Zambia’s Financial Intelligence Centre (FIC) has released a troubling report, highlighting the country’s growing vulnerability to money laundering and other financial crimes. The report reveals a surge in suspicious financial activity, with the casino industry emerging as a particularly problematic sector.

According to the report, the number of suspicious transaction reports analyzed by the FIC jumped from 10,293 in 2022 to 15,696 in 2023 – a 52% increase. The FIC also disseminated 923 intelligence reports to law enforcement, a sevenfold rise from the previous year. The value of these disseminations skyrocketed by 133%, reaching a ZMW13.58 billion (approximately $680 million).

The FIC identified money laundering, corruption, and tax evasion as the primary drivers behind this surge in illicit financial activity. The casino industry has become a hub for such crimes, with the FIC observing that some operators have deliberately adopted a “cash-heavy” business model to obscure the origins of their funds and avoid scrutiny.

“Casinos would deliberately use a business model heavily reliant on cash to avoid leaving a paper trail,” the report states. “In this cash-heavy environment, some casinos facilitated bribery and underreported their income.”

The FIC also discovered intelligence suggesting that some casinos were engaged in the illegal cross-border cash courier business, further compounding the problem.

Another prevalent trend observed by the FIC was the abuse of corporate vehicles, such as the use of fronts and falsified documents to mask beneficial ownership. In many cases, companies had either failed to disclose their true beneficial owners or had simply provided “strawmen” instead.

The FIC’s efforts have led to tangible results, with the Zambia Revenue Authority (ZRA) making tax assessments totaling ZMW1.2 billion in principal tax, interest, and penalties. However, the recovery rate remains low, with just over ZMW3.5 million recouped as of the end of the year.

InfinityMediaHub #stayinformed

10th July, 2024.

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