Kuda-Print First Draft A1 Dissertation

The solutions to money laundering as a crime in the banking sector in Zimbabwe
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1.1 Introduction
The new global economy fuelled by advances in information and communication technology
(ICT) holds potential benefits and opportunities for countries world wide. However, these
opportunities also have their own challenges. Among these challenges include crimes related to
the information economy which is seen as an increasing source of concern within the
international financial community. The proceeds from these crimes are camouflaged to give it a
legal appearance and this process is known as “money laundering”. The seriousness of money
laundering is reflected in the aggregate volume of funds laundered which has been estimated by
the International Monetary Fund (IMF) to be around 2-5 percent of global gross domestic
product.
Giving reference to the Ministry of State Enterprises, Anti-Corruption & Anti-Monopolies
(Zimbabwe), Money Laundering is a global phenomenon that affects all countries in varying
degrees. Although there is no single definition of money laundering most descriptions commonly
Tafadzwa Murungu, May 2010 MSU R06405048 1

refer to it as a process by which criminals attempt to conceal the true origin and ownership of the
proceeds of their criminal activities. If undertaken successfully, it allows the criminals to
maintain and control these proceeds and ultimately provide a cover for their source of income.
By its nature money laundering is a hidden activity perpetuated in secrecy.
The Bank Use Promotion and Suppression of Money Laundering Act (Chapter 24:24) No 2/2004
(Zimbabwe), Part 1 section (2) A reference in this Act:
(b) Money laundering or laundering the proceeds of a serious offence means any act, scheme,
arrangement, device, deception or artifice whatsoever by which the true origin of the proceeds of
any serious offence is sought to be hidden or disguised.
According to Tim Hidle (1999; 131), money laundering is the process of turning ill-gotten
money gains into seemingly legitimate cash, passing dirty money through clean places (such as
Switzerland) in order to disguise where it came from or to shield it from the gaze of the tax
inspectors.
The term, money laundering can also be defined as conduct/acts designed in whole or in part to
conceal or disguise the nature, location, source, ownership or control of money (can be currency
or equivalents, eg. checks, electronic transfers, etc.) to avoid a transaction reporting requirement
under state or federal law or to disguise the fact that the money was acquired by illegal means.
Money laundering is the process by which large amounts of illegally obtained money (from drug
trafficking, terrorist activity or other serious crimes) is given the appearance of having originated
from a legitimate source. In US law it is the practice of engaging in financial transactions to
conceal the identity, source, or destination of illegally gained money. In UK law the common
law definition is wider. The act is defined as taking any action with property of any form which

is either wholly or in part the proceeds of a crime that will disguise the fact that that property is
the proceeds of a crime or obscure the beneficial ownership of said property.
(http://www.laundryman.u-net.com.page2-wisml.html 15/02/10 1950hrs).
The term Money laundering refers to the process of changing the appearance of large amounts of
money obtained from serious crimes, such as drug trafficking, into origination from a legitimate
source. It is a crime in many jurisdictions with varying definitions. It is a key operation of the
underground economy (http://en.wikipedia.org/wiki/money_laundering 15/02/10 2000hrs).
The phrase money laundering is said to risen from the practice of the most infamous money
launderer in the 20th century. The launderer, Al Capone was a dealer in elicit drugs in the 1920s,
and the drug was alcohol during the time of prohibition. He went on to set a number of laundries
for clothes cleaning as legal business which he could pass cash which he had earned from other
illegal businesses that is cleaning the money. It is estimated that 20% of the money that is
moved around the world is secret money.
This form of money is believed to be
Money that arises from individuals who place money in secret bank accounts to avoid tax or
public criticism.
Money from companies and government that wish to have ‘slush funds’ that they can use to pay
for certain services or assistance. They rather not have such kind of payments known about.
Criminal money that is the result of illegal activities for example fraud, drug dealing. The
criminals have to clean this money before the use and this is done through passing it through
clean places like financial institutions.

Money laundering and other financial-related crimes have significant economic and social
consequences for nations worldwide. It weakens the financial systems which are the main
players for global financial transactions. This in turn will jeopardize the socioeconomic
development of these nations. For money laundering activities to be carried out, a medium to
launder the illicit funds is required. The preferred medium chosen by money launderers is the
financial institutions due to its efficiency and its low cost in carrying out financial transactions.
To develop a robust economy and sustained standard of living, countries should undertake all
efforts to combat money laundering activities. In this context, good governance is vital for
ensuring the integrity of the financial systems. Countries across the world have developed laws
and regulations to curb money laundering. Anti-money laundering efforts world-wide were
focused on enhancing the resilience of the financial institutions against money laundering and
other related financial crimes.
1.2 Background of the study
In money laundering the fraudster disguises the existence, nature, source, ownership, location
and disposition of property derived from criminal activity. Currency is a popular commodity in
criminal activity; it is fungible—one dollar looks just like another—and further loses its identity
when entering the economic stream.
Zimbabwe Allied Banking Group is being affected by the cases of laundering. There are cases
of a fraudster in Harare ZABG Head Office Samora and Kadoma Branch within the same
institution. There were some employees who were involved in the crime.

On February 12 2010, ZABG was defrauded USD141 836. The culprit allegedly "suppressed" a
suspense account to conceal funds he allegedly transferred from the bank to his "friends". The
funds where transferred so that they will lose identity and will not draw attention on making
withdrawals. The fraudster opened three forex accounts providing fake identity cards; he then
funded the accounts as a process of cleaning the ill-gotten proceeds. He also deposited some of
the funds in a Redan Petroleum account with Stanbic Bank. The transfer of funds was to conceal
the source and ownership of funds.
In a different scenario, ZABG bank employee at Kadoma branch has been arrested on allegations
of defrauding clients of more than US$3 000.
"Investigations carried out revealed that the accused was allegedly making fraudulent cash
transfers from the bank's clients, and crediting cash into his staff account," said the officer-in-
charge CID Kadoma. He said investigations had so far established that offender allegedly
defrauded clients a total US$3 194 and nothing was recovered. The Herald understands that the
offender allegedly defrauded three identified clients, the first client was defrauded more than
US$2 200 and the second over US$900. The offences are believed to have been committed
between October and December 2009 and it is believed that more clients could have been
prejudiced.
According to the Zimbabwe Independent of Thursday, 18 February 2010, in January 2010:
Investigations at FBC Bank unearth a massive US$1 million fraud at its Mutare branch. The
bank says it has established that it has lost US$500 000. Junior workers defrauded the bank in
collusion with senior managers and most of the suspects have since been arrested. The fraud was
discovered when the bank was carrying out month-end reports for January, and the accounts

would not balance. The employees made fictitious deposits to three accounts they had opened to
facilitate the fraud and would withdraw the money, then deposit it again into the personal
accounts of accomplices. This unique fraud occurs because both junior and some identified
senior staff were acting in collusion; hence the dual control system was compromised.
The purpose of making these transfers where to conceal the source of the funds to the public. If
he had made the withdrawals straight from above account it was going to quickly draw attention
of the tellers and other staff members within the institution who were not part of the gang.
1.3 Statement of the problem
Money laundering is continuously being committed in the financial sector and involving some of
the employees within the organization. This raises the question whether the employees are
willing and able to prevent money laundering. The researcher is going to analyse whether the
employees are willing and able to prevent money laundering.
1.4 Statement of hypothesis
This study seeks to test the following claim;
There is an ultimate way to resolve money laundering in Zimbabwe.
1.5 Objectives of the study

To find the extent to which money laundering can be prevented in the banking sector in
Zimbabwe.
To establish the relationship between corporate governance and employees’ willingness to
prevent money laundering.
To find out if there is any relationship between the level of motivation and the reason for
committing the crime.
To find the ways of educating the public and employees in the financial services about money
laundering law.
To find out on the major challenges in preventing money laundering.
To expose the most used channels and methods of laundering money.
1.6 Significance of the study
The research, if successful, will bring benefits to ZABG and the Zimbabwean economy at large.
The benefits will include the following:
Being in a position to prevent money laundering, ZABG will increase investor confidence. The
investors will know that there funds are safe thereby raising business for ZABG. At the same
time, this will raise confidence in customers to do business with ZABG. This shall not apply to
ZABG alone but the whole industry.
The study will also help ZABG in raising employee ability to report any suspicious transactions
through education and training concerning money laundering. The research will have figured out

whether the employees are in a position to report any suspicious transactions.
There may be some channels that we do not suspect but being used to clean the dirty money that
is being generated within the country and outside the country but being used here in Zimbabwe.
This means that ZABG will not be used such for such crime and will have a good reputation.
A successful research will help ZABG to direct resource where there is the need. This will come
after identifying the challenges faced in solving money laundering and therefore appropriate
measures are to be taken to overcome them. This will see the resources being directed to the
place at the right time.
There will be increased revenue to the Government. This is true in the sense that all those who
are dodging the payment of taxes will be paying or will not operate at the expense of the
government. The government raises its money from taxes which is the major source. The tax
will be collected in all forms including income tax and duties.
Given that then research is a success, our local manufacturers and providers of services will
perform in a fair environment. Those monies that are cleaned are usually gained with less
expense meaning the services and products supplied are cheaper than those provided in a clean
way.
1.7 Delimitations of the study
The researcher will contact his research within the following delimitations:
The period of the research is ranging from 01 February 2009 to 30 March 2010.

The target population is the ZABG Retail Banking Division employees in Harare, Kwekwe and
Gweru branches, Corporate Banking and Stock Brokers.
1.8 Limitations
The researcher will also be limited by financial factors as we are using currency that is not ours
and is a scarce resource.
1.9 Research assumptions
This is what the researcher assumes as he gets into the filed during the research period:
All the research questionnaires will be returned to the researcher.
All questionnaires will be answered in honesty.
The conducted population will be willing to participate.

CHAPTER 2
LITERATURE REVIEW
2.0 Introduction
This chapter serves to provide an overview of money laundering. A number of variables were
looked into during the past researches in an attempt to curd money laundering in different parts
of the world. Different aspects of money laundering will be looked at, and these include the
definition, instruments for money laundering, ways of solving money laundering, challenges
faced in solving money and targeted channels for laundering money.
2.1 Defining money laundering
In its definition, the Ministry of State Enterprises, Anti-Corruption & Anti-Monopolies
(Zimbabwe), Money Laundering is a global phenomenon that affects all countries in varying
degrees. Although there is no single definition of money laundering most descriptions commonly
refer to it as a process by which criminals attempt to conceal the true origin and ownership of the
proceeds of their criminal activities. If undertaken successfully, it allows the criminals to
maintain and control these proceeds and ultimately provide a cover for their source of income.
By its nature money laundering is a hidden activity perpetuated in secrecy.
The Bank Use Promotion and Suppression of Money Laundering Act (Chapter 24:24) No 2/2004

(Zimbabwe), Part1 section (2) A reference in this Act to⎯
(b) Money laundering or laundering the proceeds of a serious offence means any act, scheme,
arrangement, device, deception or artifice whatsoever by which the true origin of the proceeds of
any serious offence is sought to be hidden or disguised.
Combining the two definitions with that of the Ministry of State Enterprises, Anti-Corruption &
Anti-Monopolies, both definitions have the element of concealing the true origin and ownership
of criminal proceeds.
According to Ping He (2004), Money laundering is a sort of criminal activity trying to conceal
the illegality of proceeds of crime by disguising them as lawful earning. In another definition,
money laundering is the process of turning ill-gotten money gains into seemingly legitimate
cash, passing dirty money through clean places (such as Switzerland) in order to disguise where
it came from or to shield it from the gaze of the tax inspectors (Tim Hidle 1999; 131). The
definitions talk of concealing the prices of criminally gotten proceeds.
The aspect of concealing the origins of money is also stated in this definition as stated by Ping
He (2004) and Tim Hidle (1999; 131). Other definitions include the sources of money or the
crimes committed such as fraud, drug trafficking and smuggling. This is also shown in the
following definition, “Money laundering is the process of changing the appearance of large
amounts of money obtained from serious crimes, such as drug trafficking, into origination from a
legitimate source,” (http://en.wikipedia.org/wiki/money_laundering 15/02/10 2000hrs). Ministry
of State Enterprises, Anti-Corruption & Anti-Monopolies pointed out that Professor Louis de
Koker suggests that the concept of money laundering overlaps with certain common law
offences, for example fraud, forgery and uttering and statutory offences such as corruption and

exchange control offences.
It does this by involving itself in a wide variety of criminal activities such as bribery, drug
trafficking (Pinner, 1994) embezzlement, fraud, illegal arms sales (Baldwin, 2004), insider
trading, prostitution rings, smuggling, terrorism (Linn, 2005; Baldwin, 2004) and by obscuring
illegal origins of profits by making them appear legitimate.
According to Samah Al Agha, (2007) in Islamic perspective, Although money laundering is a
contemporary crime, over 1,400 years, it has been addressed through many provisions in Quran
and Sunna that contain the conception of money laundering. For example, prophet Mohamed
prohibits any activity funded by money derived from Souht (unlawful trade or ill-gotten
property). He said: “Any activity built from Souht, will be casted into Fire” (Saleh and Saleh,
2006). Furthermore, Prophet Mohamed prohibited the use of money generated from illegal
activities even if it goes to poor people or to charities. He said: “Sadakah comes from theft are
not acceptable.”
Samah Al Agha,(2007), However, the scale of prohibitions in Islam is much wider than the scale
of prohibition in any other secular laws. For example, whereas gambling (which means Qimar
and Mysar in Islam) is allowed in too many countries, it is prohibited by Islamic law. In addition,
while Paghy (prostitution) is legal in some jurisdictions, it is illegal in Islamic law, so Islamic
law illegalizes the money that comes from prostitution. Prophet Mohamed explicitly prohibited
taking the money earned by prostitution. There are two scales of prohibitions by Islamic law:
general provisions and specific provisions of prohibitions. This view was also taken from a
biblical point of view where the money is being regarded as evil as it was prohibited from being
taken.

