Meshack Mudyariwa v NMB Bank Limited

The applicant held an account with the respondent bank. On 24 March 2021, USD 300,000 was deposited into this account. The funded account did not show any contra record on the mirror account in the T24 core Banking System, raising questions about the legitimacy of the funding. The funded amount did not reflect as expected in the VISA prefunded Credit Card suspense on the T24 core banking system. The respondent suspected the money could be proceeds of money laundering and suspended the applicant's account while investigations were conducted. The respondent was unable to identify and verify the identity of the originator, obtain the originator's account details, address, ID number, or date and place of birth as required by section 27 of the Money Laundering and Proceeds of Crime Act. The applicant claimed he obtained the money as a loan from two South African companies, but these were not the originators of the funds. The director of the two companies, Mr. Gwekwerere, refused to reveal the identity of the originator, stating that the funders were acting contrary to their domestic law which prohibits such funding in Zimbabwe due to sanctions. The respondent reported the matter to the Financial Intelligence Unit of the Reserve Bank of Zimbabwe on 7 May 2021 and later to the Police. The applicant sought a mandatory interdict to compel the respondent to unfreeze his account and allow him to withdraw the USD 300,000.

• Whether the respondent bank had legitimate authority to freeze the applicant's account without a court order
• Whether the application met the requirements for a final mandatory interdict
• Whether section 27 of the Money Laundering and Proceeds of Crime Act authorizes a bank to suspend an account during investigation
• Whether the respondent's suspicion that the funds were proceeds of money laundering was reasonable
• Whether the applicant had an alternative remedy available

The application was dismissed with costs.

Section 27 of the Money Laundering and Proceeds of Crime Act [Chapter 9:24] must be interpreted purposively to give effect to the Act's objective of curbing the use of financial institutions as conduits for crime. Financial institutions have authority to freeze or suspend bank accounts as a preliminary measure during investigations where they cannot verify the identity and details of originators of funds as mandated by section 27 of the Act, even without a court order. The suspicion justifying such action is reasonable where: (1) the bank's systems cannot identify the funders' details, (2) the account holder's explanations do not provide the required information, and (3) parties brought in by the account holder refuse to identify the originators. A mandatory interdict will not be granted where the applicant has failed to demonstrate the absence of an alternative remedy, such as review of the decision or providing the required information to the bank.

The court observed that granting the relief sought would destroy the spirit, object and purpose of the Money Laundering and Proceeds of Crime Act. The court noted that it was particularly appropriate to be vigilant about money laundering "especially in this era of rampant corruption." The court also remarked that if the respondent were ordered to unfreeze the account, the applicant could withdraw all the money irrespective of the outcome of the investigations, which would be self-defeating. The court noted that had the applicant assisted with the identity of the originator of funds as required by the Act, that would have stood as an alternative remedy.

This case is significant in Zimbabwean banking and money laundering law as it establishes the scope of banks' powers to freeze accounts without court orders when conducting investigations under the Money Laundering and Proceeds of Crime Act. It confirms that financial institutions have implied authority under section 27 of the Act to suspend accounts as a preliminary measure during investigations where they cannot verify the identity and details of originators of funds. The judgment reinforces the anti-money laundering framework and the supervisory role of financial institutions in preventing abuse of the financial system. It demonstrates judicial support for purposive interpretation of anti-money laundering legislation to give effect to its objectives of suppressing abuse of financial systems and preventing proceeds of crime from circulating through the banking system.