In a rather bizzare case Former Netone Chief Executive Officer Reward Kangai’s son has been denied education in Sweden following his bank’s non-compliance to releasing funds for his schooling.
In his quest to live on, former Netone boss Mr Reward Kangai has requested for clearance for international payments so that he could fund his Son’s education.
This certainly brings public’s attention to a relatively hidden group of people that financial institutions must keep their eyes on – the politically exposed person (PEP).
Are banks and credit unions required to monitor PEPs? The answer is “Yes” or “No,” depending on whether the PEP is foreign or domestic. The U.S. Patriot Act of 2001 requires monitoring of foreign PEPs.
There isn’t a global definition for a PEP, but the Financial Action Task Force (FATF) has issued guidelines in which the term was defined. Specific country legislation such as the USA Patriot Act or the European Union Directive use similar definitions generally.
A current or former senior official in the executive, legislative, administrative, military, or judicial branch of a foreign government (elected or not);
a senior official of a major foreign political party;
a senior executive of a foreign government owned commercial enterprise, being a corporation, business or other entity formed by or for the benefit of any such individual;
an immediate family member of such individual; meaning spouse, parents, siblings, children, and spouse’s parents or siblings; and in this case Reward Kangai’s son may qualify in this category but then not qualify to be denied access to education and his father’s clean money for his education.
Also any individual publicly known (or actually known by the relevant financial institution) to be a close personal or professional associate comes in play.Differing definitions appear in laws, regulations and guidance notes internationally. Aside from the differing definitions, there is a growing consensus among banks, governments and regulators that PEPs present heightened money-laundering risks. The bank which include performing enhanced due diligence monitoring perhaps saw Kangai’s movement of money from one account to another as a possible act of “structuring” and filed a Suspicious Activity Report (SAR).
“We need to reassure institutions they need to take a risk-based approach and identify their customers and level of due diligence they need on those customers,” said Sepideh Behram commenting on a similar case back in 2008, when he was Senior Compliance Counsel at the American Bankers Association. “Certainly if you have a high political official you may want to take a little more time to look and scrutinize more carefully than you would your average customer.”
Reward Kangai is the former Chief Executive Officer of NetOne Zimbabwe. He was appointed Managing Director at the founding of NetOne when the former Posts and Telecommunications Corporation of Zimbabwe (PTC) was disbanded to create TelOne, NetOne and Zimpost. In March 2016, Kangai was suspended for three months from his role as CEO following allegations of corruption at the company.
The engineer former telecomms boss would not divulge which bank nevertheless investigations by TechnoMag led to first capital as some officials confirmed knowledge of the transactions.