A senior
official warned that the sector was morphing into a hotspot for transactions
that divert substantial funds from the economy.
In an interview
with Standardbusiness, FIU director-general Oliver Chiperesa said Zimbabwe’s
booming informal sector, coupled with high cash transactions in property sales
and other trades, was increasingly being used as a laundromat for illicit
funds.
He explained
that cash-heavy transactions were finding their way into property, vehicles,
and other high-value assets.
“What we then
do is to try to look at the manifestations of those cash transactions,”
Chiperesa said.
“They normally
manifest themselves through the purchase of high-value assets such as real
estate and cars, which is why you have us in the National Risk Assessment (NRA)
report focusing on supervising real estate agents to see where the cash is
coming from.
“The real
estate agents must also implement anti-money laundering measures,” Chiperesa
said.
In recent
months, Treasury rebased the economy to a valuation of US$45,7 billion, with
the Zimbabwe National Statistics Agency reporting that 76,1% of economic
activity is informal. The staggering percentage has made regulation a major
challenge.
“What enables
this vulnerability, mainly a cross-cutting issue, is the high level of
informalisation of our economy and the predominance of cash transactions, which
make some of the transactions harder to detect,” Chiperesa said.
Analysts warned
that deep rooted informality, cultivated over a long period, is fast becoming a
serious threat to economic growth.
In July, the
FIU reported a surge in companies diverting foreign currency into cash-heavy
businesses and relying on directors and couriers to move funds outside formal
channels. Investigations revealed that some firms were channelling forex
earnings into personal accounts, withdrawing the proceeds in bulk, and stashing
the cash in safe deposit boxes.
Others were
funnelling large sums to fuel dealers and basic goods retailers, such as sugar
and cooking oil merchants, to convert electronic balances into hard cash.
The FIU
estimates that Zimbabwe has lost US$6,15 billion to money laundering related
crimes over the past six years, with car dealerships, gold smugglers, and large
corporations among the key enablers.
Chiperesa
explained that anti-money laundering authorities often trace how cash
circulates in the economy, as part of work towards combating illicit financial
flows.
Currently, the
central bank estimates that at least US$2,5 billion in hard cash circulates
within the informal economy, a figure recorded when informality accounted for
60% of all economic activity.
With the sector
now generating more funds annually, according to the bank, it has become one of
the country’s largest sources of undocumented transactions, further
complicating efforts to police IFFs.
Under the
current framework, the FIU cannot directly enforce the adoption of electronic
payments or the use of the Zimbabwe Gold to reduce cash transactions and
improve traceability.
“But what we do
is to follow through on those cash transactions where they then manifest
themselves,” Chiperesa said.
He emphasised
that the purpose of the NRA is to identify activities generating IFFs.
“The whole
purpose of an NRA is simply to identify and assess which major illicit
activities in the country are generating the greatest illicit financial flows
going into the pockets of criminals and their associates,” Chiperesa said.
“So this is
where we look at the major financial crimes that generate those illicit
proceeds.”
He
stressed the government’s policy
refinements under the National Development Strategy (NDS) 2, the economic
blueprint currently being formulated for the 2026 to 2030 period.
“As you heard
from the deputy minister (of Finance, Economic Development, and Investment
Promotion David Mnangagwa), he advised that in the NDS2 there are going to be
refinements of policies and measures to move towards encouraging formalisation
of businesses,” Chiperesa said.
“So, I am quite
sure that the government is aware of the need to put in place policies and
measures that encourage formalisation, as the minister assured us.
“So as
anti-money laundering authorities, we want to support those policies and
initiatives because they help us on our side to be able to track transactions
and be able to tackle illicit activities.” Standard
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