (35/2021) provides for the establishment and functions of the Drug Enforcement Commission. It also criminalises trafficking in drugs and the unlawful manufacture of drugs.
  • The Non-Governmental Organisation Act (16/2009) as amended by Act No.23 of 2020 provides for the coordination and registration of non-governmental organisations, and for the maintenance of a register of local and international non-governmental organisations.
  • The Penal Code Act (Chapter 87 of the Laws of Zambia) criminalises offences and sets out the applicable sentences.
  • The National Prosecution Authority Act 2010 established the National Prosecution Authority as the primary authority for the administration of criminal justice in the jurisdiction.
  • The Bank of Zambia Anti-Money Laundering and Combating the Financing of Terrorism or Proliferation Directives, 2017 apply to all financial institutions (reporting entities) in relation to the duties of officers in ensuring AML compliance.

These acts apply at the national level.

1.2 Which bilateral and multilateral instruments on AML have effect in your jurisdiction?

The following bilateral and multilateral instruments at an international level have effect in Zambia:

  • the Financial Action Task Force (FATF) Recommendations, which set out 40 special recommendations on counter-terrorist financing (CFT). The recommendations articulate international standards for countries to adopt for AML/CFT purposes and incorporate in local legislation;
  • the UN Single Convention on Narcotic Drugs 1961 (amended in 1972) (acceded to by Zambia);
  • the UN Convention on Psychotropic Substances 1971 (acceded to by Zambia);
  • the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1981 (ratified by Zambia);
  • the UN Convention against Transnational Organised Crime 2000 (ratified by Zambia);
  • the UN Convention against Corruption (ratified by Zambia); and
  • the UN Convention on Suppression of Terrorism.

At a regional level, the following multilateral and bilateral agreements have effect in Zambia:

  • the Southern African Development Community (SADC) Protocol on Combating Illicit Drug Trafficking (ratified by Zambia);
  • the SADC Protocol against Corruption (to which Zambia is a signatory); and
  • the African Union Convention on Preventing and Combating Corruption (to which Zambia is a signatory).

Zambia is also a member of:

  • the Eastern and Southern African Anti Money Laundering Group; and
  • the African Heads on Narcotic Law Enforcement Agencies.

1.3 Which public sector bodies and authorities are responsible for enforcing the AML laws and regulations? What powers do they have?

The following public sector bodies and authorities are responsible for enforcing AML laws:

  • Anti-Money Laundering and Combating Financial Terrorism Authority: This was established by Section 3 of the Prohibition and Prevention of Money Laundering Act (14/2001). It is a policymaking body with the power to prosecute individuals and companies for money laundering.
  • National Task Force of Senior Officials: This was set up by the Cabinet Office to coordinate AML-CFT matters among stakeholders. It has the power to establish and improve existing policies on AML/CFT matters.
  • Financial Intelligence Centre: Established by the Financial Intelligence Act, the centre has the power to investigate complaints and report to enforcement agencies such as the police, the Anti-Corruption Commission, and the Drug Enforcement Commission.
  • Anti-Corruption Commission: Established by the Anti-Corruption Commission Act, this is a law enforcement body with the power to investigate and prosecute corruption offences.
  • Zambia Police Service: This is a law enforcement body and receives instructions to charge accused natural and legal persons. It has the power to charge persons with criminal offences.
  • Immigration Department: This is a law enforcement body which has the power to detect illegal immigrants.
  • Zambia Security Intelligence Service: This is a law enforcement body with the powers of the Zambia Police Service.
  • Drug Enforcement Commission: Established by the Drug Enforcement Commission Act, the commission has an AML Unit and has the power to investigate and prosecute drugs offences.
  • National Prosecution Authority: This is the principal authority for all prosecutions and is a law enforcement body. It prosecutes charges on behalf of the police by virtue of Section 82 of the Criminal Procedure Code Act (Cap 88 of the Laws of Zambia).
  • Zambia Revenue Authority: Established under the Zambia Revenue Authority Act, this is responsible for ensuring tax compliance. It is a law enforcement body with the powers to investigate and prosecute non-compliant persons.
  • National Task Force on Anti-Money Laundering: This body is tasked with:
    • enhancing domestic cooperation; and
    • overseeing the adoption and implementation of international AML/CFT standards and the development of national AML/CFT standards strategies.
  • Ministry of Foreign Affairs: This serves as the depository for international instruments to which Zambia accedes.
  • Ministry of Justice and Ministry of Home Affairs: These ministries oversee the dispensation of justice and the enforcement of the relevant AML laws.
  • Other: Any other institution designated by a minister by statutory instrument.

