INTERMARKET BANKING CORPORATION ZAMBIA LIMITED

ANTI- MONEY LAUNDERING POLICY

Contents

Page

Introduction

Background

Legal Framework

5-7

Intermarket Anti-money laundering Policies

8-11

Appendix

12- 20

1.

INTRODUCTION

Over the past ten years, the banking industry and the financial services industry at large have
made significant strides in money laundering detection and prevention. However they continue to
be vulnerable to misuse by criminal elements for laundering illegally obtained funds to finance
terrorist activities amongst other things.
On the other hand, money-launderers have become more creative due to the expansion of
products and services offered by financial institutions, competition, more complicated financial
relationships, advancement in technology and increase in velocity of money flows worldwide.
The Bank of Zambia regulates the financial services sector in Zambia and requires all regulated
institutions to develop and implement effective anti money laundering programs. The Central
Bank issued The Prohibition and Prevention of Money Laundering Act (PPMLA) number 14 and
was enacted in November 2001, in the exercise of the powers contained in section 12 (4) of
PPMLA; the Bank of Zambia issued the Ant-Money Laundering Directives in 2004.
The International community has also realized that the problem of money laundering and
international terrorism requires a coordinated approach. The most significant is the Intergovernmental body, the Financial Action Task Force (FATF) on money laundering. It develops
and promotes policies to combat Money laundering, by focusing on:

Spreading the anti-money laundering message to all continents and regions of the globe.
Monitoring the implementation of its 40 anti money laundering recommendations
Reviewing and publishing money laundering trends and counter measures.

The key country in the forefront of the anti money laundering drive is the United States of
th
America. Following the 11 September 2001 attacks in Washington & New York; the PATRIOT
Act was passed, containing provisions to combat international terrorism and block terrorists
access to the US financial system.
Other approaches are:
Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the
Proceeds from Crime and on the Financing of Terrorism
Interpols activities in the areas of money laundering and terrorist financing
United Nations International Convention for the Suppression of the Financing of
Terrorism

2.

BACKGROUND

Definition
Money laundering is the criminal practice of filtering ill-gotten gains or dirty money through a
series of transactions so that funds are cleaned to look like proceeds from legal activities. It is
intended to conceal the source, ownership or use of funds.
Interpol defines money laundering as Any act or attempted act to conceal or disguise the identity
of illegally obtained proceeds so that they appear to have originated from legitimate sources.
Money laundering is adverse and often complex process that need not involve cash transactions.
It basically involves three independent steps that can occur simultaneously. These are:
a)

Placement

This is placing, through deposits or other means of proceeds into the financial system.
b)

Layering

This is separation of proceeds of criminal activities from their origin through the use of layers of
complex financial transactions.
c)

Integration

It involves using additional transactions to create the appearance of legality through say, the
purchase of assets.
Being a financial institution Intermarket Banking Corporation Zambia limited recognizes that it is
susceptible to money launderers endeavoring to use it as a conduit for introduction of illegally
obtained funds into the financial system.
Intermarket Banking Corporation Zambia limited has therefore put in place an effective antimoney laundering program, which helps minimize exposure to transactions, compliance and
regulatory risks.

3. LEGAL AND REGULATORY FRAMEWORK FOR ANTI-MONEY LAUNDERING

As indicated earlier the legislation framework to combat money laundering was issued by the
Central Bank through The Prohibition and Prevention of Money Laundering Act (PPMLA) number
14 and was enacted in November 2001, in the exercise of the powers contained in section 12 (4)
of PPMLA; the Bank of Zambia issued the Ant-Money Laundering Directives in 2004.
The objectives of these guidelines are:
a) To guide financial institutions in establishing and maintaining specific policies and
procedures to guard against the use of the financial system for purposes of money
laundering
b) To enable Financial Institutions to recognize transactions and to provide an audit trail of
transactions with customers who come under investigations, and
c) To require financial institutions to submit reports and to disclose information on
suspicious transactions.
The Bank of Zambia Anti-Money Laundering Directives 2004 emphasizes the following;
System of internal controls to ensure on going compliance
Daily coordination and monitoring of compliance by a designated person
Training of appropriate personnel
Independent testing of compliance.