B Shanmugam et al (2003), money laundering is generally referred to as the process by which
the proceeds of elicit sources of money are brought into legitimate and organised system. The
end result is that the money is illegally gotten. Antony Whitehouse ( 2003) The FSMA goes on
to specify that ‘financial crime’ includes any offence involving handling the proceeds of crime.
2.2 Stages in laundering money
The complete process of it consists of placement stage, layering stage, and integration stage
(Gilmore, 1995). Money laundering is a complicated activity, in which the source and nature of
dirty money are disguised in order to make the money look lawful and then become usable,
transferable, and negotiable. The stages where also stated in the studies of B Shanmugam et al
(2003). They involve breaking the large amounts of cash into less conspicuous amounts and
putting them into the financial system as the placing stage. The money then moves to the next
stage of conversions and movements and then re-entering the legitimate economy
2.3 Forms of laundering
2.3.1 Cash smuggling
In November 1991, the first money-laundering case by smuggling cash in human body was
reported by John F Kennedy International Airport customs authority. A female Ghana
immigrant, under interrogation of customs officers, acknowledged carrying $9,000 in cash, just
under the customs declaration point of $10,000. Nevertheless, customs officers found $24,000
small bank notes packed in some sheets in her luggage, $224,000 in 100 cash rolls hided in

shampoo bottles, and $53,000 in small bags in her stomach, which was detected by X-ray test
(Dupuis-Danon, 2006, p. 56).
The traditional cash smuggling is still in use, this is supported by Ping He (2004), in the
following quotation, “Cash smuggling is a method of money laundering in which the proceeds of
crime are stealthily moved cross border, and then deposited in banking institution, paid for real
estate or invested to establish companies.” The reason is that the proceeds of crime are mostly
cash, therefore cash smuggling is a simple way for the criminals to evade tracing of the
authorities. This is seconded Ma Yu-Feng (2004) in the study of Taiwan when it was mentioned
that Taiwan is cash oriented and hence makes is difficult to detect money laundering which is an
indication that cash smuggling is still in use. Some studies by Stephen Schneider (2006) showed
that according to police cases, the criminal proceeds are transported from Canada to off-shore
locations in one of three ways and one of the ways is physically smuggling cash. This in it self is
an indication that cash smuggling is one of the vehicles for money laundering.
The Eastern and Southern Africa Anti-Money Laundering Group (2008), also supported the fact
that cash smuggling is one of the major methods used by terrorist financiers, money launderers
and organised criminals to move money derived through illegal means to support their activities.
In cash smuggling operations, couriers will, inter alia, travel by road, through airports or by lake
or sea with loads of cash, often stuffed into boxes, suitcases and concealed compartments in
vehicles and on persons. They went a step ahead and how the cash is carried around the world.
2.3.2 Money laundering through banking institutions

The most frequently used instrument by money launderers is banking institution. Ping He (2004),
“Financial institutions can provide multiple services, such as deposit, loan, acceptance, discount,
foreign exchange, settlement, and the like.” According to S Vaithilingam and M Nair (2007), In
fact the FATF (2001) report on Money Laundering Typologies identifies online banking and
internet as major money laundering vehicle. Accordingly, Chief Financial Officer (2002) report,
“Technology changes have influenced the operating strategies of many banks and non-banks as
they seek to compete in the increasingly fast-paced and globally interdependent business
environment”.
Alexander (2001) argued that these alternative payment technologies has open breaches that can
be exploited for disguising profits from criminal activities, as money can be channeled through
multiple accounts in a host of different sources. This poses problems relating to traceability of
the individual transactions which requires vast amount of record keeping. Further more, due to
difficulties in traceability, law enforcement intervention occurs only after the event has taken
place (FATF, 1998). Philippsohn (2001) and Vargas and Backhouse (2003) argued that
legislation and regulation implemented to combat money laundering activities needs to deal with
the use of new technology. Stephen Schneider (2006) had police cases which showed that
criminal proceeds are transported from Canada to off-shore locations in ways which include
transporting bank drafts, certified cheques, and other monetary instruments; or through electronic
wire transfers.
Proceeding with the studies, Ping He (2004) also added the principle of banking secrecy that
exists in almost every country. Owing to these characteristics, financial institutions are the most
vulnerable sectors for money launderers. M Toth and I L Gal (2004) also supported the same
view, “…., and in the next few years a very loose interpretation if the banking secrecy provided

ideal conditions for money launderers.” With the help of financial institutions, wittingly or
unconsciously, criminals transfer capital through transferring accounts or remit funds into other
countries, and eventually cover up or conceal the nature or source of the illegally obtained
proceeds.
2.3.3 Money laundering through insurance institutions
This is vehicle for money laundering in all countries. There is a case from Ping He (2004)’s
studies which goes on as follows:
A drug trafficker purchased a life insurance policy with a value of US$80,000. The policy was
purchased through an agent of a large life insurance company using a cashier's cheque. The
investigation showed that the client had made it known that the funds used to finance the policy
were the proceeds of drug trafficking. In light of this fact, the agent charged significantly higher
commission. Three months following this transaction, the investigation showed that the drug
dealer cashed in this policy (Financial Action Task Force (FATF), 2005). In this case, the money
launderer disguised the illegal origin and nature of his proceeds by buying an insurance policy
with proceeds of drug trafficking and then selling it to cash in. Meanwhile the agent of insurance
company acted as a party to this conspiracy of money laundering.
Explaining the view, Ping He (2004), Money laundering through insurance institutions is to
disguise the origin and nature of illegal proceeds and gains obtained from it by buying, altering
and surrendering insurance policies and filing insurance claim in order to avert the tracing of the
authorities. From the case above we can see how money was laundered through the insurance
institutions. Insurance institutions are also heavily employed by money launderers, the reasons

for which can be attributed to the characteristics of insurance business and a comparatively weak
interference of legal system in this market. In addition to Ping’s view, Stephen Schneider (2006),
had a case of Canada in which the insurance sector was implicated in almost 65 percent of all
cases, in the vast majority the offender did not explicitly seek out the insurance sector as a
laundering vehicle. Instead, because motor vehicles, homes, companies, and marine vessels were
purchased with the POC, it was often necessary to purchase insurance for these assets. The two
agreed on the use of insurance companies for laundering money.
2.3.4 Money laundering through realty or lottery business
According to his discoveries, Ping He (2004), noted that with the banking institutions,
strengthening their anti-money laundering measures more and more, money launderers have got
to search for new channels, among them are purchasing realty, rare metal, jewel, antique, and so
on. Auction house and lottery are also often used by money launderers, because the people in
these businesses are not ready to combat money laundering, and governments of many countries
have not asked these industries to take the responsibility of anti-money laundering. To add more
value, Stephen Schneider (2006) highlighted that real property was purchased to further the
illegal activities of the criminal organization, in particular the acquisition of homes or rural land
for marijuana cultivation. Findings from Canada, the case study used by Stephen Schneider
showed that legalized gambling, in particular casinos and lotteries, were used to launder funds in
five cases.

2.3.5 Money laundering through underground banks
A report given by FATF use a special term standing for underground banks, alternative
remittance systems, which described a remittance network out of the governance of the
governmental financial supervision. The service mode of legal banks is an executive structure to
an individual, while that of underground banks is an individual to an individual, which makes
transaction much simpler (Dupuis-Danon, 2006, pp. 174-8). Some companies choose to make
underground transactions because they are briefer and cheaper. The underground banks are much
resorted to by money launderers, though not all underground banks have something to do with
money laundering. In St Lucia, Alternative remittance systems, or underground banks, are
considered to be operating in violation of Banking Law Article 29.
2.3.6 International trade-based money laundering
Ping He (2010) gave a case of money laundering through International trade-based:
A Brazilian company signs a contract to export soybeans to a German company who prepays the
Brazilian company for the shipment. The Brazilian company immediately transfers the funds to a
third party that is unrelated to the transaction. The soybeans that were purchased by the
German company are never shipped (FATF, 2006). In this case, the German company
transferred funds to the Brazilian company as an advance payment for a shipment of soybeans.
Suspicions were raised when it was found that exports of soybeans were inconsistent with the
scale of the company's operations.
Further research by Ping He (2004) showed that money launderers often fake transactions or

overstate the price of the subject matter in trade based money laundering. In general, the
following features of international trade makes it highly attractive to money launderers: the
tremendous quantity and value of the commodity which gives superior cover to the proceeds of
crimes; the entire chain of international trade comprises many links including freight, insurance,
foreign currency exchange, and so on, and more links give money launderers more chances; the
cross-nation and cross-culture trade involves different legal system and financial mechanism
which confronts anti-money laundering actions with a variety of difficulties like cross-language
communications, information exchange, resources sharing, and application of different anti-
money laundering law.
2.3.7 Money laundering through Shell Company or front company
Shell Company refers to the company that does not have funds or enough funds required by law,
do not have organizational structure or fixed premises for production and operation that is
according to Ping He. Shell Company is fictitious because it has no real operating activities. The
criminal has more control over the company being used, financial institution through which
funds are passed may well view sizeable fluctuations in account activity with less suspicion than
similar activity on a personal account and the links between the criminals and the company can
be concealed by means of company ownership structures. In another study, R. Barry Johnston
(2006), in setting-up offshore shell corporations, the use of third parties including family
members and military officers and other measures aimed at disguising General Pinochet's
ownership the funds.
On another hand, Stephen Schneider (2006), mortgage financing actually came from a shell

company controlled by the accused (and incorporate by the lawyer), while the mortgage
payments originated from an account in the name of the accused. The chief focus of this move,
then, has been to show that money laundering can be done through shell companies. Mitch Van
der Zahn et al (2007), these transactions also involve a number of complex money laundering
techniques including “smurfing” (avoiding detection by conducting transactions in amounts
under $10,000), front companies, mis-invoicing, shell companies, wire transfers, mirror-image
trading and parallel systems.
2.3.8Money laundering through offshore corporation or offshore financial center
The findings of Ping He (2004), in recent years, the areas such as the Virgin Islands, Bahamas,
and Bermuda have established several economic zones called offshore jurisdictional area with
less strict regulations through legal methods. The corporations which are registered in these
areas, whose investors are not required to go to the areas personally, and whose businesses can
be directly operated anywhere throughout the world are called offshore corporations (Weimin,
2005a, p. 263). These are areas of no rules and businesses operate illegally.
The studies of B Shanmugam et al (2003) in Malaysia showed that the activities of money
laundering were in off-shore areas. The area mentioned is the Labuan have banks which were
opened to cater for and developing the islands.
2.3.9 Money laundering through professionals such as lawyer or accountant
Continuing with the study and the use of cases to explain, Ping in 2006 gave the following case