1.4 Are there any self-regulatory organisations or professional associations? What powers do they have?

  • Law Association of Zambia: Established by the Law Association of Zambia Act, this body regulates legal practitioners. It is responsible for ensuring that suspicious activities and transactions are reported to the Financial Intelligence Centre by legal practitioners in their legal capacity. The Prevention and Prohibition of Money Laundering Act provides that anyone that is involved in money-laundering activities will be guilty of an offence and will be liable upon conviction to a fine, imprisonment or both. This provision will thus apply to lawyers who engage in any money-laundering activities. They fall under the definition of ‘designated non-financial businesses and professions'.
  • Zambia Chartered Institute of Accountants: Established by the Accountants Act, 2008, this body regulates accountants and is responsible for ensuring that suspicious activities and transactions are reported to the Financial Intelligence Centre. The Financial Intelligence Act does not establish accountants as reporting entities; they rather fall under the definition of ‘designated non-financial businesses and professions'. The Prevention and Prohibition of Money Laundering Act provides that anyone who is involved in money-laundering activities will be guilty of an offence and will be liable upon conviction to a fine, imprisonment or both. This provision will thus apply to lawyers that engage in any money laundering activities. However, where accountants work for financial Institutions, they are required to report offences.

The above bodies do not have AML/CFT powers per se. While legal practitioners, accountants, casinos and so on are not mandated to report, they must not participate in money-laundering activities.

1.5 What is the general approach of the financial services regulators in enforcing the AML laws and regulations?

Only the Bank of Zambia and the Registrar of Banks and Financial Institutions have issued guidelines for regulated institutions. There are no directives for designated non-financial businesses and professions to put in place appropriate risk management systems to determine whether a potential client, an existing client or a beneficial owner is a politically exposed person.

Financial services are regulated by the Bank of Zambia, which derives supervisory power from Article 213 of the Constitution of Zambia (Amendment Act 2/2016). It supervises reporting entities, such as financial institutions and non-bank financial institutions (eg, micro finance institutions; leasing companies). The Bank of Zambia also supervises the transactions of reporting entities.

The Financial Intelligence Centre Act establishes financial institutions as reporting entities. They are responsible for:

  • identifying suspicious transactions and accounts;
  • identifying the actual owners of accounts;
  • compiling reports of transactions; and
  • reporting suspicious transactions to the Financial Intelligence Centre.

1.6 What are the statistics regarding past and ongoing AML procedures in your jurisdiction?

In the past, Zambia:

  • faced enforcement issues, due to the inadequate labour, training and resources of law enforcement agencies;
  • did not have a financial intelligence unit that met international standards; and
  • was placed under monitored jurisdiction (When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring) by the US Department of State in 2016 (International Narcotics Control Strategy Report).

Today, Zambia still faces enforcement issues (e.g., training, resources) and is still seeking to comply with all 40 special recommendations of the FATF. It has thus far been rated ‘effective' for 11 areas/recommendations.

1.7 What reporting activities exist for reporting suspicious activities and/or transactions (SARs)? Are there any specific powers to identify the proceeds of crime or to require an explanation as to the source of funds?

Reporting activities are conducted by reporting entities such as financial institutions and banks. Most reporting activities are conducted by financial institutions, as they are obliged to report under the Financial Intelligence Centre Act.

Lawyers, accountants and designated non-financial businesses and professions have no specific suspicious transaction reporting or suspicious activity report obligations.

Reporting entities are regulated by their respective supervisory authorities. Financial institutions must:

  • conduct suspicious transaction reporting and submit suspicious activity reports on AML/CFT activities to the Financial Intelligence Centre; and
  • require owners, account holders and so on to explain the source of funds or changes in the source of funds.

As a matter of policy, some financial institutions do not open accounts for certain businesses, or for companies and individuals from certain countries.

Financial institutions derive the powers to monitor transactions from Bank of Zambia directives, their internal policies and the law. The main such power is the power to require an explanation as to the source of funds.

1.8 Is there a central authority for reporting (ie, a Financial Intelligence Unit (FIU) responsible for assessing SARs reported from relevant entities subject to AML requirements)? Does this authority work internationally?

The Financial Intelligence Centre acts as Zambia's financial intelligence unit.

It is aligned with Financial Action Task Force Recommendation 20 and was established in 2019 under the Financial Intelligence Centre Act (46/2010) (as amended in 2016).

