Sunday 3 December 2023


SHAMBOLIC record-keeping at the Department of Deeds, Companies and Intellectual Property could compromise Zimbabwe’s listing as a low-risk country for money laundering and financing of terrorism by the Financial Action Task Force (FATF), a development that could see the country being penalised by the global financial crimes watchdog.

The Reserve Bank of Zimbabwe (RBZ)’s Financial Intelligence Unit (FIU) has since raised concern over the shambolic state of record-keeping at the department, which it says creates loopholes that could be used for money laundering.

Zimbabwe is set to undergo a routine assessment by the FATF in 2026 to stress-test the country’s anti-money laundering systems.

FATF is an intergovernmental organisation established to set global standards to prevent and detect money laundering and terrorist financing, as well as promote effective implementation of these criteria worldwide.

Last year, Zimbabwe was removed from the FATF’s grey list after three years.

There were concerns the country’s financial system did not have enough safeguards to stop the flow of dirty money.

The listing placed a huge premium on financial transactions involving Zimbabwe and other countries, which then received extra scrutiny by banks.

Some international banks consider these extra measures costly and end up completely cutting off the affected country.

Speaking at the launch of Zimbabwe’s third Money Laundering National Risk Assessment in Harare last week, FIU director-general Mr Oliver Chiperesa said the situation at the Department of Deeds, Companies and Intellectual Property could affect the country’s status.

FATF rules require countries to have effective mechanisms to ensure accurate and up-to-date information on beneficial ownership of companies and trusts is collected, maintained and readily available and accessible to competent authorities to investigate money laundering and terrorism financing cases.

“While we have in place the necessary laws to ensure this happens, sadly, those tasked with running our companies’ registry have over the years let us down, and it is about time something drastic is done to ensure efficiency and effectiveness at our companies’ registry offices,” said Mr Chiperesa.

“Without a functional registry of beneficial ownership information, it will be difficult for Zimbabwe to convince international assessors that we are serious in terms of combating money laundering.”

Zimbabwe, he said, is due to be assessed in early 2026.

“Even if we eventually manage to put in place a functional beneficial ownership registry a few weeks before the assessment starts, that will be too late,” warned Mr Chiperesa.

“The assessors look at data over a period of time, up to five years, to judge how well a country is effectively implementing anti-money laundering requirements.”

He said banks have historically been the preferred money laundering vehicle because they provide the most direct and simple means of getting dirty money into the financial system.

Enhanced regulatory oversight of banks in recent years, he said, had made it increasingly difficult for criminals to use financial institutions as conduits for money laundering.

“Thus, criminals have had to innovate and find other ways of concealing proceeds of crime from close scrutiny, and they have found other intermediaries through which to launder proceeds of crime.

“Real estate agents, lawyers, accountants, precious stone and precious metal dealers, car dealers and the use/abuse of shelf companies all remain areas of concern used by criminals to launder dirty funds.”

The FATF assesses countries periodically to measure the extent to which their anti-money laundering and counter-financing of terrorism regimes comply with its rules.

In terms of FAFT technical compliance, Zimbabwe is now classified as compliant in 36 of the 40 FATF recommendations. A 40/40 compliance rate is the target. Sunday Mail


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