Countries/Jurisdictions of Primary Concern - Zimbabwe
Zimbabwe is not a regional financial center, but it does face problems related to money laundering and corruption. Serious financial crime in Zimbabwe generally appears in the form of various violations of exchange control rules; underground banking; cross-border crime; organized syndicates, both domestic and international; non-transparency in diamond production receipts; and increased cooperation among criminal networks and links with legal business activity, resulting in corruption and bribery.
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 carried out with either the U.S. dollar or the South African rand.
The United States, Canada, Australia, and the EU have imposed targeted financial sanctions and travel restrictions on some 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. Effective November 1, 2014, the EU lifted Article 96 restrictions, which previously limited EU development assistance to Zimbabwe. Currently, the EU maintains active restrictions against President Mugabe, Grace Mugabe, and Zimbabwe Defense Industries, and an arms embargo. The EU reviews its restrictions annually. Although the EU delisted the Zimbabwe Mining Development Corporation (ZMDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ) from its list of sanctioned entities in September 2013, the United States maintains sanctions on the ZMDC and MMCZ.
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: 355: January 1 - October 31, 2014
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 at: http://www.esaamlg.org/userfiles/Zimbabwe_detailed_report.pdf
Enforcement and implementation issues and comments:
The Government of Zimbabwe sometimes abuses AML legislation for political purposes. Widespread corruption impedes the proper implementation of Zimbabwe’s AML/CFT regime. Although several reform-oriented ministers from the opposition party are no longer in the government, Parliament’s 20 portfolio committees, including some chaired by opposition members of parliament, continue to offer opportunities for oversight of the executive branch.
Due primarily to production in the Marange diamond fields, Zimbabwe is the world’s sixth largest producer of diamonds by volume. Yet Zimbabwe’s diamond revenue is non-transparent. There have been reports of collusion between some mining companies and members of the military and secret police. In a form of trade and service-based laundering, management of the mining companies also presented grossly inflated procurement receipts for mining equipment and other materials and, according to government reports, pocketed the difference. The Ministry of Finance has 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. The ministry has not yet produced a draft act, but the 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 and capacity to effectively combat money laundering. Many financial institutions are unaware of – or simply fail to comply with – their obligations to file STRs. During the period under review, Zimbabwe’s Financial Intelligence Unit (FIU) noted improved cooperation between itself and the law enforcement agencies.
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.
Between January and October 2015, the FIU referred eight cases to relevant law enforcement agencies for further investigation. The outcomes of 2013, 2014, and 2015 investigations and prosecutions are still pending.
The Money Laundering and Proceeds of Crime Act (MLPCA) of 2013 brought amendments to the Bank Use Promotions and Suppressing of Money Laundering Act, Building Societies Act, Criminal Matters (Mutual Assistance) Act and the Asset Management Act.
The MLPCA widens the applicability of the Criminal Matters Act (CMA), which deals with mutual legal assistance and appears to assist the investigation and prosecution of terrorist financing. However, this has not yet been demonstrated. While the MLPCA removes key legal impediments to mutual legal assistance, only effective implementation of the CMA will demonstrate its effectiveness. The MLPCA also bars citizens from dealing with shell banks.
Zimbabwe has made some progress in improving its AML/CFT regime. The FIU is fully operational and there have been political commitments to continue the development of anti-money laundering countermeasures. Zimbabwe should ensure that implementation of the MLPCA is underway, combat widespread corruption that permeates government and commerce, and take steps to investigate and prosecute money launderers.