OFAC
The Office of Foreign Assets Control (OFAC) of the U.S Department of Treasury is responsible
for administering a series of laws that impose economic sanctions against selected foreign
countries to further U.S foreign policy and national security objectives. Every financial institution is
required to comply with economic sanctions and embargo programs administered under
regulations issued by OFAC.
To keep financial institutions informed, OFAC regularly updates a list of designate countries and
especially designate nationals that are prohibited from conducting business with any U.S entity or
individual.
This should enable Banks to avoid transacting or starting relationships with the same.

Enforcement
The Central Bank issued The Prohibition and Prevention of Money Laundering Act (PPMLA)
number 14 and was enacted in November 2001, in the exercise of the powers contained in
section 12 (4) of PPMLA.

Offense and Penalties

There are five main money laundering offenses:
Assisting another to retain the benefit of criminal conduct.
Acquiring, possessing, or using the proceeds of criminal conduct.
Concealing or transferring the proceeds of criminal conduct.
Failure to report knowledge or suspicion of money laundering.
Tipping off.
Assisting another to retain the benefit of criminal conduct
It is an offense to hide, remove from a country, or transfer to another person or any other similar
act, on behalf of someone else, proceeds that you know or suspect to be criminally derived. It is
also an offense to look after or invest such proceeds in order that the criminal can use them. In
this regard, proceeds include property.
The penalty for this offense under this section is normally a term in prison, a fine, or both.
For the bank this is a summary dismissible offense.
Acquiring, possessing, or using the proceeds of a criminal conduct.
It is an offense for a criminal to conceal, disguise, sell, transfer or remove from the jurisdiction of
a country, their own proceeds of crime. Likewise, this been done for anyone else knowing or
suspecting that the good in whole or in part is criminally derived.
Concealing or disguising any property includes concealing or disguising its nature, source,
location, movement, or ownership or any rights with respect to it or removing it physically or
electronically across country boarders.
The penalty for an offense under this section is normally a term in prison, a fine or both.
For a bank this is a summary dismissible offense.
Failure to report the knowledge or suspicion of money laundering.
A person is guilty of this offense if, as a result of something he learns in the course of his
profession or employment, he knows or suspects that another person is engaged in money
laundering and fails to report such suspicion or knowledge to the relevant authority.
The penalty for an offense under this section is normally a term in prison, a fine, or both.
For the bank a last warning will be given to the staff affected by this.
Tipping off.
The requirement to report knowledge or suspicion is of no use if the suspected money launderer
is alerted to the fact that they have been reported and therefore could presume that they be
investigated; this is Tipping off. The offense of tipping off also occurs when information or nay
matter concerning investigation, is disclosed to the suspect of that investigation or anyone else.
This is referred to as Prejudicing an Investigation
The penalty for an offense under this section is normally a term in prison, a fine, or both.
For the bank this is a summary dismissible offense.

The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the
Proceeds from Crime and on the Financing of Terrorism) outlines the category of activities under
this code:
A) participation in an organized criminal group and racketeering;
b ) terrorism, including financing of terrorism;
c ) trafficking in human beings and migrant smuggling;
d ) sexual exploitation, including sexual exploitation of children;
e ) illicit trafficking in narcotic drugs and psychotropic substances;
f ) illicit arms trafficking;
g) illicit trafficking in stolen and other goods;
h) corruption and bribery;
i) fraud;
j ) counterfeiting currency;
k) counterfeiting and piracy of products;
l ) environmental crime;
m) murder, grievous bodily injury;
n) kidnapping, illegal restraint and hostage-taking;
o) robbery or theft;
p ) smuggling;
q) extortion;
r) forgery;
s) piracy; and
t ) insider trading and market manipulation.