with lawyers:
In one country, a prominent attorney performed services for a whole clientele of launderers. A
client with US$80 million, proceeds from an insurance fraud, used the lawyer to transfer the
money to financial institutions in countries where there are few or no anti-laundering
regulations. The attorney opened accounts in various banks under false names of individuals or
corporations. The illegal funds were placed in the form of cash or checks in banks in the country
in question, then wired to different accounts controlled by the attorney. It should be noted that
because of his professional repute the domestic banks never considered it necessary to look
more closely at the nature of the transactions in question.
Ensuing with the researches, Ping He (2004), discovered that criminals have turned to the
expertise of lawyers, accountants, and other professionals to aid them to minimize suspicion
surrounding their criminal activities. Accordingly, Stephen Schneider (2006), in a 2002 report,
the Financial Action Task Force (FATF), an international government agency initiated by the G-
7 Group of Nations to recommend and monitor national money laundering laws, wrote that
lawyers play numerous roles and provide several benefits to those wishing to launder the
Proceeds Of Crime (POC).
Lawyers' trust accounts are used for the placement and layering of funds and through their
specialized expertise, lawyers provide a “gatekeeper” service by creating the corporate vehicles,
trusts, and other legal arrangements that facilitate money laundering. Lawyers also offer the
financial advice that is a required element of complex money laundering schemes. The use of
layers, people regarded as professionals do not raise suspicion. Criminal entrepreneurs have
long been involved in establishing, purchasing, investing in, and selling companies and business

assets for the purposes of money laundering (Edwards, 1990; New York Times, 1990; Nicaso and
Lamothe, 2000; Quebec Police Commission, 1977; Royal Commission on Customs and Excise
(Canada), 1928; Sher and Marsden, 2003)
2.3.10 Money laundering through electronic money and internet
Referring to Ping He (2004), the development of high technology is a double-sided sword. He
went on to talk about the emergence of electronic money, internet bank, internet casino which
offer criminals wider space to commit money laundering. The features of these new products
and services include increase speed of transmission of digitized information, facilitating the
movement of funds and services transcending distance within and across national boundaries
(Bradley and Steward, 2002) and anonymity (Philippsohn, 2001).
Mishkin and Strahan (1999) and Berger (2003), speed, distance and anonymity are the key
factors that are transforming the financial system. However, the new products and services which
include electronic banking and the introduction of e-money technologies have made money
laundering activities even more prevalent (Masciandaro, 1998, 1999; Philippsohn, 2001).
2.4 Target business to prevent laundering
With reference to Ping He (2004), “as a result, since 1980s, many international anti-money

laundering documents have regarded banking institutions as the base of combat against money
laundering, and emphasized the responsibilities banks shall assume to identify their clients, keep
record and report suspicious transactions. In 2000, 11 major multinational banks including
Chase Manhattan Bank, Society General Bank of France, Union Bank of Switzerland, Hong
Kong and Shanghai Bank, and ABN AMRO Bank resolved to work together to control the
rampantly growing money laundering in the world.
R Alexander in (2004) had the regulations which were specifically addressed to the financial
sector and relevant business was defined as:
Deposit-taking business by banks and building societies.
Wider banking services as set out in the Annex to the EU Second Banking Directive, the
business of credit unions
The business of the National Savings Bank
Investment business as defined in the Financial Services act 1986
Insurance business
2.5 Preventive measures

2.5.1 Customer identification
World Savings Banks Institute (WSBI, 2009), Members have launched initiatives to
overcome the problems caused by identification requirements: for example South Africa
PostBank , PostBank accepts any valid documents reflecting the customer’s address, for
the identification of clients regulated outside the scope of the entry-level Mzansi accounts.
These are: utility bill; bank statement from another bank, recent lease or rental agreement;
municipal rates & taxes invoice; retail account statement; telephone or cellular, telephone,
account; valid television license; home loan statement from another financial institution;
among other documents.
In S Vaithilingam and M Nair (2007) research, the guidelines provide by the Joint Committee on
the National Crime Authority (2001): included requesting proof of identity to open internet
accounts. From another angle, M Toth and I L Gal (2004) also mentioned hat the legislation of
financial institutions saw 90 percent of Hungray’s savings accounts turning to named accounts
which reduced the level of money laundering. Trifin J R and M Salak (2003: p77) also placed
much emphasis on customer identification on account opening when he indicated that financial
institutions should maintain accounts solely in the name of the account holder and failure to
comply will result in a fine of $5, 000 or imprisonment for up to one year.
Ian Carrington and R B Johnston (2006): also talked of customer identification through know
your customer (KYC);” … know-your-customer (KYC) principles need to be applied on an on-
going basis during the course of a bank-customer relationship.” Johnston also added that banks
are expected to establish and maintain effective Customer Due Diligence (CDD) measures at the
point of establishing a customer relationship. Ma Yu-Feng (2004), in his solutions to money

laundering also placed emphasis on KYC at the same time tracking the patterns of customer
transactions. To this juncture we can we see that customer identification of significance in
combating money laundering. This is also pre-requisite in Zimbabwe in order for one to have a
bank account to be opened.
B Shanmugam et al (2003) also identified the use KYC as a means for money laundering. The
central Malaysia provided know your customer guidelines in June 1989. The same guidelines
were also revised in December 1993. On the other hand R Alexander (2004), talked of the
requirement for customer identification, often referred to as the ‘know your customer’ rule as
perhaps the most familiar as it is certainly the most discussed. The author highlighted that the
financial institutions must require from the customer ‘satisfactory evidence of his identity.’
2.5.2 Know Your Employee (KYE)
According to Ma Yu-Feng (2004), the employer must know his employee. A number of things
must be considered and investigations must be carried out. This is when an employee is
reluctant to go for a vacation to which he or she is entitled to, an employee leads a lavish lifestyle
that cannot be supported by his or her salary, and when an employee is associated with
unexplained mysterious significant deposits to and or withdrawals from his or her account. The
researcher went further beyond the factors considered by a number of researcher and came up
with a unique idea.
2.5.3 Legislation

Regulation refers to the means by which any activity, institution, organism of person is guided to
behave in a regular way or to rule (Picciotto, 2002). A well-functioning legal system and
efficient enforcement of laws and regulations are important precursors for a stable financial
sector (Fergusson, 2006). This in turn can lead to effective implementation of international anti-
money laundering programs. In another view, “… if the conduct of a certain economic actor is
not as expected or hoped for, the reason must be sought by analyzing the game rules, formal and
informal, that are represented primarily by the anti-money laundering laws (Masciandaro and
Filotto, 2001).
Backing legislation, Asselin indicated that one of the best ways to counter money laundering
problems would be by creating legislative solutions that are capable of improving the fight
against organized crimes. Two types of solutions were mentioned that is intermediate legislative
measures and laws aimed directly and exclusively at eliminating organized crime. M Toth and I
LGal (2004) also suggested the use of legislation as a means to prevent money laundering when
a committee was set to do everything in Hungray’s power to prevent money laundering and
introduce relevant legislation acceptable to the community and other international forums
operating in the region.
In 2004, the GOZ passed more expansive legislation, the Anti-Money Laundering and Proceeds
of Crime Act (“The Act”) that extended the anti-money laundering law to all serious offenses.
The Act required banks to maintain records sufficient to reconstruct individual transactions for at
least six years. It mandated a prison sentence of up to five years for being involved in money
laundering activities.

2.5.4 Quality human capital
According to Satha, quality of human capital is vital in the well being of the financial sector and
the socioeconomic development of a country. The author went on to encourage developing
economies to increase the number of skilled workers in the country and should also be able to
retain these valuable human resources in their countries. Developing countries with the aid of the
developed countries should, place high priority on identifying opportunities for mutual
cooperation and resource sharing with developed countries; provide continuous education and
develop appropriate training for financial regulators and employees of financial institutions on
cutting-edge technology, new financial instruments and effective regulations in curbing money
laundering and other financial crimes (Basel Committee, 1997).
2.5.5 Reporting suspicious transactions and record keeping
As the research ensue, S Vaithilingam and M Nair (2007), the FATF (2001) has suggested the
need to have good systems to improve customer identification and record-keeping so as to
facilitate identification and reporting of any suspicious transactions especially in the case of
multiple transactions (FATF recommendation 11). The information is suppose to be kept for a
period ranging from six months to year and should be made available when carrying our criminal
investigations.
Ian Carrington and R B Johnston (2006) supported the fact of reporting suspicious transactions.
Banks though required by there national legislation to keep records on, there objective is to
provide the competent authorities with best quality information possible. The two went on to
argue that reports from banks may not provide meaningful information and reports might not

arise suspicion. In the view of Stephen Schneider (2006), several countries have already
implemented measures to bring legal professionals under the scope of suspicious and cash
transaction reporting regimes ( Money Laundering Alert, 2002a). In Switzerland, lawyers that
provide financial services are regarded as financial intermediaries and are subject to customer
due diligence and large cash and suspicious transaction reporting obligations.
In some studies Ma Yu-Feng (2004), supported the issue of record keeping of transactions and
that any violation that rule should be reported to law enforcement with Ping He (2004) placing
emphasis on the issue of suspicious reporting of transactions and the training of officers so that
they will be able to detect money laundering activities. WSBI members argued that the
obligation for financial institutions to keep records on the identification data obtained through
the CDD procedure, for at least 5 years (Recommendation 105) proves burdensome and not
justified in a majority of cases. On the other had the FATF reviewed the keeping of information
from a period of up to one year to at least 5 years (Recommendation 105)
Much support to report suspicious transactions and record keeping came from other researchers,
“In this vein financial institutions play a central role in the war against money laundering
(Masciandaro, 2005). Recommendation 16 of FAFT requires that “if financial institutions
suspect that funds are connected to criminal activity, they should be permitted or required to
report promptly their suspicious to the competent authorities.”
The reporting of suspicious transactions and record keeping has proved to be of importance in
combating money laundering. B Shanmugam et al (2003), proceeding with the research pin
pointed that the Malaysian Act which incorporates the requirements of prohibition of non-
anonymous accounts or accounts in fictitious names, proper record keeping, reporting suspicious

and abnormal transactions (including currency transactions) which are above the amount
specified by the Central Bank.
Proving to be of importance, R Alexander also placed emphasis on record keeping. The
researcher indicated the need to keep customer record of identity for a period of up to 5 years.
This is also in line with the FAFT 40 recommendations. He also indicated the keeping of
transactions for money from gabling regardless of how much as long as they suspect that the
gambler is involved in laundering.
2.5.6 Coping with technology
Ma Yu-Feng (2004) encouraged a regular revision of the guidelines for the financial institution
to hammer money laundering. The author went on to say that e-banking should have a cyber
payment system to keep records and assist in tracing money laundering. In order to reduce
money laundering through electronic money, we should control the utilization of this kind of
money, for instance, limiting the function and capacity of smart cards, restricting the transfer
among the holders of electronic money and establishing central data base to trace the
transactions. As to money laundering through internet casino, it is necessary to require Internet
Service Providers (ISPs) to maintain reliable subscriber registers with appropriate identification
information, require ISPs to establish log files with traffic data relating internet-protocol number
to subscriber and to telephone number used in the connection, require that this information be
maintained for a reasonable period and ensure that this information may be made available
internationally in a timely manner when conducting criminal investigations (He, 2008, pp. 214-
16).

B Shanmugam et al (2003) encouraged the banks to implement a monitoring and reporting
system which identifies potential money laundering activities. This enables the central bank (of
Malaysia) to ensure that despite the development in the Information Communication and
Technology (ICT), the integrity of the financial system is maintained and the abuse of money
laundering is minimised.
In another view, S Vaithilingam and M Nair (2007) has five key factors such as technology,
quality of human capital, efficiency of the legal framework, ethical behavior of firms (corporate
governance) and capacity for innovation in the economy on the pervasiveness of money
laundering in a sample of developed and developing countries. S Vaithilingam and M Nair
(2007), to this extent, the recommendations put forth by FATF should be taken seriously by
developing nations. The FATF (2001) has reported the following suggestions:
require internet service providers (ISPs) to maintain reliable subscriber registers with appropriate
identification information;
require ISPs to establish log files with traffic data relating to internet-protocol number to
subscriber and to telephone number used in the connection;
require that this information be maintained for a reasonable period (six months to a year);
ensure that this information be made available internationally in a timely manner when
conducting criminal investigations; and
to have good systems to improve customer identification and record-keeping so as to facilitate
identification and reporting of any suspicious transactions especially in the case of multiple
transactions (FATF recommendation 11).

