Unexplained Wealth Orders in Zimbabwe: Money Laundering and Proceeds of Crime (Amendment Bill, 2019)

Introduction In November 2018, the legal framework for Unexplained Wealth Orders was introduced in Zimbabwe via Statutory Instrument 246 of 2018 (SI), also known as the Presidential Powers (Temporary Measures) (Amendment of Money Laundering and Proceeds of Crime Act and Exchange Control Act) Regulations, 2018. However, this SI expired on May 9, 2019, and subsequently led to the development of the Money Laundering And Proceeds Of Crime (Amendment Bill, 2019), (hereinafter referred to as the Bill). Objective of the Bill According to the Explanatory Note, the Money Laundering And Proceeds Of Crime (Amendment Bill, 2019) aims to insert Chapter 111A into the Money Laundering And Proceeds Of Crime Act, [Chapter 9:24], which is specifically focused on Unexplained Wealth Orders. The proposed amendments aim to enhance the existing legal provisions in the fight against corruption, money laundering, and terrorist financing, and to enable law enforcement officers to effectively carry out their duties. How does the Bill (law) seek to achieve its objective? The proposed amendment seeks to empower law enforcement authorities, specifically the Zimbabwe Anti-Corruption Commission (ZACC), the National Prosecuting Authority (NPA), the Commissioner-General of the Zimbabwe Republic Police (ZRP), and the Zimbabwe Revenue Authority (ZIMRA), to require individuals who possess significant wealth without any apparent lawful means of obtaining it to provide explanations. What is an Unexplained Wealth Order? The definition of an Unexplained Wealth Order (UWO) as outlined in Section 37B (3) of the Bill as read with Section 37B (5) describes it as an order that compels a respondent to provide a statement - setting out the nature and extent of his interest in the property in respect of which the order is made; and explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met); and where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order; and setting out such other information in connection with the property as may be so specified. The respondent may also be required to produce documents of a kind specified or described in the order. Therefore, an UWO can be viewed as an investigative tool. From the reading of the definition as provided for in section 37B (3) of the Bill, one can deduce that the whole purpose of the UWO is to compel a person to account for the origin of their assets/ how they obtained the property in instances where there is inconsistency between their legal income and their visible assets. The ultimate goal is to prevent criminals from acquiring or profiting from illegal activities. Shifting of burden of proof UWOs focus on the property in question rather than the person, and presume that the property was obtained through illicit means. This presumption is rebuttable and does not imply that the individual who owns the property is guilty. UWOs shift the burden of proof to the individual to explain how they acquired the assets. This reversal of burden of proof has been a subject of debate in other jurisdictions, such as the United Kingdom, due to concerns over violating the respondent's human rights. However, given the tendency for those involved in corruption, money laundering, and terrorist financing to conceal evidence of their illicit activities, I am of the opinion that the reversal of burden of proof is justified. This shift does not outweigh the effects of corruption on ordinary citizens. Who can make the application for an UWO? According to Section 37B (1) of the Bill, an enforcement authority can make an ex parte application to the High Court to obtain an unexplained wealth order (UWO) for any property if certain conditions are met. Thus, the Zimbabwe Anti-Corruption Commission (ZACC), the National Prosecuting Authority (NPA), the Commissioner-General of the Zimbabwe Republic Police (ZRP) and the Zimbabwe Revenue Authority (ZIMRA) (Section 37(A)(1) of the Bill) can approach the High Court for an UWO without giving the targeted person any notice. As mentioned above, those who engage in criminal activities especially grand corruption, are often powerful and have the means to conceal evidence and or dispose of the property in question, hence the commendable move to have the application brought through an ex-parte application (without notice to the respondent). Providing notice to the respondent can render the UWO process ineffective. Such an application must however, “specify or describe the property in respect to which the order is sought and specify the person whom the enforcement authority thinks holds the property” (section 37 (B)(2) of the Bill). Interim Freezing Order Additionally, to prevent the court from making unenforceable judgments, the Bill allows the enforcement authority to apply for an interim freezing order for any property subject to the UWO application. This application is made at the same time as the UWO application, and the court will only grant the order if it prevents the risk of future confiscation, benefit recovery, civil forfeiture, or property seizure orders from being frustrated (section 37H (2) of the Bill). Since the UWO application is made without notice to the respondent, it is assumed that the application for an interim freezing order is also made without notice. An interim freezing order, defined in section 37H (3) of the Bill, prohibits the respondent and any other person with an interest in the property from dealing with it, subject to any exclusions outlined in section 37I of the Bill. In my opinion, after reviewing this section of the Bill, I suggest that section 37I (1), which pertains to variations and discharges of interim freezing orders, should be revised to state that the High Court has the authority to modify or revoke an interim freezing order at any time. Alternatively, it may be worthwhile to consider removing subsection 4 of section 37I, as it appears to be redundant. Requirements for Court to grant the application for a UWO The next section of the Bill, which