It is mandated:

  • to receive, request, analyse and disseminate the disclosure of information on AML/CFT and serious offences; and
  • to conduct inquiries on behalf of foreign designated authorities and notify them of outcomes.

The Financial Intelligence Centre works with international bodies such as:

  • the FATF, which is an intergovernmental body that develops and promotes financial policies; and
  • the Eastern and Southern African Anti Money Laundering Group, of which Zambia is a founder member.

1.9 What relevant public or private corporate or other registers exist to assist with conducting and/or validating AML information, ultimate beneficial owners etc; and what details must be disclosed?

The Financial Intelligence Centre Act mandates financial institutions (reporting entities) to require from client's details such as directors, shareholders, address account holders, beneficial owners and foreign companies.

They are also required under the AML/CFT directives to maintain private registers which are not available for public use.

Private corporate registers may also be maintained by companies.

Public bodies must keep registers which are to be administered by the controlling or chief executive officer. These registers must list all gifts offered or received by the public body, as required under the Anti-Corruption Commission Act.

1.10 How do such registers interoperate with one another and do they do so internationally?

The registers of financial institutions are privately held by those financial institutions.

Registers maintained under the Bank of Zambia's AML/CFT directives are shared only with the supervisory authorities and the Financial Intelligence Centre.

2 Scope of application

2.1 Can both individuals and companies be prosecuted under the AML legislation?

Yes, both individuals and companies can be prosecuted:

  • Individuals can be prosecuted under:
    • the Anti-Corruption Commission Act;
    • the Drug Enforcement Commission Act;
    • the Penal Code Act;
    • the Forfeiture of Proceeds of Crime Act; and
    • other AML laws.
  • Companies can be prosecuted under:
    • the Forfeiture of Proceeds of Crime Act; and
    • the Anti-Corruption Commission Act for corrupt transactions, commercial crimes; and
    • other AML laws.

2.2 Can foreign companies be prosecuted under the AML legislation?

Yes. Foreign companies established in Zambia can be prosecuted under statutes such as the Forfeiture of Proceeds of Crime Act.

Foreign companies are monitored closely by financial institutions.

2.3 Does the AML legislation have extraterritorial reach?

Yes. The Financial Intelligence Centre Act forbids financial institutions and other bodies from entering into transactions with local and foreign financial institutions that have shell companies.

For instance, Section 2 of the Financial Intelligence Centre Act covers property both inside and outside the jurisdiction and covers a broad spectrum of institutions.

In addition, laws such as the Anti-Corruption Commission Act extend their application to include offences committed within or outside the jurisdiction.

2.4 Are there restrictions on financial institutions' accounts for foreign shell banks? Which types of firms are subject to such restrictions?

The Financial Intelligence Centre Act sets out certain restrictions, such as:

  • restrictions on the opening of fictitious or anonymous accounts;
  • restrictions on entering into or continuing business relations with companies that fail to properly identify and provide adequate information on their operations or existence; and
  • a prohibition on the establishment and operation of shell companies, applicable to both banks and financial institutions.

2.5 Are there cross-border transaction reporting requirements? If so, what must be reported under what circumstances and to whom?

Yes. The following requirements apply in relation to cross-border transactions:

  • Under the Financial Intelligence Centre Act, financial institutions (or reporting entities) must identify or collect adequate information on cross-border transactions; and
  • Compliance officers and reporting entities must report suspicious transactions to the supervisory authorities, which report to the Financial Intelligence Centre.

2.6 Does money laundering of the proceeds of foreign crimes constitute an offence in your jurisdiction?

Yes. The Forfeiture of Proceeds of Crime Act provides that the laundering of the proceeds of foreign crimes is an offence.

3 AML offences

3.1 What AML offences are recognised in your jurisdiction and what do they involve? Are there any codified or common law defences?

AML offences include:

  • participation in organised criminal groups and racketeering;
  • participation in terrorism and terrorist financing;
  • trafficking in human beings and migrant smuggling;
  • sexual exploitation and sexual exploitation of children;
  • illicit trafficking in narcotic drugs and psychotropic substances;
  • illicit arms trafficking;
  • illicit trafficking in stolen and other goods;
  • corruption and bribery;
  • fraud;
  • counterfeiting and piracy of products;
  • environmental crimes;
  • murder and grievous bodily injury;
  • kidnapping, illegal restraint and hostage taking;
  • robbery and theft;
  • smuggling;
  • extortion;
  • forgery; and
  • insider trading and market misconduct.