Bank Policy Statement

As a financial institution, the bank is committed to preventing money laundering. It is therefore the
policy of the Bank to provide appropriate policies and procedures to comply with the laws of
Zambia and those of other jurisdictions as regards anti-money laundering activities being
promoted by the government.
The Board of Directors recognizes the importance of ensuring that the Bank has adequate
controls and procedures in place so that we can combat money laundering. Without this, the bank
can become subject to reputational, operational, legal and concentration risks, which can result in
significant financial loss.
Management will support the training of its staff to achieve the highest standards of compliance
integrity. This document seeks to make staff aware of both the Banks commitment to preventing
money laundering and their own obligations under the policies set down.
This policy represents the basic standards of Anti-Money laundering and Suspicious Transaction
Reporting (AML) procedures within Intermarket Banking Corporation Zambia Limited (IBC) and
Intermarket Securities limited (ISL).
Internal disciplinary procedures will be strictly enforced should any employee fails to adhere or
implement this policy document.
3.Policy
Customer due diligence systems and monitoring programs
Comprehensive due diligence programs will be employed by the bank in order to avoid being
used unwittingly to launder money. The following will be the basis of the program:

Knowing Customers including depositors and other users of bank services.

The first and most essential step will be verifying the identity of customers, by applying
stringent account opening procedures as is outlined in the operational policies and
procedures. (Know Your Customer Guidelines and Know Your Staff)
Proper retention of customers identification requesting other services offered by the bank
including safe custody facilities, forex transfer and credit facilities.
No business will be entered into with any individuals or entities whose identities cannot
be determined or who refuse to provide required information or whose information
contains significant inconsistencies.
Non-customer transactions such as fund transfers and walk in draft requests shall not be
undertaken except by approval by senior management.
Generate reports that capture a threshold of transactions in the banking software.
Centralize the follow up and coordination of this function through an Anti Money
Laundering Officer (AMLRO) who shall also double as the Compliance Officer.

3.1Screening customers against government provided list of risky customers

Where Bank of Zambia provides a listing of countries, organizations and other high-risk
customers under surveillance by international organizations and governments. The bank will be
obliged to cooperate with the central bank in such instances. In such circumstances, the bank
may be called upon to:

Block accounts and other assets of specified countries, entities and persons

Prohibit financial transactions with specified countries, entities and persons

Management shall maintain and update a listing of all such organizations, individuals and
countries. All new accounts including deposits, loans, trust and other relationships will be
compared with the lists provided.

3.2

Suspicious Activity Monitoring and Reporting

The Risk & Compliance department shall institute processes, controls and measures to identify
and report suspicious transactions promptly. The aim will be to employ appropriate customer due
diligence to effectively evaluate transactions and determine whether to file a Suspicious
Transaction Report (STR) where required with Bank of Zambia.
The suspicious activities monitoring regime will focus on but will not be limited to the following:
a) Transactions involving funds from illegal activities or is conducted to hide illicit funds and
assets in a plan to violate or evade any law or regulation or to avoid transactions
reporting requirements under the Bank of Zambia anti-money laundering guidelines.
b) Transactions that have no business or apparent lawful purpose or is not the sort in which
the customer would normally be expected to engage and the banks knows of no
reasonable explanation for the transaction after examining available facts, including the
background and transaction purpose.
3.3 Roles and Responsibilities
1) Frontline Executives (FLEs) shall request for explanations from customers about suspicious
transactions and report all transactions they deem suspicious and not well explained to their
supervisors.
2) Managers
a) Reviewing of transactions reported by the FLEs
b) Generating reports for thresholds of transactions originating from the department / branch
for review in order to determine as to whether these should be referred to AMLRO.
c) Addressing cases that are proving too difficult for the FLEs
d) Block and refer any transaction that is deemed Suspicious after all investigations with the
relevant investigation wings.
3. Account relationship Managers will review in house reports to identify unusual loan activity
including;
Ascertaining the validity behind the reason for a cash secured loan
Loans that do not fit the customers general business profile
Premature cancellation of debt, particularly with cash
4.

