Regulatory Alerts2012-04-16
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Bank of Zambia Circular 06/2012 on Money Circulation Schemes
The Bank of Zambia issued Circular 06/2012 to prohibit money circulation schemes, which are illegal operations promising high returns by using new investors' funds to pay earlier participants. The regulator identified specific individuals and entities suspected of running these schemes and directed all financial institutions to report related accounts to the Anti-Money Laundering Investigations Unit by April 24, 2012. Financial institutions are further required to conduct customer due diligence to identify and report any other transactions suspected of being money circulation schemes.
BANK OF ZAMBIA
OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
April 16, 2012
To: All Financial Institutions
CB Circular No: 06/2012
MONEY CIRCULATION SCHEMES
It has come to the attention of the Bank of Zambia that certain individuals and entities have been involved in money circulation schemes and have been approaching members of the public asking them to deposit funds into various accounts for investment. A Money Circulation Scheme is a plan, arrangement, agreement or understanding, between two or more persons which involves the pooling and distribution of funds by recruitment of subscribers. The continuation of such a scheme and the realisation of any of its benefits depend on the incremental recruitment of subscribers from the public for an unspecified period.
The schemes take various forms but are generally operations which promise high returns through the use of the principal received from new investors to make payments to initial investors by falsely characterizing these payments as returns or profits.
Section 127A of the Banking and Financial Services Act prohibits money circulation schemes. The promoters of such schemes are therefore liable to arrest and prosecution.
The Bank of Zambia has so far identified the following individuals and entities suspected to be involved in money circulation schemes:
- Lweleya Likwasi Peter
- Lwesa Community Empowerment Club
- Lwesa Community General Dealers
- Lwesha Club
- Roozberg Enterprises
- Festus Tembo
- Chiluba Chikoti
- Doreen Goma
- Saphila Goma
- Tedeyo Lungu
- Fountain of Success Empowerment GD
- Ndalameta Matildah
- Chama Gideon
- Mwansa Phenia
...2/-
CB Circular No: 06/2012 - 2 - April 16, 2012
Financial institutions are hereby directed to immediately report to the Anti-Money Laundering Investigations Unit of the Drug Enforcement Commission and inform Bank of Zambia the existence of the above accounts in their books. Further, financial institutions are required to conduct appropriate customer due diligence of their customers with a view to identifying and reporting any other such accounts or transactions suspected to be money circulation schemes. The deadline for the submission of all reports is 24th April 2012.
Bwalya K. E. Ng’andu (Dr)
DEPUTY GOVERNOR – OPERATIONS
Bank Square, Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: 260-211-226844, 228888/9 Fax: 260-211-237070 E-mail: bngandu@boz.zm http://www.boz.zm