Abstract
Technology has positively contributed to the creation of financial markets and the facilitation of payments globally. The effective use of robust technology could enhance the consistent enforcement of financial market laws by curbing financial crimes in any country. This in turn would enhance the integrity of financial markets and promote the viability of financial markets. In relation to this, it appears that Zimbabwe has struggled to comply with international measures to combat money laundering and the financing of terrorism (AML/CFT) since it has poor financial market laws which are inconsistently enforced due inter alia to its poor money laundering detection mechanisms and inadequate resources. For instance, Zimbabwe has to date failed to make satisfactory progress to adopt and enforce adequate risk mitigation measures against money laundering practices in accordance with the Financial Action Task Force (FATF) recommendations. This is evidenced by the increased incidence of money laundering in Zimbabwean financial markets. Furthermore, the inconsistent enforcement of financial market laws has resulted in poor liquidity and the recent suspension of the Zimbabwe Stock Exchange (ZSE). The viability and integrity of the Zimbabwean financial market has thus been compromised. This article discusses the integration and use of robust technology in the Zimbabwean financial market to curb financial crimes such as money laundering and bank fraud. The adequacy of financial market laws and/or regulations will also be discussed vis-à-vis their consistent enforcement by relevant bodies such as the Financial Intelligence Inspectorate Evaluation Unit (FIU) in Zimbabwe. This is done to evaluate the use of technology to curb money laundering and promote a viable economy and financial market in Zimbabwe. It is submitted that the relevant authorities should promote the effective use of technological inventions like artificial intelligence (AI) and machine learning to curb money laundering, bank fraud and other related financial crimes in Zimbabwe.
Highlights
A financial market is a marketplace where the creation and trading of financial assets, securities and/or financial instruments such as shares, debentures, bonds, derivatives and currencies take place.[1]
The Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) report of 2019 indicates that Zimbabwe is still struggling to comply with the Financial Action Task Force (FATF)'s AML/CFT recommendations due inter alia to the lack of adequate resources and the poor use of technological devices to detect and combat money laundering and bank fraud in its financial markets and financial institutions.[96]
The FATF held that Zimbabwe fell short of adequate compliance on more serious AML/CFT offences and on most FATF recommendations, especially the recommendation to adopt robust measures to curb money laundering and the financing of terrorism offences in the financial market.[113]
Summary
A financial market is a marketplace where the creation and trading of financial assets, securities and/or financial instruments such as shares, debentures, bonds, derivatives and currencies take place.[1]. Money laundering and/or bank fraud-related practices were carried out between 2003 and 2008 by the personnel of a number of banking institutions.[41] For example, ENG Capital Asset Management (ENG) established a pyramid scheme which offered investment to the public with very high interest rates in order to lure more depositors.[42] ENG collapsed in 2003 owing to the fraudulent provision of insider loans and other instances of the mismanagement of funds by its directors.[43] In another incident, Richard Floyd Mambo and Nigel Mahoko were arrested for attempting to cross into Zambia with the undeclared amount of ZW$575 million.[44] In addition, banks such as First Mutual, Time Bank, Royal, CFX Bank Limited, CFX Merchant Bank, Century Bank, Interfin Bank, United Merchant Bank, Royal Bank Zimbabwe Limited, Intermarket Banking Corporation Limited, Intermarket Building Society and Trust Bank collapsed in Zimbabwe in 2004 as a result of the banking financial distress which was caused inter alia by bank fraud and poor adherence to corporate governance standards on the part of the directors and/or management of these banks.[45] and corporations failed to exchange the old bearer cheques for new ones as they could not provide proof of the source of such funds, as was required by the RBZ; see National. Directors diverted invested depositors' money into their own properties and luxury vehicles in Zimbabwe and other countries
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