Defences exist for certain offences and are codified in local law.

3.2 How are predicate offences defined in your jurisdiction? Is tax evasion a predicate offence for money laundering?

Predicate offences are defined by local law. Essentially, these are money-laundering related illegal and criminal activities.

Tax evasion is a predicate offence.

Other predicate offences in Zambia include corruption, theft, fraud and drug trafficking.

3.3 What reporting offences exist (eg, failure to disclose, tipping-off and prejudicing or obstructing an investigation)?

  • Failure to disclose, tipping off and obstructing investigations are offences under the Prevention and Prohibition of Money Laundering Act; and
  • Failure to do certain actions (e.g., failure to disclose) will subject officers and reporting entities to heavy penalties.

3.4 Do any restrictions or thresholds (eg, in terms of parties, asset type or transaction value) serve to limit the types of activities that constitute AML offences?

Yes. There are certain restrictions or thresholds that limit the activities of reporting entities. For instance, for certain financial institutions (reporting entities):

  • transaction values for individuals are restricted to amounts of up to $20,000; and
  • transaction values for companies are restricted to amounts of up to $20,000.

For non-bank financial institutions, such as bureaux de change, the transaction amounts are quite vague.

4 Compliance

4.1 Is implementing an AML compliance programme a regulatory requirement in your jurisdiction? If so, what aspects must this cover? Are there any criteria and/or conditions that a money laundering reporting officer or any other person responsible for AML must observe?

No. An AML compliance programme is not mandatory, but it is encouraged.

Most financial institutions and companies are moving towards establishing an AML compliance programme or a department that serves this purpose.

Money-laundering reporting officers, compliance officers and other legal officers in financial institutions must:

  • monitor transactions/accounts; and
  • have sufficient regulatory and legal knowledge.

4.2 What customer and business partner due diligence (know your customer/client due diligence) requirements apply in this regard? Do any look-through requirements apply? Are there any simplified or enhanced due diligence requirements for certain types of persons and activities?

Financial institutions must observe the following due diligence requirements with regard to both business and business partners:

  • Transactions involving high-risk officials – that is, politically exposed persons under the Financial Intelligence Centre Act (Sections 2 is the interpretation section and 19) – are expected to be monitored (enhanced due diligence).
  • Under Section 16 of the Financial Intelligence Centre Act, there is a requirement for financial institutions to identify and verify customer information.
  • Know your customer requirements require that specific information be retained in relation to large transactions.

4.3 What due diligence requirements apply in relation to ultimate beneficial owners?

Under the Financial Intelligence Centre Act, financial institutions (reporting entities) must:

  • determine the beneficial owners of businesses (i.e., the real owner of a business or the party that operates the business); and
  • identify certain persons (e.g., directors, shareholders and members of the company).

These requirements are particularly stringent for foreign companies.

4.4 Which books and records requirements have relevance in the AML context? What privacy laws apply?

According to the Financial Intelligence Centre Act, all books and records involving customers must be made available to the Financial Intelligence Centre.

The Cyber Security and Cyber Crimes Act 2021 provides that private citizens have no right to be notified by either a law enforcement officer or a service provider that they are being investigated. The act further provides that cyber inspectors can access and inspect operations or equipment forming part of an information system if there is reasonable cause to believe that it has been used in connection with any offence.

4.5 What other compliance best practices should a company implement to mitigate the risk of AML violations?

A company that implements an AML programme should mitigate the risk of AML violations by:

  • keeping up to date with the law and regulations;
  • training risk and compliance or money-laundering officers on relevant AML legislation;
  • ensuring that all due diligence requirements are satisfied; and
  • maintaining private registers of clients or gifts. Public bodies must maintain a public register of any gifts offered or received.

4.6 Are companies obliged to report financial irregularities or actual or potential AML violations?

Yes. Financial institutions (reporting entities) must report potential and actual AML violations.

However, designated non-financial businesses and professionals are not obliged to do so. Parties that are found to be involved in AML violations (e.g., casinos, betting companies, firms) will be found guilty of an offence.

According to the Prohibition and Prevention of Money Laundering Act, a failure to report results in exposure to penalties – for example, for financial institutions and compliance officers.

4.7 Does failure to implement an adequate AML programme constitute a regulatory and/or criminal violation in your jurisdiction?

No. While encouraged, the establishment of an AML programme is not mandatory, so the absence of such a programme is not a violation.

