The role of Financial Intelligence Units in combating money laundering. A comparative analysis of Zambia, Zimbabwe and Malawi
| DOI | https://doi.org/10.1108/13685201211194754 |
| Date | 30 December 2011 |
| Published date | 30 December 2011 |
| Pages | 112-134 |
| Author | Musonda Simwayi,Muhammed Haseed |
| Subject Matter | Accounting & finance |
The role of Financial Intelligence
Units in combating money
laundering
A comparative analysis of Zambia,
Zimbabwe and Malawi
Musonda Simwayi and Muhammed Haseed
School of Public Administration,
Huazhong University of Science and Technology, Wuhan City,
People’s Republic of China
Abstract
Purpose – The purpose of this paper is to present a comparative position of Financial Intelligence
Units (FIU) in Zambia, Zimbabwe and Malawi and assess their role in combating money laundering.
Design/methodology/approach – The study employed a multiple case study research
methodology. The units in the three countries are compared using a framework based on the
Financial Action Task Force (FATF) recommendations, the International Monetary Fund, the
World Bank and Commonwealth guidelines and the Egmont Group guidelines.
Findings – The study established that the three countries have made tremendous progress in the
fight against money laundering. The units in the three countries have several commonalities and
differences. Zimbabwe is left behind in the process of establishing an effective FIU. Malawi is on top
with Zambia coming second.
Research limitations/implications – Apart from the common limitations of the multiple case
study methodology, the major limitation of this study was the utilization of secondary data in the case
of Zimbabwe.
Practical implications – The practical implication of these findings is that policy makers and FIU
authorities the world over would be particularly interested in regard to strengthening their units and
comparing themselves with international standards.
Originality/value – By focusing on three countries the study has addressed weaknesses usually
associated with single country case studies. These findings may be generalized without difficulties.
It is envisaged that that research will encourage similar studies in other regions of the world.
Keywords Zambia, Zimbabwe,Malawi, Money laundering, Government agencies,
Financial Intelligence Units
Paper type Research paper
1. Introduction
In the last 20 years or so the fight against financial crimes, particularly
money laundering, has intensified. The need for a modern anti-money laundering
(AML) strategy has now become widely accepted internationally (IMF/WB, 2004, p. 1).
One of the critical components of this strategy is the creation of Financial Intelligence
Units (FIUs). The Egmont Group, an informal international gathering of FIUs, defines
an FIU as a central, national agency responsible for receiving (and as permitted,
requesting), analyzing and disseminating to competent authority, disclosures of
financial information:
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
15,1
112
Journal of Money Laundering Control
Vol. 15 No. 1, 2012
pp. 112-134
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201211194754
.concerning proceeds of crime and potential financing of terrorism; or
.required by national legislation or regulation, in order to counter money
laundering and terrorism financing (Egmont Group, 2008, p. 7).
In their simplest form, FIUs are agencies that receive reports of suspicious transactions
from financial institutions and other persons and entities, analyze them, and disseminate
the resulting intelligence to local law-enforcement agencies and foreign FIUs to combat
money laundering (IMF/WB, 2004, p. 4). The creation of these specialized law
enforcement agencies should be seen against the background of the larger phenomenon
of an increasing proliferation of law enforcement agencies (Stessens, 2003, p. 6). The first
few FIUs were established in the early 1990s (IMF/WB, 2004, p. 1). As at the end of July
2010 there were 121 FIUs (Egmont Group, 2010). This is an incredible achievement,
given that 35 FIUs attended the July 1997 Egmont Group held in Madrid, Spain (Egmont
Group, 2004a, b, p. 4). The Egmont Group Chairperson for the 2009-2010 period,
Mr Luis Urrutia, who is also the Director of the FIU in Mexico, in recognition of this
achievement, puts it:
[...] very few international initiatives have been able to take a diverse body of government
entities (FIUs) and mature to form a global network of over 120 members strongly committed
to exchanging sensitive information that would otherwise not be available to combat crime at
a national level (Egmont Group, 2010, p. 1).
During the 1990s there was little academic attention given to this important institution
in the fight against financial crimes. However, after 2000, there has been a considerable
number of studies on various aspects of FIUs.
Some studies that have focused on some FIU context include Sien’czlo-Chlabicz and
Filipkowski (2001), Engen (2005), Dokmanovic and Hristovski (2005), Masciandaro
(2005), Stana (2006), O’Reilly (2006), Sathye and Patel (2007) and Preller (2008).
Sien’czlo-Chlabicz and Filipkowski (2001) focused on the statutory basis of the
functioning of an FIU in Poland. Engen (2005) looked at financial institution’s efforts to
check fraud through the use of their own FIUs. Dokmanovic and Hristovski (2005)
examined and compared FIUs of three countries; Republic of Slovenia, Republic of
Bulgaria and Republic of Macedonia. Masciandaro (2005) established an economic and
empirical relationship between the unification of financial supervision and creation of an
FIU. Stana (2006) dwelt on the capacity of FIUs particularly in Europe and South Asia.
O’Reilly (2006) provided comments on the FIU reporting requirements in Ireland. Sathye
and Patel (2007) carried out a comparative analysis of the FIUs in Australia and India.
Preller (2008) compared contrasted and evaluated legislative foundations for FIUs in the
UK, Switzerland and Germany. These studies have been significant in pioneering
academic work in regard to FIUs.
All of these studies, apart from one, have utilized a single case design in that they
have focused on one country therefore raising serious concerns of replicating and
generalizing their findings. A multiple case design (more than one country) has distinct
advantages because of being more compelling and robust (Herriot and Firestore, 1983).
Only Sathye and Patel (2007) and Preller (2008) applied a multiple case study method.
Single case studies are vulnerable because of putting “all eggs in one basket”.
Analytical conclusions arising from two or three cases will be more convincing and
beneficial than those coming from a single case (Gillham, 2002).
Financial
Intelligence
Units
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