AMLRO roles are

i) Day to day monitoring of Anti Money Laundering activity reported from Branches
and/or from appropriate reports to provide timely feedback to the Asset Liability
Committee (ALCO) queries.
ii) Identifying and reporting of suspicious transactions to the Central bank. The kind of
information to be reported is shown in the example of the Suspicious Transaction
Report (Appendix II)
iii) Organising / coordinating trainings and awareness courses for the relevant staff at
least once a year.
iv) Sensitizing, inducting new staff and preparing questions for the quarterly quizzes
related to Money Laundering.

v) Liaising with third parties/regulatory agencies including those from Jurisdictions

outside Zambia for whom we are compelled to provide information by virtue of
relationships in connection with the banks compliance requirements.
vi) Monitoring Anti Money Laundering Legislation and regulation of trends and
incorporating these into the Anti Money laundering programs
5.

ALCO roles are:

I. Review all movements above specified threshold for any irregularities and get
explanation from AMLRO where required.
II. Oversee the overall function of the Anti Money Laundering Officer

3.4 Risk based Anti-money Laundering programs

In order to make the Banks Anti-Money Laundering program more focused, a risk-based
approach will be pursued. Controls will be put in place based on the risk posed by the
products and services offered, customers served and geographic jurisdiction as follows:
3.3.1

3.3.2

3.3.3

High-risk products and services

These include wire transfers and the international correspondent banking. Care will be
exercised to ensure that the banks international correspondent banking channels are not
used for illegitimate purposes as this could possibly endanger the banks standing on the
international scene.
Private banking relationships like Club Esteem are also high risk. These relate to
personal or discreet offering of a wide variety of financial services and products to an
affluent market. It includes all-inclusive personalized services. Due diligence for private
banking clients will be a more extensive process than for retail customers including
reference and /or conducting background checks.
Electronic banking encompasses delivery of products and services by electronic means.
The bank will regularly monitor the development of its electronic banking products namely
Automated Teller Machines (ATMs).
Credit facilities like Credit source top ups shall be critically reviewed before approval.
High-risk customers
Certain kinds of business will be require enhanced customer due diligence at account
opening and ongoing transactions review. The reviews will include their anti-money
laundering systems, potential for being abused by money launderers, their level of risk
and the banks ability to control this risk. The high-risk entities include:
Non- Bank financial institutions like Money lenders and Forex Bureau
Non Government Organizations like Non traditional Churches
Offshore Corporations
Cash Intensive business like distributorship business
High-risk geographical Locations

Identifying high-risk geographic locations is essential to the banks anti-money laundering

program. Management will therefore gather information regarding high-risk geographic locations
from several sources. Identifying customers and transactions from high-risk geographic locations
will help develop, modify policies procedures and controls addressing the risks associated with
those locations.

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This document will be amended from time to time to meet with the changes put in place by
government institutions to curb this scourge.
Application of Policy.
1.

Application of the policy is subject to the following conditions:

(a) Except where provided by the Prohibition and Prevention of Money
Laundering Act 2001 or other relevant law, the Banks obligation to maintain
the confidentiality of its customers affairs continues in full force.
(b) It is not the intention of these guidelines to deviate from the standard legal
and fiduciary relationship, which automatically exists between the Bank and
its customers.
(c) These guidelines set out standard rules for avoiding money laundering
activities in the conduct of the Banks business and are in accordance with
the banking code of conduct, they are not intended to impede the efficient
provision of services to bonafide customers.