I believe has been mislabeled as section 37B instead of 37C, outlines the requirements that must be met to make an UWO application. However, to avoid confusion, I will refer to it as 37B, as it appears in the Bill. To obtain an unexplained wealth order for any property, the High Court must be convinced of the following: That there is reasonable cause to believe that the respondent holds the property and the value of the property is greater than ten thousand united Stated dollars or its equivalent in any currency (Section 37(1)(a) and (b) of the Bill). That there are reasonable grounds for suspecting that the known sources (that is, sources of income - whether arising from employment, assets otherwise) that are reasonably ascertainable from available information at the time of the making of the application for the order of the respondents lawfully obtained income (income obtained under the laws of the country from where the income arises would have been insufficient for the purposes of enabling the respondent to obtain or hold the property. That the respondent is a politically exposed person or That there are reasonably grounds for suspecting that the respondent (or a person connected with the respondent) is or has been, involved in serious crime (whether in Zimbabwe or elsewhere). It is understandable that one might question why the standards for granting UWOs are relatively low, such as "reasonable cause" or "reasonable grounds". However, it is important to reiterate that UWOs are considered to be a civil matter rather than a criminal matter. The emphasis is on the property and not the individual who owns the property. A Politically Exposed Persons (PEP) is defined in section 13 of the Principal Act, as; any person who is or has been a “public officer” as defined in section 169 of the Criminal Law Code; or any person who is or has been a manager, chief executive officer, chief financial officer, corporate secretary, member of a board of directors or holder of a similar post in any statutory corporation or State-controlled company; or any person who is or has been a senior office-bearer in a political party in any country; and shall include any immediate family member or close associate of any of the foregoing persons. It is noteworthy that there is no obligation to establish reasonable grounds for suspicion of criminality for Politically Exposed Persons (PEPs). This is a positive development, as PEPs have greater opportunities to acquire assets through illicit means, such as embezzlement and accepting bribes, owing to their proximity to power. It is also important to note that when applying for a UWO, the ownership status of the property in question is irrelevant, that is whether they are other persons who hold the property in question or not (section 37B (4)(a) of the Bill). Retrospective effect The Bill further proposes that the provisions regarding UWOs have a retrospective effect, which means that the court can grant the order even if the property in question was acquired prior to the implementation of the law, provided that all other requirements are met (section 37B (4)(b) of the Bill). I am of the view that this approach is progressive since it targets the property and not the individual, and the respondent is not questioned about any alleged criminal offense. Compliance and Non- Compliance with the requirements of an UWO Once granted, the UWO requires the respondent to comply with the imposed requirements within a specified period determined at the court's discretion (section 37B(6) of the Bill). While the Bill does not elaborate on the timeframe, it must satisfy the test of reasonableness. Non-compliance with the UWO is addressed in section 37C of the Bill, which states that failure to comply without reasonable excuse before the specified time frame expires will lead to the presumption of the property being tainted in any proceedings, unless proven otherwise. The Bill does not define "reasonable excuse," and I suggest that the legislation should include provisions to hold the respondent in contempt of court. If the respondent complies or purports to comply before the end of the response period and there is an interim freezing order in effect, an enforcement authority has sixty days from the day of compliance to determine what enforcement or investigatory proceedings, if any, should be taken in relation to the property. Criminal offense Interestingly, a person who purports to comply with the UWO but knowingly provides false or misleading information as per section 37E (1) (a-b) of the Bill is not deemed to have failed to comply with the order (as per section 37C(4)(a) of the Bill), but instead, is subject to an offence under section 37E, which carries a fine not exceeding US$65 000 or the equivalent in Zimbabwe dollars at the prevailing interbank rate of exchange or to imprisonment for a period not exceeding two years, or to both such fine and such imprisonment. This may seem severe, but I believe it is necessary to deter individuals from tampering with evidence. The fact that whatever a person says and produces as evidence to rebut an application for UWO cannot be used against that person in a criminal court should serve as an incentive for people disclosing the information required (preserves’ the right against self-incrimination). In instances, where an UWO imposes more than one requirement on the respondent, section 37C (4)(b) states that the respondent must comply or purport to comply with both the requirements so imposed, failure of which the respondent will be deemed to have failed to comply with the requirements imposed by the order. To determine whether a person is connected with another person, the Bill refers to the Income Tax Act [Chapter 23:06], and the definition of an associate as laid down in section 2A of the Income Tax Act is used to determine whether a person is connected with another. Conclusion The proposed amendments, with more clarity and public input through consultations, are a welcome development in a country where corruption has become widespread and entrenched.