5 Enforcement

5.1 Can companies that voluntarily report AML violations or cooperate with investigations benefit from leniency in your jurisdiction?

The applicable regulatory and legal provisions are silent on whether any leniency programme is available for AML violations.

5.2 Can the existence of an AML compliance programme constitute a defence to charges of AML violations?

The regulatory and legal provisions are silent on whether the existence of an AML compliance programme is a defence to AML violations.

However, certain regulatory and legal provisions set out statutory defences. In such circumstances, the statutory defence is the only valid defence.

5.3 What other defences are available to companies charged with AML violations?

Certain defences are codified under the law.

For instance, in the Anti-corruption Commission Act, a valid defence to bribery or other offences set out under the act is that gratification received or offered involved entertainment or a casual gift.

5.4 Can companies negotiate a pre-trial settlement through plea bargaining, settlement agreements or similar?

Yes. The Plea Negotiations and Agreements Act 2010 provides that accused persons can enter into plea negotiations. The act does not state whether this applies to legal persons. However, it can be implied that the definition of a ‘person' in Zambia extends to legal persons.

In certain instances, according to the Plea Negotiations and Agreements Act 2010, a prosecutor can enter into plea negotiations with accused persons, provided that they undertake to enter guilty pleas.

However, the courts are not bound by plea agreements and can reject them where:

  • a plea agreement would be contrary to public interest and policy;
  • the plea negotiation does not reflect the facts; or
  • no admission is made by the accused person.

It is not possible for reporting entities, such as financial institutions, to enter into plea negotiations; they simply report and are penalised for failure to do so.

5.5 What penalties can be imposed for violations of the AML legislation? How are these determined? Can non-exhaustive penalties be imposed for such violations (eg, exclusion from public procurement, exclusion from entitlement to public benefits or aid, disqualification from the practice of certain commercial activities, judicial winding up)?

Yes, penalties such as the following can be imposed:

  • fines;
  • penalties, calculated in fee units; and
  • for criminal offences, imprisonment upon conviction.

The applicable penalties are determined based on the severity of the offence and the provisions of the law.

5.6 Can funds, property and/or proceeds of AML and/or financial crime be subject to asset freezing/confiscation/forfeiture or victim compensation laws? If so, under what circumstances and what types of funds or property may be confiscated/forfeited? Can such actions be taken if there is no criminal conviction?

Yes, funds, property and proceeds can be subject to freezing or confiscation.

In certain instances – especially those specified in the Forfeiture of Proceeds of Crimes Act –these actions cannot be taken without a criminal conviction.

However, the Prevention and Prohibition of Money Laundering Act provides that in other cases, assets can be seized without a criminal conviction if an officer has reasonable grounds to believe that the property or its proceeds are the proceeds of money laundering.

5.7 What is the statute of limitations for prosecuting AML offences in your jurisdiction?

None; criminal offences ordinarily have no limitations under the law.

6 Alternatives to prosecution

6.1 What alternatives to criminal prosecution are available to enforcement agencies that find evidence of AML violations?

Fines are imposed in certain instances, depending on the severity of the circumstances.

Penalties are imposed only under certain legal and regulatory provisions – for example, for failure to report a suspicious transaction.

6.2 What procedures are involved in concluding an investigation in this way?

Investigations are conducted by the relevant law enforcement bodies.

The law enforcement bodies collect and evaluate financial information on the suspected proceeds of crime received from the supervisory authorities.

They then investigate and prosecute, while liaising with other law enforcement agencies.

6.3 What factors will determine whether such an alternative to prosecution is to be offered by an enforcement agency to those who have been involved in AML violations?

Essentially, what determines the availability of alternatives to prosecution are the applicable legal and regulatory provisions.

6.4 How common are these alternatives to prosecution?

They are quite common, as most investigations do not end in conviction.

Financial institutions, companies and non-bank financial institutions are usually fined and penalised, ordinarily upon conviction.

6.5 What reasons, if any, could lead to an increase in the use of such alternatives?

There is nothing under the law that would lead an increase in the use of such alternatives.

7 Private AML enforcement

7.1 Are private enforcement actions for AML offences available in your jurisdiction? If so, where can they be brought and what process do they follow?

No. There are no private enforcement actions in Zambia. Only the government has enforcement powers through certain bodies.

7.2 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?

No types of relief are available, as private enforcement is not possible in Zambia.

7.3 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?

There are no such decisions to be appealed, as no private enforcement agencies can conduct private enforcement actions in Zambia.

