Report exposes illegal cash transactions in Zambia’s key economic sectors

The Financial Intelligence Centre (FIC) has revealed that Zambia’s key economic sectors remain vulnerable to illicit cash transactions.

The FIC’s ninth Money Laundering and Terrorism Financing Trends Report 2023 highlights the ongoing use of cash in illegal activities across various sectors, including banking, construction, manufacturing, agriculture, and businesses such as legal services and real estate.

The report identified several red flags associated with financial crime schemes, such as individuals with no commercial ties making large cash deposits and immediately transferring funds out of the country, as well as those insisting on cash payments for high-value property.

Other suspicious activities include account holders receiving large deposits from third parties in different regions, inconsistent with their account profiles, and promptly withdrawing equivalent cash amounts.

The FIC noted a persistent trend of using cash to hide the illicit origins of criminal proceeds. The anonymity provided by cash transactions makes them attractive to criminals looking to obscure their activities.

Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) analyzed by the FIC revealed unusually high cash deposits into corporate bank accounts without corresponding revenue-generating activities.

In 2023, the FIC received 4,091 STRs related to cash transactions, accounting for 40 percent of all STRs reported.

Of these, 381 intelligence reports were disseminated to the Zambia Revenue Authority (ZRA) and the Bank of Zambia (BoZ).

The reports sent to BoZ involved Bureaux de Change owners suspected of using low-income individuals to conduct foreign exchange transactions with their personal accounts, circumventing currency transaction thresholds and avoiding statutory reporting obligations.

The FIC’s findings underscore the need for increased vigilance and robust measures to combat financial crimes in Zambia’s economic sectors.

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