Antony Whitehouse ( 2003) To be able to carry out effective monitoring firms will need to have
client information at their fingertips to determine when something unusual or out of character has
occurred, again this will inevitably mean more use of systems and databases, with the inevitable
increase in costs. This is in support of the idea of keeping information about customers for easy
identification. The operators in the financial sector should have adequate information
concerning there clients.
2.5.7 Education and training
According to Stephen Schneider (2006), in their 2000 and 2001 National Money Laundering
Strategy reports, the US Treasury and Justice Departments called for studies on the appropriate
role of lawyers and accountants as “gatekeepers” (United States). Department of the Treasury
and Department of Justice, 2001). Vienna convention and FATF (2003) among there
recommendations to developing countries included developing or improving training programs
for its law enforcement officers to ensure that they are updated on the changes in the way money
is laundered.
This view was also reinforced by M Toth and I L Gal (2004) when they encouraged the training
of the police force on ways to detect money laundering identify suspicious transactions and file
STRs as necessary and the use of comprehensive programs for the training of staff.
On the job training to employees concerning money laundering was said to be vital in combating
the problem by Ma Yu-Feng (2004). Despite the legislative moves, a pilot study by Jackson
(2001) on attitudes of Western Australian accountants, real estate agents and solicitors to money
laundering training revealed that of the three respondent groups, accountants have the least

enthusiasm for training and that throughout the professions of accountancy, real estate agency
and law there was a need to bring their knowledge and skills of anti-money laundering up to an
acceptable level
According B Shanmugam et al (2003) the central bank of Malaysia in collaboration with the
institute of Malaysian banks has initiated a series of education and training programmes to the
banking and financial service staff. This is vital for staff such that it will be able to identify and
take necessary action on money laundering activities. Stephen Schneider (2006), and the others
viewed the need for training on the professionals as well as law enforcement officers.
R Alexander (2004), a further requirement is to provide anti-money laundering training to staff.
On this point he agrees with the judgments of B Shanmugam et al (2003) as they also
recommended on the training of banking staff. Alexander indicated that staff are to be trained on
the reporting procedure, current laws and regulations relating to money laundering as well
training in recognising transactions carried out by or, on behalf of, those who are engaged in
money laundering.
To add value to the issue of training and education, Antony Whitehouse (2003), what has been
the immediate impact of the introduction of POCA on financial institutions? Most obviously
there has been a general requirement to train all relevant staff in the changes to the law and, more
importantly for them, their new liabilities under it.
2.5.8 Good corporate governance
Accordingly, S Vaithilingam and M Nair (2007)’s empirical analysis showed that efficient legal

framework with good corporate governance lower the pervasiveness of money laundering
activities and a high-innovative capacity contribute negatively to the pervasiveness of money
laundering activities. S Vaithilingam and M Nair went on to emphasise that, good governance is
vital for ensuring the integrity of the financial systems. In another research, Ian Carrington and
R B Johnston (2006) cited that in the United States, the Sarbanes Oxley Act has sought to
strengthen significantly the corporate governance framework for commercial entities in general
and the Patriot Act to address vulnerabilities related to the financing of terrorism.
2.5.9 Offering Incentives to banks
Ricardo Azevedo Araujo (2008), proposed the use of incentive-based approach to combat money
laundering. However, even in environments in which the principle of bank secrecy is more
flexible the efficiency of the anti-money laundering regulation based mainly on an incentive
approach has been at doubt. According to this approach, if the conduct of a certain economic
actor is not as expected or hoped for, the reason must be sought by analyzing the game rules,
formal and informal, that are represented primarily by the anti-money laundering laws
(Masciandaro and Filotto, 2001). This approach also shows that the efficiency of the anti-money
laundering regulation may be reached if the ability of screening the bank willingness to
cooperate increases. This effort has been performed by Financial Intelligence Units (FIU)
hereafter, created to concentrate the efforts to combat money laundering.
The same researcher, Ricardo Azevedo Araujo (2008) discovered that the central problem of
anti-money laundering regulation is to design a system of procedures and incentives that induces
the agent, that is, the financial institution, to act effectively with regard to the production of the

information required by the principal, that is, the competent authority. According to Masciandaro
(2005), over the past years many countries have created specialized agencies to deal with the
money-laundering issue. This author approaches the anti-money laundering regulation by using a
hierarchical principal-agent approach model in which the lawmaker, the FIU hereafter, and the
intermediary must be considered simultaneously. The goal of the lawmaker is to build a legal set-
up that maximizes the incentives to FIU's and intermediaries to disclose promptly relevant
information on suspicious activities of money laundering.
Changing the angle of focus by Ricardo Azevedo Araujo (2008), here, we adopt an incentive-
based approach but with a different focus: the relationship between the agency, that is, the FIU
and the intermediary or financial institution. The aim is to analyze the efficiency of the existing
anti-money laundering regulation by excluding the possibility of the collusion between the FIU
and the intermediary. Let us assume that the financial institution has two possible actions:
“combat” or “not combat” money laundering. This means that some financial institutions may
decide to take the risk of not combating money laundering, a view that is according to an adapted
concept of “legal-criminal economy” developed by Masciandaro (1999) in which banks are
eligible for being involved in legal and illegal activities concomitantly.
2.5.10 Monitoring physical cross-border transportation.
Ping He (2004), in the 2003 revised “Forty FATF Recommendations”, Article 19 provided that,
“Countries should consider Implementing feasible measures to detect or monitor the physical
cross-border transportation of currency and bearer negotiable instruments. The author went on to
say, “smugglers surely would not report the true number of cash they carry, often hidden in some

altered devices or certain places of their body hard to search.” The issuing of 1,000-Canadian
Dollar (or CAD) banknote has been terminated. And US$500 cash have been withdrawn from
circulation since 1969 (Dupuis-Danon, 2006, p. 55). The removal of large denominations will
make it difficult to carry huge amounts of hard cash.
A report by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
(2008) showed that there was close monitoring of cross-borders. On 8 November 2007, a
Zimbabwean national was arrested at Chirundu Border Post after he was found in possession of,
Zimbabwean currency, Z$209 6000 000 in the pocket of his jacket. The money had not been
declared to ZIMRA officials as required by law. The money was seized and subsequently
forfeited to the State. The accused was prosecuted at Court.
2.5.11 Imposing sanctions on the FIs and fines
Extending the research Ian Carrington and R B Johnston (2006): the year 2004 witnessed
financial regulators imposing harsh sanctions on commercial banks in response to integrity
related failures within these institutions. In 2004, Riggs Bank and Citigroup were subject to
heavy sanctions from regulators in the United States and Japan, respectively. Riggs was subject
to civil money penalties of $25 million and criminal penalties of $16 million. Supporting the
vision, Ma Yu-Feng (2004) in his studies in Taiwan, went on to support this method of
preventing money laundering in his Article when any financial institution that violet the
provisions set in the Article was liable to be punished by a fine between NT$200, 000 and NT$1
million (Article 17).
Placing emphasis on the imposing of sanctions on the FIs and fines, B Shanmugam et al (2003)

indicated that the Malyasian act has a provision which provides for stiffer penalties to those who
commit the crime. Those found guilty will be liable for a maximum fine of RM5m (US$1.321) or
a maximum imprisonment for 5 years or both. This is the same view that was adopted by Ma
Yu-Feng (2004) in the researches in Taiwan.
Antony Whitehouse ( 2003) later, in August, 2001, there was the FSA’s (still acting as the
Securities and Futures Authority, SFA) unexpected enforcement action against BS/PaineWebber
for failures in money laundering controls, leading to a then noteworthy fine of £350,000 plus an
award of costs. In this way the regulators sent a very strong message that they would take the
issue of money laundering systems and controls seriously even when no instances of money
laundering were identified. This is showing the adoption of a fine a measure to combat money
laundering making it a valuable measure.
2.5.12 Freezing or seizure of proceeds
B Shanmugam et al (2003), once an entity is has been convicted of a money laundering offence,
the Act requires the freeing, seizure and forfeiting of the properties (both movable and
immovable) that have been deemed to be proceeds of such activities. Findings by Ping revealed
the same point of freezing the proceeds. “Allow law enforcement personnel to identify, freeze or
confiscate proceeds from money laundering activities (FATF 7 and 35).”
Antony Whitehouse (2003) one of the main aims of POCA was to secure far more criminal
assets for the Treasury, but will far more seizures and criminal assets be seen to be recovered by
the Asset Recovery Agency? The reality is that the UK has already had the powers to recover
assets in relation to drug offences since 1986 and for all other offences since 1988, so why

should POCA make a big difference here? n UK money laundering prevention
2.5.13 .General provisions that prohibit the ill-gotten money
These were observed in the Islamic perspective by Samah Al Agha,(2007). There are many
general Quranic provisions regarding prohibiting illicit activities and illegalizing the money
derived from such activities. For example, in the Holy Quran, there is a Quranic verse that says:
“… God will make lawful for them all good things and prohibit for them only the foul…
”(Pickthall, 2005, verse 157). In addition, in An-Nisa Surah there is a Quranic verse says:
O you who believe! Squander not your wealth among yourselves in vanity, except it be a trade
by mutual consent, and kill not one another. Allah is ever merciful to you. Whoever does that
through aggression and injustice, we shall cast him into fire. And that is ever easy for Allah
(Pickthall, 2005, verse 29,30).
To explain; God allows Muslim people to have or to do good and lawful as regards things, deeds,
beliefs, persons, foods. And prohibits them as unlawful Al-Khabaith (i.e. all evil and unlawful as
regards things, deeds, beliefs, persons and foods. For example, in relation to corruption and
bribery, there is a general Quranic provision says: And eat not up your property among
yourselves in vanity, not seek by it to gain the hearing of judges that you may knowingly devour
a portion of the property of others wrongfully (Pickthall, 2005, verse 188).
2.6 Challenges in preventing money laundering
2.6.1 Privacy
Privacy is in both the financial institutions and in the law and accounting firms. These keep

information that will be useful to the detection of money laundering. Findings in the research,
Ping H (2004), realised professional secrecy that exists in almost all countries is giving a
challenge in solving money laundering. The secrecy exist in financial institutions as well as law
firms.
The use of internet has also brought about privacy because in this case it is difficult to implement
customer identification and record transactions. This has also been facilitated by the easy to
access internet and contact between customer and institution is personalized. Tadesse (2006), for
example, suggests banking crises are less likely to occur in countries with greater regulated
disclosures and transparency. This indicates the impact of privacy in the financial institutions.
2.6.2 Failure to record names in transactions
According to Ping He (2004), money launderers aim at some features of insurance market:
various insurance products, some of which can be bought by simply paying cash and some of
which can be sold without recording the buyer's name, so giving cover to money launderers;
despite insurance companies' requirement to identify their clients, there is no similar regulations
for insurance agents, who are the ones contacting and negotiating with clients; strict regulations
have been imposed upon insurance companies but not re-insurers which have enormous turnover
each year (Dupuis-Danon, 2006, p. 170). Second, interference of legal system in anti-money
laundering is weaker in non-banking financial institutions including insurance companies than in
banking institutions. Naturally, money launderers turned from banks to easier games, like
insurers.

