Mozambique restricts mobile money transfers to combat terrorism

Mozambican Electronic Currency Institutions (IME), which operate through mobile telecom companies, will implement transaction limits beginning at the end of this month to combat money laundering and terrorism.

According to Lusa News Agency, the order was issued by the Bank of Mozambique in a notice dated 1 April, and will take effect after 30 days.

According to the news agency, the notice imposes “transactional limits applicable to electronic currency institutions” based on customer type.

Lusa reported last week that the measure is justified in the same notice by the Central Bank, saying there is need to guide the actions of IMEs and strengthen measures to prevent and combat money laundering, terrorism financing.

The notice requires IMEs to classify their clients “based on risk assessment” into three levels.

Level I refers to “clients subject to simplified measures of identification, verification, and due diligence, based on their low risk, which will now have limits such as a maximum account balance of MZN 200,000 (€2,915), the same value as the daily limit for transfers and withdrawals, up to an annual maximum of MZN 500,000 (€7,290) in transfers, and MZN 40,000 (€583) per transfer and transaction.”

Level II will be assigned to clients “for whom standard or enhanced identification, verification, and due diligence measures are adopted, provided that they fall within transactional limits,” which are a maximum account balance of MZN 500,000 (€7,290), the same value as the daily limit for transfers and withdrawals, and MZN 75,000 (€1,094) per transfer and transaction, according to Lusa.

Level III corresponds to micro and small businesses, “as defined in the Commercial Code, for which standard or enhanced identification, verification, and due diligence measures are adopted, in accordance with the conditions provided for in legislation on money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction.” In this instance, they will have limits such as a maximum account balance of three million meticais (€43,750), which is the same as the daily transfer and withdrawal limit, with no further restrictions.

These limits do not apply to medium and large firms as defined in the Commercial Code, as well as Public Administration organs and organisations.

As per Lusa report on 20 March, Mozambican authorities have rated the IME sector as having a “high” threat level in terms of terrorism financing.

The assessment also recognises the “excessive movement of funds to areas of active terrorist threat using electronic currency institutions” operating in Mozambique, which it says is “concentrated in rural areas with limited access to the national banking network.”

“For this reason, there is a preference for the use of electronic currency institutions, given the ease of use and quick movement of funds it provides. These factors combined precipitate and make the abuse of this sector by terrorism sympathisers appealing,” it continues.

According to the analysis, 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).

In February, Lusa reported that the number of IME agents in Mozambique facilitating transfers, purchases, withdrawals, and deposits via mobile telecommunications providers climbed by 10.5% in three months, reaching 224,704 in December, encompassing all 154 districts of the country.