Mozambique’s Electronic Currency Institutions (IME) will introduce transaction limits by the end of this month to address concerns related to money laundering and terrorism financing.
The move, mandated by the Bank of Mozambique, aims to regulate the operations of IMEs and enhance measures for preventing financial crimes.
Implementation of Transaction Limits
The Bank of Mozambique issued a notice on April 1st, which will be effective after a 30-day period.
Transaction limits will be applied based on the risk assessment of customers, categorized into three levels: Level I, Level II, and Level III.
Transaction Limits by Customer Type:
- Level I: Customers subject to simplified identification measures will have transaction limits such as a maximum account balance of MZN 200,000 (€2,915) and daily transfer and withdrawal limits.
- Level II: Clients requiring standard or enhanced verification measures will have higher transaction limits, including a maximum account balance of MZN 500,000 (€7,290).
- Level III: Micro and small businesses will have their own set of transaction limits, with a maximum account balance of three million meticais (€43,750).
Exemptions from Transaction Limits
Medium and large firms as defined in the Commercial Code, along with Public Administration organs and organizations, are exempt from these transaction limits.
Rationale and Threat Assessment
The decision to impose transaction limits is driven by the need to strengthen measures against money laundering and terrorism financing.
Mozambican authorities have rated the IME sector as having a “high” threat level for terrorism financing, citing excessive fund movement to areas with active terrorist threats.
The ease of use and quick fund movement provided by IMEs, especially in rural areas with limited banking access, makes them susceptible to abuse by terrorism sympathizers.
Industry Statistics and Growth:
- The value of IME assets in September 2023 was MZN 16.940 billion (€243.2 million), with accumulated social capital of MZN 2.004 billion (€28.7 million).
- The number of IME agents facilitating transfers and transactions via mobile telecommunications providers increased by 10.5% in three months, reaching 224,704 agents in December.
The implementation of transaction limits on Mozambique’s Electronic Currency Institutions reflects a proactive approach by the government to combat financial crimes such as money laundering and terrorism financing.
By categorizing customers into risk-based levels and imposing corresponding transaction limits, authorities aim to enhance regulatory oversight and mitigate potential risks associated with electronic currency transactions.
These measures underscore the importance of robust regulatory frameworks in safeguarding financial integrity and security.
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