2.6.3 Operating environment
According to Ping He (2004), different jurisdictions have different languages, culture, legal
systems, and taxation systems, criminals can fully take advantage of these differences while the
investigation into money laundering undoubtedly meets lots of obstacles which also include
secrecy. There is also high degree of freedom especially in the offshore businesses. It has strict
confidential system.
In many places, offshore corporation does not need to disclosure the information of its
shareholders, equity ratio, earnings and so on to the public. On the other had, Ian Carrington and
R B Johnston (2006): one of the key challenges will be implementing standards worldwide
across continents and countries that are at very different stages of economic development. These
factors make it difficult to trace and prevent money laundering activities.
2.6.4 Customer Due Diligence (CDD) requirements
For WSBI members, the main financial inclusion challenge linked to the implementation of the
AML/CFT rules is the Customer Due Diligence requirements (CDD), as stated in FATF
Recommendation 53. In a number of developing countries, the way people are identified (name,
address etc) makes full compliance with the Recommendation requirement a burdensome
and costly process.
Those financially vulnerable people, who form a significant part of the (potential) clientele of
obligation to get information on the occupation of the clients and on the use of the funds
leads to a heavy procedure for each of the transactions;

obligation to get information on the occupation of the clients and on the use of the funds
leads to a heavy procedure for each of the transactions;
lack of proper identification documents (ID, Passport);
lack of official proof of income and residence address. For instance, self-employed rural
farmers would not be able to produce proof of income while poor living in rural areas and
informal accommodations will not be able to justify their residence address;
lack of appreciation by the unbanked of the need to supply the compliance information;
customers do have the requisite documentation, but due to the lack of information they do
not have them on their person when going to the bank to open accounts and would necessarily
not be served. These prospective customers might be coming from places quite distant from the
branches, and would obviously find it costly in terms of time and money to go back to the bank
to open accounts.
Some WSBI member banks may also face reputation risks resulting into a commercial
challenge, since these CDD requirements are conflicting with their mandate to serve
unbanked and under-banked people.
A case was drawn from the Lesotho Post Bank:
The impact of the introduction of AML/CFT requirements was measured by the sales
comparison between the years 2005, when the bank started operating, and 2008, when the
CDD/KYC process was implemented: LPB sales have been on an upward trend pre-KYC
implementation, but dropped dramatically in 2008 when KYC was implemented. Sales decline
could have been caused by economic pressures such as increased cost of living, but this decline

would have been gradual and not sudden. Overall, the savings book’s new accounts recorded an
average of 1,006 customers per month for 2008, as opposed to 1,700 average numbers of
customers per month in 2007. Obviously the most vulnerable people are often those who lack the
prescribed documents and too stringent requirements often turn them down from embracing
formal banking services.
2.6.5 Conflicting interests
In the simplified version of the “capture theory” of regulation (Stigler, 1971), a unified group of
producers maximizes the wellbeing of its members at the expense of politically unorganized
consumers. On the other hand, Peltzman's (1976) more general theory of regulation, regulators
balance the interests of producers and consumers so that neither group gains all of the benefits of
regulatory intervention, except when one of them is politically impotent and the model reduces
to one of Stiglerian capture.
Other students of economic and social regulation recognized, however, that the firms within an
industry often have competing interests with respect to the outcomes of regulatory processes.
The heterogeneous-firm model of regulation suggests that imposing the same regulatory
standards on all of an industry's members can make the more efficient firms better off. Buchanan
and Tullock (1975) were the first economists to construct such a theory of regulation (Tollison,
1991).
Ping He posed a question, “which is more important, banking secrecy or the fight against money
laundering? This question rose from the fact that the requirement of banks and financial
institutions to perform with due diligence in the course of business, such as customer

identification, recording keeping and suspicious transactions, the provisions set challenges the
issue of banking secrecy.
2.6.6 Technological changes
Ping He (2004) had the view that internet money laundering is so complicated that it is difficult
to decide where it occurs. Ping had the questions like, Does it take place where the launderer is
located, where the server is located or where the accounts are held? And also it is quite confusing
to determine which authority has jurisdiction to investigate and prosecute the transnational
crime. In another research, S Vaithilingam and M Nair (2007) found the fact that the FATF
(2001) report on Money Laundering Typologies identifies online banking and internet as major
money laundering vehicle. According to the Chief Financial Officer (2002) report, “Technology
changes have influenced the operating strategies of many banks and non-banks as they seek to
compete in the increasingly fast-paced and globally interdependent business that can be exploited
for disguising profits from criminal activities, as money can be quickly moved within the
environment”.
Alexander (2001) argued that these alternative payment technologies have open breaches
channeled through multiple accounts in a host of different sources. This poses problems relating
to traceability of the individual transactions which requires vast amount of record keeping.
Further, due to difficulties in traceability, law enforcement intervention occurs only after the
event has taken place (FATF, 1998). Philippsohn (2001) and Vargas and Backhouse (2003)
argued that legislation and regulation implemented to combat money laundering activities needs
to deal with the use of new technology.

2.6.7 Unwillingness of banks to cooperate
According to Ricardo Azevedo Araujo (2008), theoretically, speaking the problem is easier than
handled in practice. The main difficulties faced by competent authorities range from an imperfect
knowledge of the bank's intrinsic willingness or ability to cooperate by reporting suspicious
activity to inadequate interpretation of the bank secrecy principle by courts. This viewpoint is
also supported by Ping (2005, p. 253) who states that: … although banks are the most vulnerable
institutions to money laundering activities, according to the complex schemes of money
laundering; it is not enough only to impose the obligation of reporting suspicious transactions on
them but it is also necessary to create a legal environment in which they face incentives to
disclose promptly information on any suspicious transactions.
This view is also emphasized by Stessens (2000, p. 172) who states that: … in order to obtain co-
operation from financial institutions that they will not be held responsible, either civilly or
criminally, if they inform the authorities responsible for combating money laundering of facts
which are covered by banking secrecy. Ricardo Azevedo Araujo (2008), this approach also
shows that the efficiency of the anti-money laundering regulation may be reached if the ability of
screening the bank willingness to cooperate increases. This effort has been performed by
Financial Intelligence Units (FIU) hereafter, created to concentrate the efforts to combat money
laundering.
2.6.8 Underground banks

Ping He (2004), as a channel for money laundering and capital fleeing, the underground banks
shall be wiped out according to the following articles of PRC Criminal Law: Article 174 about
the crime of establishing commercial banks or other financial institutions without due approval;
Article 176 about the crime of illegal pooling of public deposits; Article 225 about the crime of
illegal operation; Article 191 about the crime of money laundering. However, the battle against
underground banks proved to be of poor cost efficiency and underground banks would never
perish under such pressure.
These banks also offer cheap services which are also faster than the normal and registered
financial institutions. This means most people will still use them thereby giving them the
influence to carry on functioning. Under such circumstances, money laundering will be difficult
to combat.
2.6.9 Weak governance
In S Vaithilingam and M Nair (2007)’s research, According to the FATF (2006b) annual report,
many illegal activities are associated with corrupt practices and lack of transparency, which will
subsequently give rise to weak governance. This in turn results in poor and ineffective
implementation of anti-money laundering programs. Operating in this environment means which
ever effort you put in place will go in vain it will not be put into practice.
2.7 Recommendations

The recommendations are mainly focused on developing countries which are in a greater battle
to fight against money laundering.
2.7.1 Developing countries
S Vaithilingam and M Nair (2007) identified developing countries having challenges in
combating money laundering. The pooling of “know-how” experience and expertise by the
regulatory and enforcement authorities is still lacking in these sample countries particularly in
the developing countries, thus lacking an effective synergy. Most of the developing countries do
have laws to curb financial crime and control criminal activities relating to money laundering
activities. However, some of these countries have so far not criminalized money laundering. To
this end, developing countries should focus on the following recommendations put forth by the
Vienna convention and FATF (2003):
Adapt its legislation to comply with international requirement.
Develop or improve training programs for its law enforcement officers to ensure that they are
updated on the changes in the way money is laundered.
Should make an effort to coordinate and cooperate with other countries and international and
regional agencies to enhance the effectiveness of law enforcement action to curb money
laundering activities.
Have laws to establish a regulatory and supervisory mechanism for financial institutions. This is
to ensure that these financial institutions adhere with customer identification and verification
procedures, minimum standards of record-keeping, cooperation among banks, supervisory and

law enforcement agencies and mandatory reporting of suspicious transactions (FATF
recommendation 11-13). Although the banking industry is obligated to implement customer
identification (the “know your customer” (KYC) principle) under the Basel Committee on
Banking Regulation and Supervisory Practices (Core principle 15) published its Core Principles
for Effective Banking Supervision (1997), there has been constant opposition by banks as they
feel that it burdens them financially.
Allow law enforcement personnel to identify, freeze or confiscate proceeds from money
laundering activities (FATF 7 and 35).
To this extent, developed countries must provide the necessary support to developing countries
with respect to finance, resources, technical support and training programs. Without this support,
it will be a challenge for these developing countries to combat money laundering activities.
B Shanmugam et al (2003), recommended a continuous research and development. The
researchers indicated that, ‘there should be a continuous effort to assess money laundering
activities, as the launderers will no doubt take ‘loophole mining’ , that is, finding loopholes in
the law and exploiting them to a maximum.”
2.8 The targets for money launderers among other things are:
Ping He (2004), as a result, since 1980s, many international anti-money laundering documents
have regarded banking institutions as the base of combat against money laundering, and
emphasized the responsibilities banks shall assume to identify their clients, keep record and
report suspicious transactions. Casinos and lotteries were identified as placed for money

laundering. Gambling areas were also identified by R Alexander. According to Samah Al Agha
(2007), prophet Mohamed also highlighted gambling as an area for money laundering.
Ministry of State Enterprises, Anti-Corruption & Anti-Monopolies identified the following as
the targets for money launderers among other things:
• Countries with high level of corruption
• Countries with a fragile financial infrastructure
• Countries with lack of effective money laundering legislation
• Countries where law enforcement agents and banking staff are under-trained
• Countries that are desperate for foreign currency
Money laundering is often associated with banks, however the sophisticated money launderer
involves many other unwitting accomplices such as: -
• Accountants
• Lawyers/Solicitors
• Surveyors
• Estate Agents
• Management Services Companies
• Antique Dealers
• Dealers in precious stones

• Foreign Currency Smugglers
• Car Dealers
2.9 Impact to the inclusive financial sector
AML/CFT requirements place obligations on financial institutions that are expensive to meet
(e.g. having compliance officers at different locations to verify day to day transactions), more
forcefully in developing countries. Mass-market financial institutions such as WSBI member
banks, consider that these regulations are not adapted to the local context and can be
disproportionate in terms of costs and administrative burden, particularly when applied to
“small” accounts and when they have to be repeated for each of the transactions performed.
It is also important to tackle this issue in order to accompany the development of innovative
ways of banking, particularly suited to the needs of low income people in developing
economies. In this respect, branchless banking has proved very promising, both through
partnerships between banks and retail outlets (“agent banking”) or through technologies such as
mobile phones. The positive impact of these new ways of banking should not be weakened by
regulatory obstacles raised by AML/CFT requirements.
Banks feel a financial burden
Have laws to establish a regulatory and supervisory mechanism for financial institutions. This is
to ensure that these financial institutions adhere with customer identification and verification
procedures, minimum standards of record-keeping, cooperation among banks, supervisory and

law enforcement agencies and mandatory reporting of suspicious transactions (FATF
recommendation 11-13). Although the banking industry is obligated to implement customer
identification (the “know your customer” (KYC) principle) under the Basel Committee on
Banking Regulation and Supervisory Practices (Core principle 15) published its Core Principles
for Effective Banking Supervision (1997), there has been constant opposition by banks as they
feel that it burdens them financially.
Money laundering is a crucially important globalised activity in contemporary financial society
BINLEA, 2006). It avoids national controls and distributes dirty money around the world. A
country’s financial controls and tax regime can be completely bypassed (Hampton and Sikka,
(2005). Money laundering is a global phenomenon and a major obstacle in maintaining effective
operating domestic and international financial systems (Buchanan, 2004). It, therefore, poses a
significant problem to central banks as it damages the effective operations of national economies
and promotes poor economic policies (Johnston and Abbott, 2005; Buchanan, 2004). Indeed,
money laundering corrupts financial markets and erodes the public’s confidence in the global
financial system.
2.10 Failures cases
The Anti-Money Laundering Act of 2001 in Nauru failed because the law it had failed to meet
the FATF 40 recommendations and had 400 shell banks with no physical appearance in there
jurisdiction. The Anti-Money Laundering Act 2001 of Malaysia was said to be not all that
successful. This was mainly because of reporting institutions for instance complaining of

ignorance with respect to reporting requirements on currency transactions, monetary instruments
and foreign accounts ( B Shanmugam et al 2003), the team went on to say soldiers are basically
part of the staff in the financial institutions and that if they do not know the enemy, there is
hardly no battle. They were not able to fight the crime as they lacked the necessary knowledge.
The combating of money laundering in Malaysia was also made difficult by the staff that was not
trained. According to B Shanmugam and others (2003), “this is because the large volume of
information collected about their customers will be of no use if the employees are not trained to
detect attempts at laundering.”
Antony Whitehouse (2003) Bank of England, or the Financial Services Authority (FSA) after
1998, was a failure to combat money laundering. This may have been due in part to a lack of
motivation by government, or a lack of public awareness of the issues, but probably the greatest
underlying cause was the fact that there was no one organization with responsibility for policing,
and more importantly, prosecuting breaches of, the Regulations.
2.11 Chapter summary
Money laundering is crime that is as a result of cleaning illegally gotten money. This is
supported by a number of definitions such as the one by Tim Hidle (1999; 131). The money is
then passed through a number of placed that raise no suspicion such as lawyers’ hands who will
make transactions on behalf of there clients. Shell companies are also used for laundering
money. The challenges in combating money laundering include unwillingness of bank

employees to cooperate, rapid changes in technology as well the existence of underground banks
which offer affordable prices as compared to legal financial institutions.
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter is describing the methodology that the researcher used in collecting data on
ascertaining whether there will be ultimate solutions to money laundering Zimbabwe. The

chapter reveals procedures and activities undertaken to gather the necessary data. Major areas of
concern are research design, research population, research sample, data collection methods,
instruments, the data presentation and analysis plan.
3.1 Research Design
According to William G Zikmund and Michael Damico (1996; 157), “research design is a master
plan that specifically identifies what techniques and procedures that will be used to collect and
analyze data relevant to the reach problem.” The research design that the researcher used in this
case is descriptive in nature.
The researcher used descriptive research designs because of its ability to portray variables that
answer the questions: who, what, and how questions. It can also describe respondent’s attitudes,
intentions, and behavior. With this type of research, the researcher relies on the use of primary
data and secondary data.
3.1.2 Descriptive research
Its objective is to reveal any accurate profile events or situations. It is also undertaken in order to
ascertain and be able to describe the characteristics of the variables of interest in a situation. A
descriptive research design is concerned with high degree of accuracy to the subject. The
method is appropriate and suitable in such cases where data is derived from interviews and
questionnaires. The basis following the use of descriptive survey is that it describes the existing
state of affairs of the research subject. This is suitable for answering the question who, what,
where and whom.

