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The Securities and Exchange Commission of Zimbabwe (SECZ) has issued a directive requiring virtual asset service providers (VASP) to conduct risk assessments on and before launching new products, business practices, technologies or delivery mechanisms.
The directive is in line with Financial Action Task Force (FATF) Recommendation 15 on new technologies issued in response to heightened Money Laundering/Terrorist Financing (ML/TF) risks related to virtual assets (like Bitcoin).
A virtual asset (VA) is a representation of currency in some environment or situation and in this context, currency can be defined as either a medium of exchange or a property with value in a specific environment, such as a video or financial trading simulation exercise. SECZ said securities market intermediaries (SMIs) must undertake risk assessments on modern and new products, business practices, new or developing technologies and new delivery mechanisms.
“Regarding the money laundering or terrorism financing risk assessment should take place prior to the launch of the new products, business practices or the use of new or developing technologies,” SECZ said.
Virtual Asset Service Providers (VASPs) and Virtual Assets (VA) are regulated for Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation (AML/CFT/PF) purposes, and subject to effective systems for monitoring.
The securities commission said in light of the above requirements, whenever a new product or technology is introduced in the Securities sector, the ML/TF risk assessment should be conducted, and the report shared with the Commission. As such, the Securities and Exchange
“The Securities and Exchange Commission of Zimbabwe hereby requests compliance with this requirement with immediate effect.
Those who already launched or embraced virtual assets and did not do risk assessment are required to conduct them and file the reports with SECZ,” SECZ said in the recent directive. In March, the Financial Action Task Force (FATF) updated pre-existing guidance on its risk-based approach to virtual assets (VAs) and virtual asset service providers (VASPs). The draft updated guidance revises guidance originally released June 2019.
Under the original guidance, FATF members agreed to regulate and supervise virtual asset financial activities and related service providers and place anti-money laundering and countering the financing of terrorism obligations on VAs and VASPs.
The revisions “aim to maintain a level playing field for VASPs, based on the financial services they provide in line with existing standards applicable to financial institutions and other AML/CF-obliged entities, as well as minimising the opportunity for regulatory arbitrage between sectors and countries.”
FATF has indicated it intends to consult private sector stakeholders before finalising the revisions, and is separately considering implementing revised FATF standards on VAs and VASPs as well as whether further updates are necessary.
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