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Appendix I
1 Identifying Unusual or Suspicious Transaction-Retail
Indicators of what might constitute a suspicious transaction are listed below: This list is by no
means exhaustive but does suggest some potential situations that could be indicative of money
laundering taking place particularly where large sums of money are involved.
If a transaction is deemed suspicious it must be recorded on a suspicious Transaction form and
forwarded to the Money Laundering Reporting Officer (MLRO). The customer must not be made
aware that this form is being completed, as this would be tipping off, which is a criminal offense.

The size of the transaction itself.

The customer is reluctant to provide Identity (ID) or the address details or has various
forms of IDs in different names.
The customer changes money that is not consistent with their destination or the Terminal
or Port that they are travelling from.
The customer conducts regular transactions that do not appear not to be travel or
business related.
The customer ask to split a transaction or conducts multiple transactions in the same
currency to fall just under the large transaction level;. This is known as Smurfing
Customer down sizes transactions just under the large transaction level.
The customer does not know how much money they have and asks the Bank staff
member to count their cash.
Frequent exchange of small denomination notes for large notes and vice versa.
The transaction includes some counterfeit notes.
Customers who appear to know each other and do transactions close to compulsory
identification requirement of that jurisdiction.
Customer was seen at another branch or even competitors counter earlier or a few days
ago.
The customer ask about internal procedures and doesnt start the transaction until he/she
knows what they are.
The customer conducts a large encashment of Travellers cheques that were recently
purchased.
The age , appearance and dress of the customer conflict with a transaction of that type or
value.

Suspicious transactions do not only apply to foreign transactions.

Customers who deposit cash or cheques by means by means of numerous credit slips so
that each deposit is small but cumulative total is significant.
Additionally
An employee who demonstrates a conflict of interest such as changing money for family
and friends.

Identifying Unusual or Suspicious Transactions all other business.

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Staff dealing with non-retail operations, are equally important to the companys strategy in the
fight against money laundering.
As money laundering is a necessary consequence of almost all profit generating income, it can
occur practically anywhere in the world. Generally, money laundering tend to seek out areas in
which there is a low risk of detection due to weak ineffective anti money laundering programmes.
Method popular to money launderers are the establishment of anonymous companies in the
countries where the right of secrecy is guaranteed. They are then able to grant themselves loans
out of laundered money in the course of a future legal transaction.
Laundering may also take the form of sending false export/import invoices that overvalue goods
allowing launderer to move money from one company and country to another with the invoices
serving to verify the origin of the monies place with financial services.
Indicators of what might constitute suspicious transactions are listed below: These are not in
tendered to be exhaustive and only provide examples of the most basic way that money can be
laundered.
Beware of a customer who provides insufficient or suspicious information.
A business that is reluctant to provide complete information regarding the purpose of the
business, banking relationship, officers or directors or its location.
A business that refuses to provide information to qualify customers for credit or other
financial services.
A customer who pursues a dealing relationship without references, a local address , or
identification (passport, drivers license or any recognized documentation of
identification) or refuses to provide any other information that a bank requests for.
Unusually large cash deposits made by an individual or company whose ostensible
business activities would normally be generated by Cheques and other instruments
A customer who presents unusual or suspicious identification documents that cannot be
readily be verified.
A customer who only provides a mobile phone number as a contact number.
A business that is reluctant to reveal details about its activities or to provide financial
statements.
A business that presents financial statements noticeably different from those of similar
businesses.
Conflict of interest by a bank employee such as deals done for friends, family or on the
good will recommendation of existing customers. Prior approval must be sought in all
instances.

Beware of changes in transactions:

Significant changes in currency shipment patterns between correspondent banks.

An increase in the amount of cash being handled without a corresponding increase in the
number of large transactions reports being filed.
Significant increase in larges denominations notes.
A large increase in small denomination notes and a corresponding decrease in large
denominations but no increase in turnover.
A corporate account where transactions are requested in cash.
A customer who operates a retail business and provides a cheque as cashing service
and does not make large draws of cash against cheques deposited. This may indicate
that the customer has another source of cash.

