Zim leaps ahead in fight against dirty money

Zimbabwe is way ahead of its peers in dealing with money laundering as it now ranks second in terms of compliance with the international standards that relate to money laundering and addressing illicit financial flows, a senior Government official told investors here on Tuesday.

Speaking at a panel discussion at the Zimbabwe Capital Markets and Investment Promotion Conference held in London this week, director of financial sector policy in the Ministry of Finance, Economic Development and Investment Promotion, Judith Rusike, allayed investors’ fears that by establishing the Victoria Falls International Financial Centre and relaxing investment laws that govern the Victoria Falls Stock Exchange and the soon to be established Victoria Falls Commodity Exchange (“VCOMEX”), the country risked receiving dirty money.

However, Rusike emphasised Zimbabwe’s robust anti-money laundering framework, highlighting the country’s position as the second-best in Africa regarding compliance with Financial Action Task Force (FATF) standards.

Only Mauritius surpasses Zimbabwe in this ranking.

Rusike said Zimbabwe being part of the international financial action task force and some other institutions to curb money laundering it is “the second best in terms of Financial Action Task Force (FATF) after Mauritius and our systems are in place”.

“We just have two items in terms of full compliance with the money laundering issues,” she said.

Zimbabwe was placed on the FATF grey list in 2019, following a mutual evaluation (assessment) process that identified a number of deficiencies in the country’s implementation of the Anti-Money Laundering and Counter Financing of Terrorism (AML/CTF) Standards.

But following an on-site evaluation carried out in January 2022, the southern African country
was removed from the grey list after it implemented a number of measures to curb money laundering.

Botswana was listed in 2018 and delisted in 2021; Morocco was listed in February 2021 and delisted in February 2023; and Mauritius was listed in January 2020 and removed in 2021.

South Africa was grey listed by the FATF in February 2023 for not complying with international standards that relate to money laundering and addressing illicit financial flows.

The southern African country has 22 action items linked to the strategic deficiencies identified in the Anti-Money Laundering and the Combating of the Financing of Terrorism (AML/CFT) regime.

South Africa’s progress in addressing the deficiencies will be assessed again in February 2025 but some analysts still forecast the country will not be removed from the list until 2026.

Speaking at a financial sector conference in March this year, South African Reserve Bank Governor, Lesetja Kganyago, said being on the watch list had “been a costly episode for us”.

“The lesson is that joint efforts are required to look after the integrity of South Africa’s financial system. We all suffer when this is compromised,” he said.

The FATF grey list refers to the FATF’s practice of publicly identifying countries with strategic AML/CFT deficiencies.

The FATF maintains two such lists with one being jurisdictions under “increased monitoring” that are actively working with the FATF to address strategic deficiencies in their regimes” and secondly “high-risk jurisdictions subject to a call for action” that are not actively engaging with the FATF to address these deficiencies.

As of February 2024, the FATF has reviewed 131 countries and jurisdictions and publicly identified 106 of them.

Of these, 82 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process.

By highlighting its strong AML/CFT framework, Zimbabwe aims to attract investors by demonstrating its commitment to transparency and financial security. This strategy positions the country as a favourable destination for legitimate investment within the Victoria Falls financial hub.-ebsinessweekly