Remember back in late October when BancABC’s Prepaid Visa was down for everyone and for days on end? The outage that stranded everyone who used the card domestically and abroad? Well, it looks like the authorities have found the person who was behind it. According to a report by ZimLive, Malvin Kudakwashe Serima appeared in court yesterday in connection with a money-laundering scheme that amounted to US$120,000.
This suspicious transaction was reportedly the reason why BancABC had to shut down its service for days and it wasn’t just in Zimbabwe but in other territories too.
According to the National Prosecuting Authority, Serima opened two Visa accounts which he then subsequently deposited US$10,000 in the first one and US$110,000 in the second. Serima then allegedly passed the pin numbers to two accomplices Talent Kamupupu and Paminous Mutengwa. The two, who are apparently in the Ivory Coast, went on to withdraw US$8,400 from the first card and US$9,530 from the second from ATMs.
“Both transactions were ATM cash withdrawals, a trend that is synonymous with money laundering,”
Thomas Chanakira, Prosecutor (via ZimLive)
This string of transactions was flagged by BancABC’s Risk Department which relayed the situation to Visa and the Reserve Bank of Zimbabwe. BancABC reportedly found 11 cards that were being used for suspicious transactions all allegedly connected to the same group of its customers.
The remainder of the deposited amount has been frozen by Visa International and BancABC Zimbabwe’s CEO Dr Lance Mambondiani said the following
“We first needed to establish how far the exposure goes because we have banks in six countries all sitting on the same VISA platform. We’re quietly satisfied that we have identified the weakness in the system and are hopeful that, working with VISA International, we can restore the cash withdrawal service in the next few weeks,”
ZimLive
Hopefully this won’t be an attack on less strict KYC requirements for accounts
How Serima was able to open two prepaid Visa cards and didn’t raise suspicion on BancABC’s internal systems is very strange. Moreover, how these large deposits were not immediately flagged or monitored is also equally confusing. Additionally, the chain of events to the two accomplices getting to withdraw the funds over seven and a half thousand kilometres away is a mystery that was not revealed in the report.
Something of great concern here is how the nature of BancABC’s KYC requirements for its prepaid Visa was spoken of by the prosecutor in the case.
“Thomas Chanakira, for the prosecution, said Serima opened two VISA card accounts with the bank which have a lower threshold for know-your-customer rules because they are pre-paid”
ZimLive
The card is a fantastic facility for those who want to access international services, the fact that the barrier to entry is low is great because it allows more Zimbabweans to participate in international commerce.
Furthermore, ZIMRA already collects VAT and other taxes on the transactions these cards perform like Netflix, Spotify, Facebook Ads payments etc, so it’s a win for all involved.
The problem, at least in my opinion, is BancABC’s internal systems which Dr Mambondiani admitted to and said that they would be working on. Things like multiple accounts should be flagged early on and greater scrutiny should be put on that not necessarily on the barrier to entry being low. Conventional Nostro accounts are not completely immune from fraud and other illicit activity, so the solution should be tightening up the back end, not the way customers can access prepaid USD cards.
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13 comments
I don’t see the money laundering part. Making large ATM withdrawals while synonymous with money laundering is not itself money laundering. I think the case rests on how he got that large sum of money.
Money laundering iripapi, I can’t see it
I do not see the crime in this. Unless they are probing the source of the funds.
Go & search the definition of money laundering, also read to understand the context “Both transactions were ATM cash withdrawals, a trend that is synonymous with money laundering,”. Watch Ozark…. You could get more understanding of how money laundering works
What are you saying? Just state your point. Don’t tell what to watch or read.
Well a simple withdrawal does not constitute ML. Research the concept of free funds. The second deposit however should not have been allowed on a low kyc account without being flagged by the bank. Its a suspicious transaction at best
They sent the PIN numbers, so the folks withdrew money without the cards? 😕
Nonetheless, I think the actual events are probably reversed. If BankABC had flagged the cards, they would have just suspended them, till proof of source of income and without the rest of the BankABC clientele being shut out.
I posit that Visa is the one that flagged the transactions, whilst risk department was sleeping. They then failed to satisfy Visas queries and prove their due diligence as the bank and subsequently got shut out.
Compliance should have systems that pick these up not risk
Compliance should have systems that pick these up not risk
Exactly. Honestly suspending the cash withdrawal to all customers was not right. The worst part is they were not information customers of the unavailabilty of the service.
“BancABC reportedly found 11 cards that were being used for suspicious transactions all allegedly connected to the same group of its customers.”
Same group of its customers?? Was it card cloning?? Nyaya yako ndeyama kwai kwai
we are now stranded with our visa cards that we obtained so that we can make online payments and keep our hard earned usd because of this yet they are still charging us every month. pliz tell us when this will last so that we can look elsewhere and move our funds
Where is money laundering here ?