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An usual purchase of bank drafts or cheques.

Transfer of money to or from a country, company or individuals that appears on the list of
Non Cooperative countries or those in the in the Off shore jurisdictions.
Customer who constantly pay in or deposit cash to cover request for banker drafts,
money transfers or other negotiable and readily marketable money instruments.
Branches that have a great deal more cash transactions than usual. (Head Office
statistics should detect aberrations in cash transactions.)
Customers transferring large sums of money to or from overseas locations with
instructions to pay in cash.
Purchasing or selling of foreign currencies in substantial amounts by cash settlement
despite the customer having an account with the financial institution.
Customer making large and frequent cash deposits but cheques drawn on the account
are mostly to individuals and firms not normally associated with their retail business.
An account that sends or receives wire instructions to or from suspects drug sources or
transit country without apparent reasons or inconsistent with the customers business or
history.
An account that receives many small incoming wire transfers or makes deposits using
cheques and immediately transfers all but a residue amount to another account, when this
activity is not consistent with the customers business or history.
A customer who is reluctant to provide information needed to complete a transaction.
Depositing funds into several accounts, usually in small amounts below a reportable
threshold, and then consolidating into a master account and transferring them outside the
country.
Transactions not consistent with the stated business activity or the profile of the company
e.g. small second hand clothes trader with turnover of K5 million sends K50 million.

Money Laundering Using Bank accounts

Customers who wish to maintain a number of trustee or clients accounts which do not
appear consistent with their type of business, including transactions which involve
nominee names.

Customers who have numerous accounts and pay in amounts of cash to each of them in
circumstances in which the total of credits would be large amount.

Any individual or company whose account shows virtually no normal personal banking or
business related activity, but is used to receive or disburse large sums which have no
obvious purpose or relationship to the account holder and/or his business( e.g.
substantial increase in turn over on account).

Reluctance to provide normal information when opening an account, providing minimal or

fictitious information or, when applying to open an account, providing information that is
difficult or expensive for the institution to verify.

Customers who appear to have accounts with several financial institutions within the
same locality, especially when the institution is aware of a regular consolidation process
from such accounts prior to a request for onward transmission of the funds.

Matching of payments out with credits paid out in by cash on the same day or previous
day.

Paying in large third party cheques endorsed in favour of the customer.

14

Large cash withdrawals from a previously dormant / inactive account, or from an account
which has just received an expected large credit from abroad.

Customer who together and simultaneously, use separate tellers to conduct large cash
transactions or foreign exchange transactions.

Greater use of safe deposit facilities by individuals. The use of sealed packets deposited
and withdrawn.

Companies representatives avoiding contact with the branch.

Substantial increase in deposits of cash or negotiable instruments by a professional firm

or company, using client accounts or in- house company or trust accounts, especially if
the deposits are promptly transferred between other client company and trust accounts.

Customers who decline to provide information that in normal circumstances would make
the customer eligible for credit or for other banking or financial services that would be
regarded as valuable.

Large number of individuals making payments into same account without adequate
explanation.

Customers who maintain an unusually large number of accounts for the type of business
they purportedly conducting and/or use inordinately large number of funds transfers
among these accounts.

High velocity of funds through an accounts i.e, low beginning and ending daily balances,
which do no reflect the large volume of money flowing through an account..

Multiple depositors using a single bank account.

An account opened in the names of a moneychanger or forex bureau that receives

structured deposits.

An account operated in the name of an Off-shore company with structured movement of

funds.

1. Money Laundering Using Investment Related Transactions

a) Purchasing of securities to be held by the institution is safe custody, where this does
not appear appropriate given the customers apparent standing.
b) Back to back deposit/ loan transaction with subsidiaries of, or affiliate of, overseas
financial institution in known drug trafficking areas.
c) Requests by customers for investment management services (either foreign
currency or securities) where the source of funds is unclear or not consistent with the
customers apparent standing.
d) Larger or unusual settlement of securities transactions in cash form.