3.1.3 Justification of the research design
Descriptive research relies heavily on primary and secondary data that the researcher used to
gather the requisite data. Additionally, descriptive methods use questionnaires and interviews,
which were used as instruments for data collection during the research.
This type of research design is used in bulk of management research and it aims to provide facts
on which decisions should be based.
It offers ideas for further probe and research.
It helps to understand the characteristics of a group in a given situation.
3.2 Data Collection Techniques.
Ronald. F. Bush and Alvin C. Burns (2001; 66) states that there are basically two types of data
collection techniques available to the researcher, which are primary data collection technique and
secondary data collection technique.
3.2.1. Primary data
This is data collected in the research using methods such as interviews, observations and

questionnaires. The key point is that data collected is exceptional to the research. No one has
access to the distinctive data until the day of publishing the research. The primary data is original
data especially for solving the problem at hand and the data collection methods are ideal for the
study. The researcher made use of personal interviews and personally administered
questionnaires to employees at Zimbabwe Allied Banking Group find out whether there will be
ultimate solutions to money laundering as a crime.
3.3 Research Instruments
The researcher used personal interviews and personally administered questionnaires to gather
data from the employees
3.3.1 Personally Administered Questionnaires
V.Kumar (2003; 202) defined a questionnaires as a set of questions designed to evoke useful
answers. It is a vehicle of communication between those seeking insight (the survey sponsor) and
those whose insight is sought (the respondents). Questionnaires used are open –ended and
closed- ended questions. The use of questionnaires was preferred because they give the
respondents time to analyse the matter and give the valuable answers.
Justification Personally Administered Questionnaires

The researcher used this type of questionnaires because they have got better chances of getting
the responds as compared to other means. They also provide room for the respondents to
examine the questions and they place less pressure on the respondent like interviews do. There
was a mixture of open-ended and closed questions because they cover the gaps of each type.
Closed questions made it easy to scrutinize the data, they also increase the response rate because
the respondents will not take time thinking about the question. Open-ended questions also gave
the respondents opportunity to ventilate their views about the topic.
3.3.2 Personal Interviews
According to V .Kumer (2003:130) “interviews are used to obtain in-depth information on a
specific topic.” For the purposes of this research, the researcher used personal interviews.
Personal interviews have got merits which justify why the researcher opted for them.
3.3.2.1 Justification for personal interviews
The researcher had the opportunity to clarify questions to the respondents for better
understanding of the theme.
The researcher had a chance to observe non-verbal gestures and this enables the researcher to
understand the unsaid words.
Personal interviews assisted the researcher to get information from some employees who were
on a busy schedule and could not have time to go through the questionnaire, the researcher only

asked the areas of significance to the study.
Secondary Data
Secondary data is the systematic collection, and evaluation of data to describe, explain and
thereby understand actions and events that occurred in some researches. The sources used during
the research include texts, internet, journals and news papers. This type of data is easy and cheap
to collect and provides readily available information about the subject.
3.4 Research Population
Following the delimitations of the study, the research population was drawn from employees at
Zimbabwe Allied Banking Group Harare Retail Banking Division, Corporate Banking division,
Stock Broking, Gweru and Kwekwe branches. According to Dooley D (1995; 131) “researchers
want to generalize from their sample to all potential elements, termed population.”
Table 3.1 Population and sample sizes
Division Managerial Non-managerial Total
position position
Retail Banking Division 14 57 71
Stock Broking 2 5 7
Corporate Banking 6 10 16
Target population 22 72 94
Sample unit (22*0.40) = 9 (72*0.40) = 29 38

3.4.1 Research Sample
This sample was drawn from the divisions which the researcher felt are most vulnerable to
money laundering that is Retail Banking Division, Corporate Banking division and Stock
Broking.
3.4.2 Sample Design
The researcher initially used convenience sampling to choose the branches to consider due to the
fact that the branches are geographically spaced within the country. The researcher came up
with five branches in Harare, corporate banking, stock brokers, Gweru branch and Kwekwe
branch. Within these branches, the researcher went on to use stratified random sampling to group
the employees into two categories that is managerial and non-managerial employees. The
samples from each strata where selected using simple random sampling.
Sampling Unit
Unit is a basic unit from which the researcher will extract data and was a sample of 38
employees drawn from a target population of 94 employees. Choosing units saves on time, the
researcher will also be in position to conduct people who are likely to produce correct
information.
3.5 Data presentation

This section is a description of the approach that will used to organize, describe and present the
collected data. The researcher used tables, bar graphs and pie charts.
3.5.1. Data editing
The process was done just after the collection of questionnaires and completion of interviews.
The essence of editing is to ensure that the requested data is legible.
3.6 Data analysis
The data was analysed using the chi-squared distribution test. This is section under hypothesis
testing which an educated guess about the state of affairs. The researcher wanted to test whether
money laundering has an ultimate solution.
3.6.1 Tabulation
Data is presented in simple tables to show the frequent occurrence of each response. This
facilitates the presentation of data on pie charts and bar graphs.
3.7 Chapter summary
This chapter deals with the research methodology that will be used during the research. It

involved the research design, population, sample, research instruments, validity and reliability,
pretesting and data analysis. The next chapter focuses on data presentation techniques,
discussions, analysis and interpretation of findings.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.0 Introduction
The purpose of this chapter is to present, analyze and discuss research findings. In this chapter,
the researcher has presented the findings in both writing and graphic communication. Graphic
devises help the researcher to communicate more effectively since they:
Show group of numbers that will be very difficult to show in a written message
Show relationships that will take many sentences to explain, and
Give a quick visual impression that enable readers to compare figures quickly
The data was analysed using the chi-square distribution to illustrate the relationship between
different variables.
4.1 Questionnaire and interview response rate
From the 17 questionnaires dispatched to non-managerial staff at Zimbabwe Allied Banking
Group retail banking division, corporate banking and stock brokers, 14 questionnaires were fully

completed, giving a response rate of 82%. From the 5 questionnaires personally administered to
non-managerial staff from the same departments as above, 4 were fully completed giving a
response rate of 80%. This high response rate illustrates that the results from this research are
credible. The researcher attributes the high questionnaire response rate to the fact that he had
previously assured the respondents that their responses were for academic purposes only and
would not be divulged to the public. The high response rate is also ascribed to the fact that the
researcher once worked with some of the respondents. The response rate of the dispatched
questionnaires is depicted in Table 2 below:
Table 4.1: Questionnaire response rate
Department Disbursed Fully Partly Not Response
Completed Completed completed Rate (%)

Retail banking 14 10 3 1 71
Corporate banking 5 5 0 0 100
Stock brokers 3 2 0 1 67
Total 22 17 3 2 77
Source: Questionnaire survey
Table 2 indicates that the retail banking division and stock brokers are the departments with
questionnaires that were not completed, they had one questionnaire per department, whilst
corporate banking department managed to have all questionnaires fully completed. Furthermore,
it can also be seen that corporate banking had the highest questionnaire response rate of 100%
while stock brokers had the lowest response rate of 67%. The researcher also achieved a 75%
response rate from non-managerial staff and 75% from managerial staff at ZABG from the

interviews contacted. The research was affected with the issue of leave as some of the
employees were not at work and the few who were there were too busy to bump into other
business.
Table 3: Interview response rate.
Targeted Contacted Response rate
Category interviews interviews (%)

Managers 4 3 75
Non-managerial 12 9 75
Total 16 12 75
Source: Interview survey
4.2 Data presentation analysis and interpretation
4.2.1 The reasons for committing the crime in relation to employee level of motivation
Money laundering as a crime in the banking sector in Zimbabwe is committed for different
reasons which are assumed to be in relation to level of employee motivation. The reasons entail
ignorance, the need for cash and fun. The findings presented below illustrate the level of
employee motivation ranging from high to low related to the reason for money laundering.
Figure 4.1 The reasons for money laundering in relation to employee level of motivation

16
14
12
number
10
of
8
employee
6
s
4
2
0
For fun Ignorance Need for
cash
reason for committig the crime
high modest low

The graph shows that most of the employees which are involved in the crime have modest and
low level of motivation and have the high need for cash. Those with the low level of motivation
are the ones who are so much involved in the rime.
The data from the graph above was analysed below using the chi-square.
The significance level (α) is 0.05
Null hypothesis: The reason for money laundering and level of employee motivation are not
related.
Alternative hypothesis: The reasons for money laundering and the level of employee motivation
are related.
Table 4.3: The level of motivation in relation to the reasons for committing the crime

Level of motivation
High Modest Low

Reason for o e o e o e Row
committing total
the crime
For fun 2 0.3429 0 0.6857 0 0.9714 2
Ignorance 0 0.1714 0 0.3429 1 0.4857 1
Need for cash 4 5.4857 12 10.9714 16 15.5429 32
Column total 6 6 12 12 17 17 35
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02071405020c150202020202020e1112020202020202020
2020202020202020202020202020202020202020e0f1002

02020202020202020e0f1002020202020202020e1102030
0000004050202020202020202020202020202020202020
2020202020202020202020202020202020202020202020
2060405020202020202020202020708000009020202020
2020604050202020202020202020202020202020202020
2020202020202020202020202020202020202020202020
202020202020202020604040000002701ffff03000000000
0
χ 2cal =
∑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= 8.0081+0.1714+0.4024+0.6857+0.3429+0.0964+0.9714+0.5446+0.0134
= 11.2363
df = (r-1)(c-1)
= (3-1)(3-1)
=4
From the tables χ 2

(0.05) (4) = 9.488
This is graphical presentation of the results of the analysed data
Figure 4.1a

B A
0 χ 2
(0.05) (4) = 9.488 χ 2
cal = 11.2362
The whole side marked A is the rejection region, while B is the acceptable region, this is
determined by the critical value 9.488 and in this case the test statistic 11.2362 has fallen in the
rejection region and this becomes the basis of our interpretation or conclusion.
Interpretation: Therefore reject null hypothesis at 5% level of significance and conclude that
there is a relationship between the reason for money laundering and the level of motivation.
4.2.2 Assessing the employees’ willingness to prevent money laundering in relation to
corporate governance.
The research revealed that 58% of the employees in the banking sector are willing to prevent
money laundering under strong corporate governance. It is also indicated that 26% is willing to
prevent money laundering under moderate corporate governance with 16% under weak corporate

governance. The information is presented in figure 4.1 below:
Figure 4.2
Willingnessofem ployeestocurbthecrime
versuscorporategovernance
16%
26% 58%
Strong Moderate Weak

The data collected and presented above is analysed below.
Table 4.4: Employee willingness to prevent money laundering to relation to governance
Willing Unwilling
Corporate o e o e Raw total
governance
Strong 11 7.0571 2 5.9429 13
Moderate 5 5.4286 5 4.5714 10
Weak 3 6.5143 9 5.4857 12

