Countries/Jurisdictions of Primary Concern - Zimbabwe
Zimbabwe is not a regional financial center, but it faces problems related to money laundering and corruption. Regulatory and enforcement deficiencies in Zimbabwe’s AML/CFT regime expose the country to illicit finance risks, but there are no reliable data as to the actual extent of the problem. Commercial banks, building societies, moneylenders, insurance brokers, realtors, and lawyers in Zimbabwe are all vulnerable to exploitation by money launderers.
Nearly all transactions in Zimbabwe are now carried out with either the U.S. dollar or the South African rand. The Government of Zimbabwe’s switch to this “multi-currency regime” significantly reduced opportunities for money laundering and the commission of other financial crimes via exploitation of the multiple exchange rates and opaque foreign exchange controls that were in place until 2009.
The United States, Canada, Australia, and the EU have imposed targeted financial sanctions and travel restrictions on both political leaders and a limited number of private companies and state-owned enterprises for complicity in human rights abuses or for undermining democratic processes or institutions in Zimbabwe. In 2013, the EU significantly reduced the number of individuals and entities under sanctions from 91 to 11. Following the de-listing of the Zimbabwe Mining Development Corporation (ZMDC) from the EU’s list of sanctioned entities in September 2013, financial crime could begin to fall, as buyers have an increased number of legal channels through which to purchase diamonds from Zimbabwe. By contrast, the United States maintains sanctions on the ZMDC, so it remains illegal for U.S. persons to transact with this corporation.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Commercial banks, acceptance houses, discount houses, money transfer agencies, bureaux de change, legal practitioners, accounting firms, pension funds, real estate agents, cash dealers, and finance houses
Number of STRs received and time frame: 230: January 1 - October 31, 2013
Number of CTRs received and time frame: Not applicable
STR covered entities: Commercial banks, acceptance houses, discount houses, money transfer agencies, bureaux de change, legal practitioners, accounting firms, pension funds, real estate agents, cash dealers, and finance houses
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: Not available
Convictions: Not available
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: NO
With other governments/jurisdictions: YES
Zimbabwe is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.esaamlg.org/userfiles/Zimbabwe_detailed_report.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
AML legislation is sometimes abused for political purposes. More broadly, widespread corruption impedes the proper implementation of Zimbabwe’s AML/CFT regime. In June 2013, the government took important steps to improve its AML/CFT regime by enacting the Money Laundering and Proceeds of Crime Act (MLPCA), addressing Zimbabwe’s deficiencies with regard to civil forfeiture, international cooperation, suspicious transaction reporting on the part of designated non-financial businesses and professions, and the criminalization of terrorist financing.
Although legislators from all parties in the former Government of National Unity (GNU) had increased scrutiny of the government’s activities, that enhanced oversight may wane now that just one party, the Zimbabwe African National Union-Patriotic Front, controls a supermajority of parliament and several reform-oriented ministers from the opposition party, including the finance minister, are no longer in the government. However, Parliament’s 20 portfolio committees, including some chaired by opposition MPs, continue to offer opportunities for oversight of the executive branch. For example, under the GNU, the parliamentary committee on mining held officials to account for government actions in the Marange diamond fields. As a result, the Ministry of Finance promised to tighten controls in future legislation and to enhance the revenue authority’s oversight of the production and sale of diamonds. Ultimate responsibility for this legislation lies with the Ministry of Mines and Mining Development, and although a draft act has not yet been produced, the new Minister of this department has promised to improve accountability within the diamond mining sector.
Regulation and enforcement in the financial sector is weak, mainly due to a lack of trained regulators and financial crimes investigators. Regulatory and law enforcement agencies lack the resources to effectively combat money laundering, and many financial institutions are unaware of – or simply fail to comply with – their obligations to file STRs. Zimbabwe’s framework to freeze terrorist assets has yet to be proven effective. Financial institutions typically receive information related to UN designations from private sources or companies rather than from the government. In 2013, Zimbabwe issued new regulations aimed at beginning its implementation of its obligations to identify and freeze terrorist assets under UNSCRs 1267 and 1373.
The MLPCA widens the applicability of the Criminal Matters Act (CMA), which deals with mutual legal assistance (MLA). Prior to the MLPCA, there were no legal or practical impediments to rendering assistance, providing both Zimbabwe and the requesting country criminalize the conduct underlying the offense. However, while mutual legal assistance has been available for the investigation and prosecution of money laundering offenses, it was not available for terrorist financing matters. The MLPCA appears to amend the CMA to make MLA available for the investigation and prosecution of terrorist financing, but this has not yet been demonstrated. While the MLPCA appears to have removed key legal impediments to MLA, only effective implementation of the CMA, as amended, will demonstrate a lack of practical impediments. Zimbabwe should now work to demonstrate that it can and will engage in timely and effective international cooperation to combat illicit finance.
There were a number of prosecutions and convictions for money laundering between January and November 2013, although the exact figures are not available because there is no centralized system for compiling and collating such statistics. The FIU referred 15 cases to the relevant law enforcement agencies for further investigation between January and October 2013; the outcomes of those investigations are still pending.
On January 30, 2013, Zimbabwe became a party to the International Convention for the Suppression of the Financing of Terrorism.
Zimbabwe should continue to make progress on these issues and work to ensure that its financial intelligence unit is fully operational and effectively functioning. Additionally, Zimbabwe should work to ensure that across-the-board implementation of the MLPCA has begun. Zimbabwe should criminalize human trafficking and piracy.