15

e) Buying and selling of a security with no discernible purpose or in circumstances,

which appear unusual.

2. Money Laundering Involving Off-Shore International Activity

a) Customers introduced by an overseas branch, affiliate or other bank based in
countries where production of drugs or drug trafficking may be prevalent.
b) Use of letters of credit and other methods or trade finance to move money
between countries where such trade is not consistent wit the customers usual
business.
c) Customer who make regular and large payments, including wire transactions,
that cannot be clearly identified as bona fide transactions to, or receive regular
and large payments from countries which are commonly associated with
production, processing or marketing of drugs.
d) Building up of large balances, not consistent with the known turnover of the
customers business, and subsequent transfer to account(s) overseas.
e) Unexplained electronic funds transfer by customers on an in and out basis or
without passing through an account.
f)

Frequent requests for travelers cheques, foreign currency drafts, or other

negotiable instruments to be issued.

g) Frequent paying in of travelers cheques, foreign currency drafts particularly if

originating from overseas.
h)

Numerous wire transfers received in an account but each transfer is below the
large cash reporting requirement in the remitting country.

i)

Customers sending and receiving wire transfers to/ from financial haven
countries, particularly if there are no apparent business reasons for such
transfers or such transfers are not consistent with the customers business or
history.

3. Money laundering Involving Financial Institutions Employees and Agents

a) Changes in employee characters e.g Lavish life styles
b) Any dealings with an agent where the identity of the ultimate beneficiary or
counterparty is undisclosed, contrary to normal procedure for the type of
business concerned.
4. Money Laundering by Secured and Unsecured Lending
a) Customers who repay problem loans unexpectedly

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b) Request to borrow against assets held by the financial institution or a third party,
where the origin of the asset is not known or the assets are inconsistent with the
customers standing.
c) Request by customer for a financial institution to provide or arrange finance
where the source of the customers financial contribution to deal is unclear,
particularly where property is involved.
d) A customer who is reluctant or refuses to state a purpose of a loan or the source
of payment, or provide a questionable purpose and/or source.

3.

Advances

Customers financial statements make representation that does not conform to

generally accepted accounting principles.
Transaction is made to appear more complicated than it needs to be by use of
impressive but unnecessary terms such as emission rate, prime bank notes,
standby commitment, arbitrage or hedge contracts, etc
Customers requests loans to off shore companies or loans secured by obligations of
offshore banks.
Customer suddenly pays off a large problem loan with no plausible explanation for
the source of funds.
Customer collateralizes a loan with cash deposits.
Customer uses cash collateral located offshore to obtain a loan or
Customers loans proceeds are unexpectedly transferred offshore.

4. ATM operations
When customer is applying for ATM card.

Customer provides doubtful or vague information.

Customer only submits copies of personal identification documents.
Customers supporting documents lacks important details such as name.
Customer wants to establish identity through means other than his or her personal
identification documents.
Customer is accompanied and watched.
Customer has an usual or excessively nervous demeanour during business transaction.
Customer furnishes unusual or suspicious identification documents and is unwilling to
provide personal background information.

When sending PIN numbers/Giving out the ATM Cards to customers.

Customer uses aliases and a variety of similar but different addresses.

Customer uses a post office number or general delivery address instead of a home
address.
Customers permanent address is outside banks service area or outside Zambia.
Customers home or business telephone is disconnected.
Employee frequently overrides internal controls or establishes approval authority or
circumvents policy.
Customer want to establish identity through means other than his or her personal
identification documents.
Customer is accompanied and watched.
Customer has an usual or excessively nervous demeanour during business transaction.

17

Customer who provides insufficient or suspicious information.