Column total 19 19 16 16 35
Expected count (e) =

010009000003c60900000000a1090000000004000000030
10800050000000b0200000000050000000c021f00810003
0000001e000400000007010400a1090000410b2000cc001
e008000000000001e008000000000002800000080000000
1e00000001000800000000000000000000000000000000
00000000000000000000000000ffffff00fefefe009bd4fe00
72000000feeaba00009bd400baeafe0000007200eaba7200
eafefe007272ba0072baea00d49b0000d4fefe009b009b00f
efed400ba729b00fefeea00ba72720072007200fed49b0000
72ba009b00000000009b00ba72000072009b009bd4ea009
bbaea009b007200babad400baeaea00d49b72009b72ba009
b9bd4009bd4d400eababa00729bd4009b9b9b00ba9b0000
babaea00eafed400ead4d400d4feea00fed4d400d4d4d400d
4d4ea00009bba00eaba9b00d49b9b0072bad400d4fed400b
aead400ba9bba00eafeea000000000000000000000000000
0000000000000000000000000000000000000000000000
0000000000000000000000000000000000000000000000












χ 2cal =
∑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000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000000000000000000002020202020202020202020
202020202020202020202020202020202020202020202020002020202020202020
202020202020202020202020202020202020202020202020202020002020202020
202020202020202020202020202020202020202020202020202020202020002020
202020202020202020202020202020202020202020202020202020202020202020
00202020202020202020202020202061a000405020202020202020202020202020
20202000202020202020202020202020202030a0214150d0202020202020202020
202020202023f02020202020202020202020202020f1700000a0202020202020202
020202020202020200020202020202020202020202020214160b02080b02020202
020202020202020202020200020202020202020202020202020202020800000b02
020202020202020202020202020200020202020202020202020202020202020202

020202020202020202020202020202020200020202020202020202020202020202
020202020202020202020202020202020202020200020202020202020202020202
020202020202020202020202020202020202020202020200020202020202020202
020202020202020202020202020202020202020202020202020200020202020202
020202020202020202020202020202020202020202020202020202020200020202
020202020202020202020202020202020202020202020202020202020202020200
020202020202020202020202020202020202020202020202020202020202020202
020200000000000000000000000000000000000000000000000000000000000000
000000000000020202020202020202020202020202020202020202020202020202
020202020202020200020202020202020202020202020202020202020202020202
02020202020202020202020002020f1d05020202020202020202020202020202020
2020202081218020202020202020002061b1802020202020202020202020202020
2020202020202020f1c0202020202020200020e0b0202141600000b020202020202
02020202061a000405020211050202020202020014150d0202031218061a0b02020
2020202020202030a0214150d020e0902020202020200060c0d02020f191802030a
0202020202020202020f1700000a0202030a02020202020200060c0d02021416090
20312180f1700000000040514160b02080b02030a0202020202020014150d020202
141600000b02020202020202020202020800000b020e09020f1700000900020e0b0
202020202020202020202020202020202020202020202021105020203121310000
2060c0d020202020202020202020202020202020202020202020e0a020202020f10
020002020607050202020202020202020202020202020202020202080902020203
0a02080b0002020202020202020202020202020202020202020202020202020202
0202030000040500040000002701ffff030000000000
= 2.2030+2.6160+0.0338+0.0402+1.8959+2.2514

= 9.0402
df = (r-1)(c-1)
= (3-1)(2-1)
=2
From the tables χ 2

(0.05) (2) we get 5.991
Presented below are graphical results of the analysed data.
Figure 4.2a
B A
0 χ2 (0.05) (2) = 5.991 χ 2

cal = 9.0402
The whole side marked A is the rejection region, while B is the acceptable region, this is
determined by the critical value 5.991 and in this case the test statistic 9.0402 has fallen in the
rejection region and this becomes the basis of the interpretation or conclusion.

Interpretation: Therefore reject null hypothesis at 5% level of significance and conclude that
there is a relationship between the corporate governance and employees’ willingness to prevent
money laundering
4.2.3 Educating the employees about money laundering
A greater number of the management at Zimbabwe Allied Banking Group, that is 57% (4/7*100)
have opted for the use of education and training as the best way of putting their employees in a
best position to detect and prevent money laundering. The remaining 43% is shared between
holding regular workshops (14%) and through thorough induction training (29%). A line graph
was used to present the findings from the research, see figure 4.4:
Figure 4.3

Suggestedwaysof educatingthe
employees
4.5
4
3.5
3
2.5 Series1
2
1.5
1
0.5
0
Through Holding Thorugh
education regular induction
and workshops training
training
4.2.4 Educating the public about money laundering
The research also assisted in finding out possible ways of educating the public about money
laundering laws. The options on the ways of educating employees were given on the
questionnaire and through the interviews, new ideas such as the use of television and radio were
proposed. From the research, 35% of those who participated in the research opted for the use of
fliers as a way of educating the public. The other 26% had the idea of publishing in the
newspapers, 17% opted for the use of workshops where the information will be conveyed face-
to-face to the public. The use of television and radio had 22% in favor of it from the
respondents. The results are presented in a graphical structure below.
Figure 4.4

Suggested ways of educating the

public
Use of fliers
22% Holding regular

35%
workshops
Publishing in the
26% news paper
17%
Use of television
and radio
4.2.5 The extent perceived of preventing money laundering
From the research carried, it is showing that the crime can, to a larger extent be prevented. The
management at ZABG who were contacted during the time of the research, 71% showed that the
crime can be prevented. The remaining 29% had the perception that to a lesser extent, money
laundering can be prevented. These are the views of the managers at ZABG given the
confidence that they have with there subordinates. The findings are illustrated in figure 4.2
below:
Figure 4.5

Extent of preventing the crime
29%
lesser extent
greater extent
71%
Some of the managers at ZABG doubted the ability of their employees in detecting and
preventing money laundering. They also pointed out the issues like politics, corruption and the
ineffectiveness of the Bank Use and Suppression of Money Laundering Act as posing greater
challenges to their subordinates.
4.2.6 Challenges in an attempt to combat money laundering Zimbabwe
The research carried out at ZABG helped to identify some of the challenges that are being faced
in an attempt to prevent money laundering as a crime in Zimbabwe. The identified challenges
are as follows:
The research showed that some of the senior management within the banking sector are involved
in committing the crime which makes it difficult for the juniors to prevent it. An employee will
be in a dilemma of choosing whether to loose a job or just pass the transaction. In such cases it

causes complications for the employees to prevent the crime since instructions comes from the
superior.
The research has also shown that the launderers in Zimbabwe are using fake identity cards. ‘The
fake national identity cards are being printed from the registrar’s office. These are then used to
open numerous accounts with different banks using different names for the same individual
hence making it difficult to trace how the funds are being moved around the system,’ said one
ZABG employee in an interview. It is also difficult for a bank employee to doubt an ID from the
registrar where he or she does not have experience with. This will reduce the credibility of them
being capable of preventing the crime.
It is also noted that the willingness of reporting of suspicious transactions is turned away buy the
low level of deposits in the financial sector. This will result in the employees not reporting the
transactions so that they will not shun away huge deposit customers thus money laundering is
going on unstopped. Researches from ZABG showed that departments in the banking sector
compare their figures of revenue generation each month end and this will result in departments
that are generating huge profits from criminal activities not stopping them as this will affect their
revenue generation negatively. This also raises the issue of conflict of interest which is another
major challenge in an attempt to curb the crime.
Know Your Customer (KYC) principle is difficult to practice. This is because most people are
not property owners which make it difficult to have adequate and relevant information which
denote their residential premises. The information provided is valid for a short period of time as
the customers are of no fixed abode due to the fact that they will be renting. This is also affected
by transfers that are done to them by their respective employers from one area to another, these

customers will not update the bank of these changes and this makes it difficult to locate them in
the event of any matters arising.
In addition, the research also showed that some of the employees in the financial sector are
committing the crime due to low salaries. This is the greatest challenge as money will never be
adequate to any individual. The organization is also a profit making institution hence there is
need to strike a balance between costs incurred and profits generated. This point can also be
linked to the greater need for cash. Employees will keep on finding means to compensate
themselves to meet their requirements at the expense of the organization.
Moreso, respondents from the study indicated that the crime is being committed due to relaxed
policies within the institution. This has found the employees making use of the loop-holes that
they identify within the system.
On the other hand, corruption is an extended arm which perpetuates money laundering in
Zimbabwe. For instance police officers and employees’ negligence to report any suspicious
transactions after being bribed leads to high cases of crimes in money laundering since little or
no cases will be reported. Moreover, corruption has also risen from printing of fake IDs which
are being used by the criminals. This is also one of the major challenges and the two (money
laundering and corruption) move together.
It is also identified that some of the Zimbabwean citizens are illiterate. This means that they can
be cheated by the launderers who take advantage of their status.
4.2.7 Techniques used to launder money in Zimbabwe
The use of ghost accounts is one of the techniques used to launder money in Zimbabwe. These

accounts do not have identifiable holders but they exist. These have been facilitated by the
printing of fake identity cards. The account holders are difficult to arrest as the identity cards
will not provide information that will lead to the arrests of the culprit.
The respondents also indicated that some of the money launderers are doing it in the form of
helping the less privileged. This can be in the form of building charity homes such that they can
not raise any suspicion from the crowd.
Buying and selling of soccer players was also identified as the way of laundering money. This is
also in line with the formation of numerous teams. The formation of Highway team which was
based in Mutare was also identified as an example of money laundering by some individuals who
had gained from illegal diamond mining at Chiyadzwa.
Nominal partnerships are also suggested to be used for money laundering by the culprits. The
sources for money will not be doubted as partnerships are formed to raise more capital, but in
this case they will be used to launder money as they know that suspicion will not arise from the
employees in the financial sector.
4.2.8 Chapter summary
The chapter presented the findings of the research in various forms which included pie charts,
bar-graphs and line graphs. The reasons why employees in the banking sector are involved in
money laundering, the challenges that they face as well as ways of educating employees and the
public about the crime are also clearly laid down. Also identified during the research are the
ways in which money is being laundered in Zimbabwe and a typical example is the use of ghost

accounts. The data was analysed using the chi-square distribution.
CHAPTER 5

SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
This chapter is a presentation of the summary of the chapters, research conclusions as well as
recommendations to the research findings.
5.1 Summary
This research study sought to find the solutions to ultimately prevent money laundering in the
banking sector in Zimbabwe. The researcher used descriptive study method to gather data as the
research design is intended to portray an accurate profile of events or situations. The research
study was to a lesser extent affected by the issue of forced annual leaves as some of the
employees were not at work and the few who where at work were working under pressure.
Some of the employees were afraid that the information will be used for other purposes other
than academic purposes and some were of the opinion that they will be regarded as being
ignorant. This made them provide incomplete information. However, the researcher assured the
non-managerial staff that their contributions would be treated with utmost confidentiality and
would not be used against them by informing the management about their status and publishing
it to the public. From the research, it is noted that, to a greater extent, money laundering can be
prevented in the banking sector in Zimbabwe as perceived by the managerial staff.
5.2 Research conclusions

It has been noted from the research that 71% of the managerial employees at Zimbabwe Allied
Banking Group has the view that money laundering as crime in the banking sector can be
ultimately prevented. This is a well above an average of 50% to the positive side of the story.
This is attributed to the level of confidence that they have in their employees despite the
challenges.
It has been clearly pointed out that employee motivation has an influence to the level of
employee motivation. The analysis has proved that the two have got relationship. Indicated is
that the highest numbers of employees with moderate to low level of motivation are the ones
much involved into committing the crime.
The findings of the research also show that there is a relationship between corporate governance
and money laundering in the banking sector. This is derived from the analysis that was made in
chapter of this paper. Weaker governance promotes money laundering as compared to a strong
or stiff one.
Also noted from the research is that most of the managerial employees at ZABG preferred the
use of education and training as the best method of educating their subordinates about money
laundering prevention and detection.
The major cause for money laundering that was excavated from the research is that there is much

need for cash. This has been noted by both managerial and non-managerial employees at
Zimbabwe Allied Banking Group. Action has to be taken to solve or reduce the hunger for cash
from the employees.
5.3 Recommendations
Motivation of employees
The research has shown that there is every need to motivate the employees in the road to detect
and prevent money laundering. Chapter four has shown that the two, money laundering and
employee level of motivation move side by side. Employees with low level of motivation are
not in a position to prevent the crime, they might be involved or not willing to report any
suspicious transactions. To place emphasis on motivation, another researcher noted the need of
motivation that is Antony Whitehouse (2003). The researcher pointed out that the Bank of
England, or the Financial Services Authority (FSA) after 1998, was a failure to combat money
laundering. This may have been due in part to a lack of motivation by government
There is need for education and training to employees
One of the aspects noted during the course of the research was that the employees lacked
confidence in themselves as being capable of detecting and preventing money laundering. This
was observed from the way they answered the questionnaires which were partly completed.
They also lacked confidence as they attempt to answer the questions during the interviews. The
most preferred way of educating the employees is education and training. The other option is

thorough induction training. It is assumed that new employees in the field are not aware of the
crime and hence are prone to promoting it if they do not go for training. According to B
Shanmugam and others (2003), the combating of money laundering in Malaysia was made
difficult by the staff that was not trained (refer to empirical evidence of failure cases in chapter
two).
Close monitoring at the registrar's office
Noted is also the existence of ghost accounts, this is being facilitated by the registrar's office
where individuals are being involved in corrupt activities of printing fake national identity cards
for criminals. Proper monitoring should be put in place within that office such that the work will
not be tough for the prospective detectors and preventors of the crime.
Tightening of the policies within the institutions
It was identified during the analysis of the data in chapter four that there is a relationship
between corporate governance and committing of the crime. To this extent, the corporate
governance of the firms should not be left relaxed as the prospective offenders will take
advantage of the situation. There is every need to put in place tight and effective policies. Close
monitoring of accounts is also a basic requirement to curb the problem.
Establish a basic salary level within the industry

