Anti-money laundering and counter-terrorist financing measures Mozambique Mutual Evaluation Report June 2021 │ 2 The Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) was officially established in 1999 in Arusha, Tanzania through a Memorandum of Understanding (MOU). As at the date of this Report, ESAAMLG membership comprises of 18 countries and also includes a number of regional and international observers such as AUSTRAC, COMESA, Commonwealth Secretariat, East African Community, Egmont Group of Financial Intelligence Units, FATF, IMF, SADC, United Kingdom, United Nations, UNODC, United States of America, World Bank and World Customs Organization. ESAAMLG’s members and observers are committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism and proliferation, in particular the FATF Recommendations. For more information about the ESAAMLG, please visit the website: www.esaamlg.org This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. This assessment was conducted under the responsibility of the ESAAMLG, adopted by the Council of Ministers in June 2021. Citing reference: ESAAMLG (2021), Anti-money laundering and counter-terrorist financing measures - Mozambique, Second Round Mutual Evaluation Report, ESAAMLG, Dar es Salaam http://www.esaamlg.org/reports/me.php © 2021 ESAAMLG. All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the ESAAMLG Secretariat, P.O.Box 9923, Dar es Salaam-United Republic of Tanzania Tel: +255 22 2667895/7679 Fax No: +255 22 2668745 Email: [email protected] Second Round MER of Mozambique-May 2021 ESAAMLG │ 3 MUTUAL EVALUATION REPORT of Republic of Mozambique Second Round MER of Mozambique-May 2021 ESAAMLG │ 4 Table of Contents Glossary of Acronyms ........................................................................................................................ 9 Executive Summary ............................................................................................................................ 11 Key Findings ...................................................................................................................................... 11 Risks and General Situation ............................................................................................................... 12 Overall Level of Compliance and Effectiveness ................................................................................ 13 Priority Actions .................................................................................................................................. 18 Effectiveness & Technical Compliance Ratings ................................................................................ 20 MUTUAL EVALUATION REPORT ................................................................................................ 21 Preface ............................................................................................................................................... 21 1. ML/TF RISKS AND CONTEXT ................................................................................................... 23 1.1. ML/TF Risks and Scoping of Higher Risk Issues....................................................................... 24 1.1.1. Overview of ML/TF Risks ................................................................................................... 24 1.1.2. Country’s Risk Assessment & Scoping of Higher Risk Issues ............................................ 25 1.2. Materiality ................................................................................................................................... 27 1.3. Structural Elements ..................................................................................................................... 27 1.4. Background and Other Contextual Factors ................................................................................. 28 1.4.1. AML/CFT strategy ............................................................................................................... 29 1.4.2. Legal & institutional framework .......................................................................................... 29 1.4.3. Financial sector and DNFBPs .............................................................................................. 32 1.4.4. Preventive measures ............................................................................................................. 36 1.4.5. Legal persons and arrangements .......................................................................................... 37 1.4.6. Supervisory arrangements .................................................................................................... 37 1.4.7. International cooperation ...................................................................................................... 37 2. NATIONAL AML/CFT POLICIES AND COORDINATION ................................................... 39 2.1. Key Findings and Recommended Actions .................................................................................. 39 2.2. Immediate Outcome 1 (Risk, Policy and Coordination) ............................................................. 40 2.2.1. Country’s understanding of its ML/TF risks ........................................................................ 40 2.2.2. National policies to address identified ML/TF risks ............................................................ 41 2.2.3. Exemptions, enhanced and simplified measures .................................................................. 42 2.2.4. Objectives and activities of competent authorities ............................................................... 42 2.2.5. National coordination and cooperation ................................................................................ 43 2.2.6. Private sector’s awareness of risks ....................................................................................... 44 3. LEGAL SYSTEM AND OPERATIONAL ISSUES ..................................................................... 46 3.1. Key Findings and Recommended Actions .................................................................................. 46 3.2. Immediate Outcome 6 (Financial Intelligence ML/TF) .............................................................. 50 3.2.1. Use of financial intelligence and other information ............................................................. 51 3.2.2. STRs received and requested by competent authorities ....................................................... 51 3.2.3. Operational needs supported by FIU analysis and dissemination ........................................ 53 3.2.4. Cooperation and exchange of information/financial intelligence ........................................ 56 3.3. Immediate Outcome 7 (ML investigation and prosecution) ....................................................... 58 3.3.1. ML identification and investigation ..................................................................................... 58 Second Round MER of Mozambique-May 2021 ESAAMLG │ 5 3.3.2. Consistency of ML investigations and prosecutions with threats and risk profile, and national AML policies ................................................................................................................................. 62 3.3.3. Types of ML cases pursued .................................................................................................. 63 3.3.4. Effectiveness, proportionality and dissuasiveness of sanctions ........................................... 64 3.3.5. Use of alternative measures .................................................................................................. 64 3.4. Immediate Outcome 8 (Confiscation) ......................................................................................... 65 3.4.1. Confiscation of proceeds, instrumentalities and property of equivalent value as a policy objective ......................................................................................................................................... 65 3.4.2. Confiscation of proceeds from foreign and domestic predicates, and proceeds located abroad ........................................................................................................................................................ 67 3.4.3. Confiscation of falsely or undeclared cross-border transaction of currency/BNI ................ 68 3.4.4. Consistency of confiscation results with ML/TF risks and national AML/CFT policies and priorities ......................................................................................................................................... 70 4. TERRORIST FINANCING AND FINANCING OF PROLIFERATION ................................. 74 4.1. Key Findings and Recommended Actions .................................................................................. 74 4.2. Immediate Outcome 9 (TF investigation and prosecution) ........................................................ 76 4.2.1. Prosecution/conviction of types of TF activity consistent with the country’s risk-profile... 77 4.2.2. TF identification