8 AML, cyber and crypto-assets

8.1 How does the AML regime dovetail with other cyber law in your jurisdiction?

Cyber law is quite new in Zambia and takes the form of the Cyber Security and Cyber Crimes Act, 2021.

Among other things, the act criminalises:

  • the use of devices for illegal activities; and
  • the protection of persons against cybercrime.

8.2 What specific considerations, concerns and best practices should companies be aware of with regard to AML prevention in the cyber sphere?

Companies must:

  • be aware that the cyber regime in Zambia is very new;
  • understand that mobile money exchanges are not safe in Zambia; and
  • establish best practices and strict online processes for their transactions.

8.3 Does the AML regime extend to crypto-asset activity and if so, how?

No. Crypto-asset activity is quite new in Zambia and as yet, cryptocurrencies are not legal tender in Zambia. This is the position of the Bank of Zambia.

As a result, the use of any cryptocurrencies is at the owners' risk, as the law does not regulate such transactions.

9 Trends and predictions

9.1 How would you describe the current AML enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The current AML enforcement trends are as follows:

  • Cryptocurrency activity is developing, and companies and individuals are now selling cryptocurrencies in Zambia.
  • The Ministry of Finance recently launched a Financial Sector Development Policy, which supports technology-enabled financial service delivery models such as:
    • online-based financial services;
    • agent banking;
    • mobile financial services;
    • ATM use; and
    • point of sale facilities.

The following proposed legislative reforms will also lead to new developments:

  • The Penal Code Act will be amended to extend to money-laundering activities; and
  • The Bank of Zambia is in the process of concluding research in the area of cryptocurrencies, which may lead to a proposed act on cryptocurrency crimes.

9.2 Has your jurisdiction's AML regime been evaluated by an international organisation, such as the Financial Action Task Force (FATF), the Council of Europe (Moneyval) or the International Monetary Fund; and if so, when?

Yes. The Zambian regime has been evaluated by the Financial Action Task Force (FATF), which provides annual reports on the assessment and evaluation of money laundering activities.

The latest of these is the FATF's mutual evaluation report for 2022.

9.3 Does your jurisdiction meet the recommendations of the Financial Action Task Force; and if not, what are the barriers to meeting these?

Yes. Zambia is currently:

  • compliant with 11 FATF recommendations;
  • largely compliant with 17 FATF recommendations;
  • partially compliant with 17 FATF Recommendations; and
  • non-compliant with one FATF recommendation.

9.4 What noteworthy technology developments have you observed in your jurisdiction over the past 12 months in the growth of regtech and suptech solutions, as well areas where blockchain and digital assets or online-based communities are used as an enabler (eg, money laundering using video games or online forums)?

Noteworthy technology developments in Zambia include:

  • individuals and companies paying for gaming using cryptocurrency;
  • individuals and companies paying for different gaming activities using digital assets;
  • the growing use of blockchain in Zambia, primarily in money-laundering activities; and
  • a reluctance on the part of most banks and financial institutions to engage in business with betting companies, casinos and users of crypto assets, due to the difficulties of tracing cryptocurrencies in Zambia.

10 Tips and traps

10.1 What are your top tips for the smooth implementation of a robust AML compliance programme and what potential sticking points would you highlight?

Our top tips are as follows:

  • Maintain up-to-date knowledge of the law and regulation, including proposed legislation;
  • Continually monitor clients' suspicious transactions and activities;
  • Submit suspicious transaction reports and suspicious activity reports on an ongoing basis;
  • Avoid mobile money exchanges, which are unsafe in Zambia; and
  • Avoid unsafe crypto currency exchanges.

10.2 What are the key threats and trends that you have seen in your jurisdiction with respect to money-laundering techniques during the COVID-19 pandemic?

  • Threats:
    • Cryptocurrency, which is the biggest threat, has ruined several transactions and made it difficult to trace money-laundering activities.
    • Money laundering often occurs through trade-based mechanisms to raise, launder and move funds through commerce in either illicit or illicit goods (e.g., under-invoicing, false invoicing or over-invoicing).
  • Trends:
    • Many transactions occurred through trade-based mechanisms.
    • Many transactions were effected using cryptocurrencies.

10.3 Are your jurisdiction's relevant AML legislative and rulemaking instruments available in online; and if so, are they publicly available and in English?

Yes. They are publicly available online and in English, which is the official language as provided in the Constitution of Zambia (Amendment) Act (2/2016).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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