Given that the research showed in most instances that the crime is being committed due the need
for cash, a basic salary level should be established within the industry. Having the different
institutions within the same industry paying salaries with a greater margin to employees in the
same level will lour the others to be involved in the crime because they will feel underpaid, thus
they will resort to a way of trying to cover up and the result is committing the crime.
Know Your Customer (KYC)
This is one of the major challenges in attempt to prevent the crime. The researcher suggests that
account holders should provide information about their work information and the employers
should obliged to inform the bank in the event of termination of the contract or changes that
might affect the extent to which the individual can be located.
Having external auditors coming in
It was also noted during the research that the most senior personnel in the organizations are also
involved in committing the crime. This will make it difficult for a junior employee not to
carryout the transaction and will not be in position to report the case because of the need to
maintain his or her job. To this extent, there is need to bring in external auditors on a regular
basis though it is an expensive session.

REFERENCES
Araujo R. A (2008); Assessing the efficiency of the anti-money laundering regulation: an
incentive-based approach, Journal of Money Laundering Control, Volume: 11, Number: 1, pp:
67-75, Emerald Group Publishing Limited
Bala S, Mahendhiran N and Sugathi R. (2003); Money laundering in Malaysia, journal of money
laundering, Vol 6, No 4, pp 373-378, Henry Stewart Publications

Eastern and Southern Africa Anti-Money laundering, Report on cash courier-based money
laundering (ESAAMLG), 18 August 2008, Mombasa Kenya
INCSR 2006 Volume II, Money Laundering and Financial Crimes
Johnston. R. B and Carrington I (2006); Protecting the financial system from abuse, Challenges
to banks in implementing AML/CFT standards, Journal of Money Laundering Control, Vol. 9,
No. 1, pp. 48-61, Emerald Group Publishing Limited
Mackenzie M (2004); Money Laundering; What will Criminal Elements think of Next?, Journal
of Money Laundering Control, Vol 8, No 2, 2004, pp: 122 – 125, Henry Stewart Publications.
Ma Yu-Feng (2004); Anti-Money Laundering activities of Financial Institutions in Taiwan,
journal of money laundering control, Vol 8, No 2, pp; 178 – 185, Henry Stewart Publications.
Ping H (2010); A typological study on money laundering, Journal of Money Laundering Control
Vol13, No1, pp 15-32, Emerald Group Publishing Limited.
Ping He (2006); Lawyers, notaries, accountants and money laundering, Journal of Money
Laundering Control, Vol 9, No 1, pp 62-70, Emerald Group Publishing Limited.

Ping He (2004); Banking Secrecy and Money Laundering, Journal of Money Laundering
Control, Vol 7, No 4, pp: 376-382, Henry Stewart Publications
Ping H (2004); The new weapon for combating money laundering in the EU, Journal of Money
Laundering Control, Vol 8, No 2, pp115-121, Henry Stewart Publications.
Richard Alexander (2004); The 2003 money laundering regulations, Journal of Money
Laundering Control, Vol 8, No 1, pp 75-94, Henry Stewart Publications
Salak. M and Trifin J. R (2003); The Anti-Money Laundering in the Republic of Nauru, Journal
of Money Laundering Control, Vol 7, No 1, 2003, pp 75 – 83, Henry Stewart Publications.
Samah Al Agha (2007); Money laundering from Islamic perspective, Journal of Money
Laundering Control, Vol 10, No 4, pp 406-411, Emerald Group Publishing Limited.
Schneider S (2006); Testing the limits of solicitor-client privilege, Lawyers, money laundering,
and suspicious transaction reporting, Journal of Money Laundering Control, Vol 9, No 1, pp 27-
47, Emerald Group Publishing Limited.
Toth M and Istvan L Gal (2004), The Fight against Money laundering in Hungray, Journal of
Money Laundering Control, Vol 8, No 2, pp 186-192, Henry Stewart Publications.

Van der Zahn Mitch, et al (2007); The anti-money laundering activities of the central banks of
Australia and Ukraine, Journal of Money Laundering Control, Vol. 10 No. 1, pp. 116-133,
Emerald Group Publishing Limited.
Whitehouse A (2003); A brave new world: The impact of domestic and international regulation
on money laundering prevention in the UK, Journal of Financial Regulation and Compliance,
Vol. 11, No. 2, pp. 138–145, Henry Stewart Publications.
WSBI experience and proposals to FATF, Anti Money Laundering And Combat Financing
Terrorism Rules And The Challenge Of Financial Inclusion, DOC 0565/09 September 2009
Tim Hindle (1999), The Economist book, Pocket Finance, Economist Newspapers Ltd, London
http://www.laundryman.u-net.com/ page2-wisml.html 15/02/10 1950hrs
http://allafrica.com
http://en.wikipedia.org/wiki/money_laundering 15/02/10 2000hrs
http://www.issafrica.org/pgcontent.php?UID
http://www.datanomic.com/solutions/solutions-pep-screening

http://www.blog.consected.com/2010/02/anti-money-laundering-or-discrimination.html
APPENDICES
Appendix A
Research questions for managers
I am student at Midlands State University under the department of Business Management. I am
carrying out a research on finding out the solution to prevent money laundering in Zimbabwe.
Money laundering or laundering the proceeds of a serious offence means any act, scheme,
arrangement, device, deception or artifice whatsoever by which the true origin of the proceeds
of any serious offence is sought to be hidden or disguised..
May you please help this study by attempting the following questions?
NB The information provided is private and confidential.

Where there are options, indicate with a tick
1. In which department or division are you?
Retail banking division Stock brokers Corporate banking
To what extent do you think that money laundering can be ultimately prevented?
Greater extent Lesser extent
Given the different lvels of motivation. Which level do you think your employees are and why
would they be involved in commiting the crime. Tick the box that matches your view.
Level of motivation
Reason for High Modest low
committing the
crime
For fun
Need for cash
Ignorance
With reference to the corporate governance of your organization, how do you see your
employees in preventing money laundering? Tick the box that matches your view.
State of corporate Willing Unwilling
governance
Strong
Moderate

Weak
How can your employees be in a position to prevent money laundering?
Through thorough induction training
Holding regular workshops
Through education and training
What challenges to you see in an attempt to curb the crime?
……………………………………………………………………………………………………
……………………………………………………………………………………………………
……………………………………………………………………………………
Which money laundering techniques do you think are the most hidden?
……………………………………………………………………………………………………
……………………………………………………………………………………………………
……………………………………………………………………………………
THANK YOU

Appendix B
Research question for non-managerial employees
I am student at Midlands State University under the department of Business Management. I am
carrying out a research on finding out the solution to prevent money laundering in Zimbabwe.
Money laundering or laundering the proceeds of a serious offence means any act, scheme,
arrangement, device, deception or artifice whatsoever by which the true origin of the proceeds
of any serious offence is sought to be hidden or disguised..
May you please help this study by attempting the following questions?
NB The information provided is private and confidential.
Where there are options, indicate with a tick
1. In which department or division are you?
Retail banking division Stock brokers Corporate banking
2 Given the different lvels of motivation. Which level are you and why do think you would be
involed in money laundering. Tick thebox that matches your view.

Level of motivation
Reason for High Modest low
committing the
crime
For fun
Need for cash
Ignorance
With reference to the corporate governance of your organization, how do you match it with your
willingness to prevent money laundering? Tick the box that matches your view.
State of corporate Willing Unwilling
governance
Strong
Moderate
Weak
4. How can the public be educated about money laundering laws?
Use of fliers
Holding workshops regularly
Publishing in the news papers

5. Do you think see any challenges in preventing money laundering?
More often Not at all
What challenges to you see in an attempt to prevent the crime?
……………………………………………………………………………………………………
……………………………………………………………………………………………………
……………………………………………………………………………………
Which techniques for money laundering do you think are the most used?
……………………………………………………………………………………………………
……………………………………………………………………………………………………
……………………………………………………………………………………
THANK YOU
Appendix C
Interview Schedule

Non-managerial employees
Do you think you are able to detect and prevent money laundering?
Why do you think the crime is being committed in relation to your level of motivation?
Which methods of money laundering do you think are the used?
What challenges are you facing in detecting and preventing money laundering?
How can the public be made aware of the money laundering laws.
Managerial employees
Do you think money laundering can be completely resolved?
Why do you think the crime is being committed in relation to your level of motivation?
How do you match your corporate governance and employee willingness to participate in
curbing the crime?
Which methods of money laundering do you think are the used?
What challenges are you facing in detecting and preventing money laundering?

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The solutions to money laundering as a crime in the banking sector in Zimbabwe

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Giving reference to the Ministry of State Enterprises, Anti-Corruption & Anti-Monopolies

Tafadzwa Murungu, May 2010 MSU R06405048 1

proceeds of their criminal activities. If undertaken successfully, it allows the criminals to

By its nature money laundering is a hidden activity perpetuated in secrecy.

(Zimbabwe), Part 1 section (2) A reference in this Act:

any serious offence is sought to be hidden or disguised.

from a legitimate source. In US law it is the practice of engaging in financial transactions to

Tafadzwa Murungu, May 2010 MSU R06405048 2

the proceeds of a crime or obscure the beneficial ownership of said property.

(http://www.laundryman.u-net.com.page2-wisml.html 15/02/10 1950hrs).

underground economy (http://en.wikipedia.org/wiki/money_laundering 15/02/10 2000hrs).

moved around the world is secret money.

This form of money is believed to be

clean places like financial institutions.

Tafadzwa Murungu, May 2010 MSU R06405048 3

other related financial crimes.

1.2 Background of the study

when entering the economic stream.

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the source and ownership of funds.

of defrauding clients of more than US$3 000.

According to the Zimbabwe Independent of Thursday, 18 February 2010, in January 2010:

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1.3 Statement of the problem

employees are willing and able to prevent money laundering.

1.4 Statement of hypothesis

This study seeks to test the following claim;

There is an ultimate way to resolve money laundering in Zimbabwe.

1.5 Objectives of the study

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To establish the relationship between corporate governance and employees’ willingness to

prevent money laundering.

committing the crime.

To find out on the major challenges in preventing money laundering.

To expose the most used channels and methods of laundering money.

1.6 Significance of the study

The benefits will include the following:

ZABG alone but the whole industry.

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whether the employees are in a position to report any suspicious transactions.

place at the right time.

will be collected in all forms including income tax and duties.

1.7 Delimitations of the study

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Gweru branches, Corporate Banking and Stock Brokers.

and is a scarce resource.

1.9 Research assumptions

All the research questionnaires will be returned to the researcher.

All questionnaires will be answered in honesty.

The conducted population will be willing to participate.

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faced in solving money and targeted channels for laundering money.

2.1 Defining money laundering

In its definition, the Ministry of State Enterprises, Anti-Corruption & Anti-Monopolies

proceeds of their criminal activities. If undertaken successfully, it allows the criminals to

By its nature money laundering is a hidden activity perpetuated in secrecy.

Tafadzwa Murungu, May 2010 MSU R06405048 10