A customers uses unusual or suspicious identification documents that can not readily be
verified.
A business is reluctant, when establishing a new account, to provide complete
information about the nature and purpose of its business, anticipated account activity,
prior banking relationship, names of its officers and directors, or information on its
business location.
Customers home or business telephone is disconnected.
A customer makes frequent or large transactions and has no record of past or present
employment experience.

Certain funds transfer activities.

Wire transfer activity to/from a financial secrecy haven or high-risk geographic location
without apparent business reason or when inconsistent with the customers business or
history.
Many small, incoming wire transfers of funds received , deposits made using cheques
and money orders. Almost immediately, all or most are wired to another city or country in
a manner inconsistent with customers business or history.
Large incoming wire transfers on behalf of a foreign client with little or no explicit reason.
Wire activity that is unexplained, repetitive, or shows unusual patterns.
Payments or receipts with no apparent links to legitimate contracts, goods, or services.

Changes in Bank to Bank Transactions.

A rapid increase in the size and frequent of cash deposits with no corresponding increase
in non-cash deposits.
Inability to track the true account holder of correspondent or concentration account
transactions.
Significant turnover in large denomination bills that would appear uncharacteristic given
the banks location.
Significant changes in currency shipment patterns between correspondent banks.

Bank employees

Lavish lifestyle that cannot be supported by an employees salary.

Failure to conform with recognized systems and controls.
Reluctant to take leave.
Employee exaggerates the credentials, background or financial ability or resources of a
customer in written reports the bank requires.
Employee is frequently involved in unresolved exceptions or recurring exceptions on the
exception reports.
Employee frequently overrides internal controls or established approval authority or
circumvents authority.
Employee uses company resources to further private interests.
Employee assists transactions where the identity of the ultimate beneficiary or counter
party is undisclosed.

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Appendix II

Internal Memorandum
To:

The Head Internal Audit

From:

(Branch Name)

Date:

Subject:

Suspicious Transaction Report

Full Name of Account

II

Account Number

III

Full address of person or entity

IV

Telephones (s)

Date of suspicious activity

VI

Suspicious Amount (s) involved

VII

Type of Account (personal or business)

VIII

Date account opened

IX

Date account closed

Status of account (active or dormant)

XI

Individuals occupation/Type of business

Please provide an account of what is unusual, irregular or suspicious about the transaction.

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Action
Taken

..

Appendix III
Internal Audit & Compliance
The Audit & compliance shall regularly confirm that the Banks policies, procedures and controls
as relating to the money laundering have been complied with.
An audit of the adequacy of money laundering control procedures and training should involve:
I.

Scrutinizing the banks high level procedures to ensure that;

There are procedures for developing and communicating policies on money

laundering.
Policies, procedures and controls relating to money laundering are complied with.
Employees are provided with training and guidance on the procedures and controls
and their individual legal obligations.
There are procedures for generating a level of awareness and vigilance that facilitates
the reporting of suspicions and
Compliance by branches is monitored.

II. Confirm that there are operating procedures for:

Account opening
Counter transactions
Retention of records
Monitoring of transactions and
Recognizing suspicious transactions.
And that the operating instructions are:

In accordance with guidelines.

Easily understood by all employees.
Fully in compliance with the relevant law.
Compatible with controls maintained with the bank.
(where appropriate approved, tacitly or expressly, by the Bank of Zambia and that they;
Do not deter bona fide customers
Do not warn customers of any suspicion.

III. Reviewing controls to ensure that adequate policies, management systems and appropriate
day to day operating instructions are in place. This should include an examination of information
and instructions that are disseminated by senior management to maintain an effective awareness
amongst staff.
IV. Meeting the money laundering officer responsible for receiving reports of suspicious
transactions and for sending these to competent authority. Visiting a sample of branches or
departments and questioning staff, to assess their level of knowledge and awareness of the
banks procedures to counter money laundering. Confirming that the banks internal guidelines and
procedures are followed from day to day

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V. Reviewing the reports of suspicious transactions to assess whether they are sufficiently
recorded.

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