MOZAMBIQUE INCSR PART II SUBMISSION - MONEY

UNCLAS SECTION 01 OF 02 MAPUTO 001755

SIPDIS
STATE FOR INL, AF/S, AF/RSA
JUSTICE FOR OIA, AFMLS
TREASURY FOR FINCEN
E.O. 12958: N/A
TAGS: EFIN KCRM PTER SNAR PGOV MZ KCOR
SUBJECT: MOZAMBIQUE INCSR PART II SUBMISSION - MONEY
LAUNDERING AND FINANCIAL CRIMES

REF: A) STATE 324347

B) STATE 328024


1. Per ref A, below is post's submission for 2003-2004
INCSR, Part II:
Mozambique is not a regional financial center. Money
laundering in Mozambique is related to bank fraud and
corruption. Lax oversight and weak banking regulations make
Mozambique's financial institutions vulnerable to money
laundering. The proceeds of stolen vehicles sales, narcotics-
trafficking, prostitution, trafficking in persons, arms
trafficking, and contraband smuggling are laundered through
Mozambique's financial institutions. Mozambique's non-bank
financial sector, primarily comprised of exchange houses, is
considered highly susceptible to money laundering.
IN OCTOBER 2003, A MAJOR MAPUTO EXCHANGE HOUSE, UNICAMBIOS,
WAS ORDERED CLOSED BY THE FINANCE MINISTER AT THE
RECOMMENDATION OF THE CENTRAL BANK OF MOZAMBIQUE. THE
CONVICTION OF SIX DEFENDANTS ON THE CARDOSO MURDER TRAIL IN
JANUARY 2003 AND THE OPENING OF THE RELATED BCM BANK FRAUD
TRAIL IN DECEMBER 2003 HAVE GREATLY INCREASED PUBLIC
AWARENESS OF CORRUPTION AND FINANCIAL CRIMES. THE MURDER OF
JOURNALIST CARLOS CARDOSO IN 2000 WAS DUE TO HIS
INVESTIGATIONS INTO THE 1996 BCM BANK FRAUD AND THE
DEFENDANTS IN BOTH TRAILS HAVE IMPLICATED BANKING OFFICIALS
IN ILLEGAL ACTIVITIES INVOLVING LARGE AMOUNT OF CASH.
Mozambique's National Assembly passed an anti-money
laundering law in December 2001, which was ratified by the
Council of Ministers on February 5, 2002. As of the end of
2003, however, implementing regulations had not been
promulgated. The law extends the crime of money laundering
to encompass predicate offenses beyond narcotics-trafficking
to most other serious crimes. The law also allows for asset
seizure and forfeiture and requires financial institutions
to verify the identity of their customers, keep transaction
records for at least 15 years, and report suspicious
transactions. The law protects employees of financial
institutions who cooperate with money laundering
investigations and exempts such cooperation from bank and
professional secrecy rules. The law also contains "banker
negligence" provisions, which hold individual bankers
responsible for money laundering.
Bankers have the right to refuse service to anyone who
refuses to identify the beneficiary of an account. Judicial
authorities are given the right to request account
information from financial institutions and to gain access
to computer records from banks, individuals, and companies
that are suspicious. Judicial authorities also have the
right to authorize the tapping of phone conversations as
part of financial investigations.
IN OCTOBER 2003, THE NATIONAL ASSEMBLY PASSED THE ANTI-
CORRUPTION LAW. THE LEGISLATION AIMS TO FIGHT CORRUPTION IN
GOVERNMENT OFFICES, AND ALSO IN HOSPITALS, SCHOOLS, AND THE
POLICE. THE LAW PROVIDES MORE PROTECTION FOR WHISTLE-BLOWERS
AND MODIFIES A KEY PROVISION ON REQUESTS FOR PERMITS. THE
LAW COVERS OFFICIALS WORKING FOR GOVERNMENT ENTITIES,
PUBLICLY-OWNED COMPANIES, AND PRIVATE COMPANIES WITH STATE
CONTRACTS OR THE STATE AS THE MAJORITY SHAREHOLDER. THE
MAXIMUM SENTENCE FOR SOLICITING BRIBES IS NOW RAISED TO
EIGHT YEARS. AUDITORS WILL BE OBLIGED TO REPORT SIGNS OF
CORRUPT PRACTICES TO THE ATTORNEY GENERAL'S ANTI-CORRUPTION
UNIT, OR FACE A FINE OF UP TO $84,000.
The government's inter-ministerial working group dealing
with money laundering, terrorist finance, and other
financial crimes was reorganized in the last quarter of

2003. Its leadership has been shifted from the Interior
Ministry to the Central Bank, and also includes
participation by the Ministries of Finance, Foreign Affairs,
and Justice.
Customs regulations require those entering or leaving the
country with foreign currency or negotiable instruments in
amounts greater than $5,000 to file a report with Customs.
Taking local currency out of the country is prohibited.
The Government of Mozambique (GOM) has the authority to
freeze and seize assets related to terrorist financing. The
GOM has circulated the list of terrorist individuals and
entities designated by the UN 1267 Sanctions Committee, as
well as the list of Specially Designated Global Terrorists
designated by the United States pursuant to E.O. 13224.
Mozambique is a member of the Eastern and Southern Africa
Anti-Money Laundering Group, a FATF-style regional body.
Mozambique ratified the UN International Convention for the
Suppression of the Financing of Terrorism in January 2003.
Mozambique is a party to the 1988 UN Drug Convention. It has
signed, but not yet ratified, the UN Convention against
Transnational Organized Crime, which entered into force in
September 2003.
Mozambique should implement its anti-money laundering law,
establish a Financial Intelligence Unit, and criminalize
terrorist financing.
HANKINS