The Financial Intelligence Centre (FIC) has uncovered a mineral smuggling syndicate involving approximately K1 billion, in which foreign currency was allegedly smuggled into Zambia through illicit mineral transactions. FIC Director General, Clement Kapalu, says the illegal…

The Financial Intelligence Centre (FIC) has uncovered a mineral smuggling syndicate involving approximately K1 billion, in which foreign currency was allegedly smuggled into Zambia through illicit mineral transactions.

FIC Director General, Clement Kapalu, says the illegal transactions occurred between 2022 and 2024 and involved copper, gold and gemstones which were exported without payment of the required taxes and duties.

Mr Kapalu has explained that the minerals were moved out of the country without following established customs procedures, resulting in significant revenue losses to government and threatening the integrity of the country’s financial system.

He disclosed this when he officially opened a three-day workshop on gold supply chain practices in Lusaka today.

Mr Kapalu said unregulated gold mining and trading created opportunities for criminal networks to exploit weaknesses in governance and regulatory systems to facilitate illicit financial flows.

He stated that Zambia’s overall money laundering risk had improved from medium to high, following the revised National Risk Assessment on Money Laundering, Terrorist Financing and Proliferation Financing launched in March, this year.

However, Mr Kapalu said the assessment had also identified regional extremist groups that posed a security threat and were suspected of financing some of their activities through minerals, including illegally mined gold.

He said the connection between gold trading and terrorist financing was a growing concern that required stronger oversight and collaboration among law enforcement agencies, regulators and other stakeholders.

Mr Kapalu further expressed gratitude that the Bank of Zambia had incorporated gold into the country’s international reserves and was expanding its domestic gold purchasing programme to include small-scale producers.

He said although the development presented significant economic opportunities, it also created avenues for criminal networks to exploit weaknesses in the gold supply chain.

Mr Kapalu noted that gold is particularly attractive to criminals because it was valuable, durable, easy to transport and could easily be smuggled across borders.

He stated that gold can be used as proceeds of crime, a commodity for trafficking or a means of payment for illegal activities, including the trafficking of arms, drugs and financing of conflict.

Mr Kapalu said the sharp increase in international gold prices had further heightened its attractiveness to criminal networks seeking to exploit gaps in governance and regulation.

He said as Zambia strengthened her anti-money laundering framework and prepared for the next Financial Action Task Force (FATF) mutual evaluation, institutions needed to demonstrate their capacity to identify financial crimes and effectively enforce existing laws.

Mr Kapalu expressed hope that the establishment of the Zambia Cyber Agency and the Mineral Regulation Commission would help address illicit financial transactions associated with digital platforms and strengthen regulation of the mining sector.

Speaking earlier, United Nations Office on Drugs and Crime (UNODC) Project Coordinator, Lindy Muzila, said international cooperation is critical in addressing mineral smuggling and other organised financial crimes.

Ms Muzila said Zambia’s presidency of the Asset Recovery Inter-Agency Network for Southern Africa (ARINSA) provided an opportunity to strengthen regional collaboration and facilitate cross-border investigations.

Ms Muzila said the network enabled law enforcement practitioners from different jurisdictions to exchange information and provide assistance in investigating transnational crimes.

She also emphasised the importance of involving the private sector in combating illicit financial flows, noting that businesses played a critical role in identifying and addressing suspicious transactions.

Ms Muzila thanked the World Gold Council for supporting the workshop through technical expertise and financial assistance.

Meanwhile, World Gold Council Senior Policy Lead, Levy Pezulu, said transparency, traceability and responsible market access were essential in combating money laundering, illicit financial flows and gold smuggling.

Mr Pezulu said strengthening governance and responsible sourcing would enable Zambia to unlock the economic potential of artisanal and small-scale gold mining, while ensuring compliance with international anti-money laundering standards.

He pointed out that the Council remained committed to working with Government, regulatory institutions, law enforcement agencies, mining stakeholders and local communities to promote a responsible and internationally competitive gold sector.