The Sunday Mail
Business Reporter
The Government has moved to counter the risk of money laundering and terrorist financing stemming from virtual assets, after Cabinet approved additional principles for the anti-money laundering and proceeds of crime law.
As part of the same objective, the Cabinet approved new principles for the Securities and Exchanges Act with a view to widening the definition of investment securities to cover provision of virtual asset services.
The term “virtual asset” refers to any digital representation of value that can be digitally traded, transferred or used for purposes of making payment, but does not include the digital representation of currency.
The threat posed by misuse of virtual assets by criminals is not a far-fetched axiom. In 2017, the “Wannacry ransomware” held thousands of computer systems hostage until victims paid hackers in bitcoin.
It is on record that the cost of this went far beyond just the ransom payments, as it resulted in an estimated US$8 billion in damages to hospitals, financial institutions and businesses operations across the world.
In light of potential risk from virtual assets the Financial Assets Taskforce Force (FATF), with support from the G20, issued global and binding standards for combating money laundering and terrorist financing.
In April this year the securities commission issued a directive for all virtual asset service providers to conduct risk assessments on and before launching new products, business practices, technologies or delivery mechanisms.
As such, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa, told a post Cabinet briefing last week that the Money Launder and Proceeds of Crime Act and Securities and Exchanges Act will be amended to reflect the changes.
Minister Mutsvangwa said the Money Laundering and Proceeds of Crime Act will be amended to include proliferation financing.
Proliferation financing refers to the illegal manufacture, acquisition, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials.
Amendments will also cover cooperation and coordination among relevant authorities to ensure compatibility of money laundering, counterfeiting terrorism and proliferation financing requirements with data protection and privacy rules.
“The definition of securities will (also) be widened to include Virtual Asset Service Providers, through amending the Securities and Exchange Act [Chapter 24:25],” the minister said.
The move is designed to enable the Securities and Exchange Commission of Zimbabwe (SECZ) to come up with regulations to supervise the Virtual Assets Service Providers (VASPs) on a risk-based approach.
“Cabinet reports that the Money Laundering and Proceeds of Crime Act will be amended in order to provide for identification and assessment of money laundering and terrorist financing risks that may arise in relation to Virtual assets, acts and the activities,” Minister Mutsvangwa said.
She said the legislation will be amended to include provisions that will ensure that sanctions are also applicable to virtual asset service providers, their directors and senior management.
The provisions will ensure that VASPs comply with set preventive measures and allow supervisors of VASPs some legal basis for exchanging information with their foreign counterparts.
