US embassy cable - 03MAPUTO1755

UNCLAS SECTION 01 OF 02 MAPUTO 001755 
 
SIPDIS 
STATE FOR INL, AF/S, AF/RSA 
JUSTICE FOR OIA, AFMLS 
TREASURY FOR FINCEN 
E.O. 12958: N/A 
TAGS: EFIN, KCRM, PTER, SNAR, PGOV, MZ, KCOR 
SUBJECT: MOZAMBIQUE INCSR PART II SUBMISSION - MONEY 
LAUNDERING AND FINANCIAL CRIMES 
 
REF: A) STATE 324347 
 
B) STATE 328024 
 
1. Per ref A, below is post's submission for 2003-2004 
INCSR, Part II: 
Mozambique is not a regional financial center. Money 
laundering in Mozambique is related to bank fraud and 
corruption. Lax oversight and weak banking regulations make 
Mozambique's financial institutions vulnerable to money 
laundering. The proceeds of stolen vehicles sales, narcotics- 
trafficking, prostitution, trafficking in persons, arms 
trafficking, and contraband smuggling are laundered through 
Mozambique's financial institutions. Mozambique's non-bank 
financial sector, primarily comprised of exchange houses, is 
considered highly susceptible to money laundering. 
IN OCTOBER 2003, A MAJOR MAPUTO EXCHANGE HOUSE, UNICAMBIOS, 
WAS ORDERED CLOSED BY THE FINANCE MINISTER AT THE 
RECOMMENDATION OF THE CENTRAL BANK OF MOZAMBIQUE. THE 
CONVICTION OF SIX DEFENDANTS ON THE CARDOSO MURDER TRAIL IN 
JANUARY 2003 AND THE OPENING OF THE RELATED BCM BANK FRAUD 
TRAIL IN DECEMBER 2003 HAVE GREATLY INCREASED PUBLIC 
AWARENESS OF CORRUPTION AND FINANCIAL CRIMES. THE MURDER OF 
JOURNALIST CARLOS CARDOSO IN 2000 WAS DUE TO HIS 
INVESTIGATIONS INTO THE 1996 BCM BANK FRAUD AND THE 
DEFENDANTS IN BOTH TRAILS HAVE IMPLICATED BANKING OFFICIALS 
IN ILLEGAL ACTIVITIES INVOLVING LARGE AMOUNT OF CASH. 
Mozambique's National Assembly passed an anti-money 
laundering law in December 2001, which was ratified by the 
Council of Ministers on February 5, 2002. As of the end of 
2003, however, implementing regulations had not been 
promulgated. The law extends the crime of money laundering 
to encompass predicate offenses beyond narcotics-trafficking 
to most other serious crimes. The law also allows for asset 
seizure and forfeiture and requires financial institutions 
to verify the identity of their customers, keep transaction 
records for at least 15 years, and report suspicious 
transactions. The law protects employees of financial 
institutions who cooperate with money laundering 
investigations and exempts such cooperation from bank and 
professional secrecy rules. The law also contains "banker 
negligence" provisions, which hold individual bankers 
responsible for money laundering. 
Bankers have the right to refuse service to anyone who 
refuses to identify the beneficiary of an account. Judicial 
authorities are given the right to request account 
information from financial institutions and to gain access 
to computer records from banks, individuals, and companies 
that are suspicious. Judicial authorities also have the 
right to authorize the tapping of phone conversations as 
part of financial investigations. 
IN OCTOBER 2003, THE NATIONAL ASSEMBLY PASSED THE ANTI- 
CORRUPTION LAW. THE LEGISLATION AIMS TO FIGHT CORRUPTION IN 
GOVERNMENT OFFICES, AND ALSO IN HOSPITALS, SCHOOLS, AND THE 
POLICE. THE LAW PROVIDES MORE PROTECTION FOR WHISTLE-BLOWERS 
AND MODIFIES A KEY PROVISION ON REQUESTS FOR PERMITS. THE 
LAW COVERS OFFICIALS WORKING FOR GOVERNMENT ENTITIES, 
PUBLICLY-OWNED COMPANIES, AND PRIVATE COMPANIES WITH STATE 
CONTRACTS OR THE STATE AS THE MAJORITY SHAREHOLDER. THE 
MAXIMUM SENTENCE FOR SOLICITING BRIBES IS NOW RAISED TO 
EIGHT YEARS. AUDITORS WILL BE OBLIGED TO REPORT SIGNS OF 
CORRUPT PRACTICES TO THE ATTORNEY GENERAL'S ANTI-CORRUPTION 
UNIT, OR FACE A FINE OF UP TO $84,000. 
The government's inter-ministerial working group dealing 
with money laundering, terrorist finance, and other 
financial crimes was reorganized in the last quarter of 
2003. Its leadership has been shifted from the Interior 
Ministry to the Central Bank, and also includes 
participation by the Ministries of Finance, Foreign Affairs, 
and Justice. 
Customs regulations require those entering or leaving the 
country with foreign currency or negotiable instruments in 
amounts greater than $5,000 to file a report with Customs. 
Taking local currency out of the country is prohibited. 
The Government of Mozambique (GOM) has the authority to 
freeze and seize assets related to terrorist financing. The 
GOM has circulated the list of terrorist individuals and 
entities designated by the UN 1267 Sanctions Committee, as 
well as the list of Specially Designated Global Terrorists 
designated by the United States pursuant to E.O. 13224. 
Mozambique is a member of the Eastern and Southern Africa 
Anti-Money Laundering Group, a FATF-style regional body. 
Mozambique ratified the UN International Convention for the 
Suppression of the Financing of Terrorism in January 2003. 
Mozambique is a party to the 1988 UN Drug Convention. It has 
signed, but not yet ratified, the UN Convention against 
Transnational Organized Crime, which entered into force in 
September 2003. 
Mozambique should implement its anti-money laundering law, 
establish a Financial Intelligence Unit, and criminalize 
terrorist financing. 
HANKINS