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RBZ exposes massive money laundering
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The Reserve Bank of Zimbabwe (RBZ) has unearthed large-scale illicit financial flows (IFFs) in the country's real estate and motor vehicle dealership sectors, revealing industrial-scale money laundering, tax evasion, and smuggling beyond the well-documented minerals trade.
In its 2024 Financial Stability Report, the central bank identified property, car dealerships, and precious stone and metal traders as major conduits for illicit transactions, where cash deals dominate, and anti-money laundering (AML) systems are either weak or non-existent.
"These sectors are most susceptible to money laundering, partly due to the widespread use of cash transactions and partly due to weak AML controls," the RBZ said.
While previous public focus has been on the looting of Zimbabwe's mineral wealth - with watchdog groups estimating US$15 billion is lost annually through gold and diamond smuggling - the RBZ's latest findings widen the scope of concern to the real estate and motor vehicle markets, exposing how financial crime continues to bleed the economy.
"The high informalisation of the Zimbabwean economy and the widespread use of US dollar cash also present challenges in effective monitoring and combating money laundering," the RBZ added.
Although the RBZ stopped short of quantifying the scale of illicit flows in these sectors, insiders have long warned of the risks. Legal practitioners told the Zimbabwe Independent last year that they had been processing millions of US dollars in untraceable cash transactions for property acquisitions - often for wealthy individuals seeking to quickly launder funds through high-value assets.
The RBZ identified the main drivers behind these illicit financial flows as tax evasion, corruption, fraud, drug trafficking, smuggling, and illegal dealings in precious stones and metals.
The findings come as the Zimbabwe Revenue Authority (Zimra) intensifies its anti-smuggling operations, leveraging technology, including drones and advanced surveillance, to intercept contraband valued at US$10.6 million during the first half of 2024 alone.
Zimra's Gladman Njanji, head of marketing and corporate affairs, revealed that the tax authority had seized alcohol, groceries, electronics, meat products, and clothing at border points such as Beitbridge. Recovered duties from these operations amounted to nearly US$5.4 million, while additional duties owed on goods still detained stand at over US$5 million.
Since launching its blitz, Zimra has recorded over 1,000 smuggling-related cases, including 384 seizures and 645 detentions.
Despite these efforts, the scale of the problem remains alarming. The Zimbabwe National Chamber of Commerce (ZNCC) has warned that the country is losing up to US$2.2 billion annually through smuggling, contributing to the collapse of legitimate industries and the loss of around 20,000 jobs.
"The porous nature of Zimbabwe's borders facilitates the smuggling of goods, which undermines the formal economy and fosters widespread illegality," the ZNCC said in a submission to Treasury.
The ZNCC warned that illicit imports were devastating the retail and textiles sectors, accelerating deindustrialisation and fuelling a vicious cycle of unemployment.
Authorities say smugglers are exploiting informal trade networks, using buses and trucks to move large consignments and abusing loopholes in the travellers' rebate system, which allows duty-free imports below US$200.
In response, Zimra is ramping up enforcement, requiring small businesses to register and adopt point-of-sale systems, with non-compliant operators facing closure. This forms part of a broader government initiative to formalise the informal economy and restore fiscal discipline.
With over 60% of Zimbabwe's economy now informal and US$2.5 billion circulating outside the banking system, policymakers face mounting pressure to plug revenue leaks, tighten regulation, and safeguard the country's fragile economy.
Analysts warn that unless authorities escalate action beyond headline seizures and public pronouncements, illicit financial flows will continue to undermine efforts to stabilise Zimbabwe's economy and rebuild investor confidence.
In its 2024 Financial Stability Report, the central bank identified property, car dealerships, and precious stone and metal traders as major conduits for illicit transactions, where cash deals dominate, and anti-money laundering (AML) systems are either weak or non-existent.
"These sectors are most susceptible to money laundering, partly due to the widespread use of cash transactions and partly due to weak AML controls," the RBZ said.
While previous public focus has been on the looting of Zimbabwe's mineral wealth - with watchdog groups estimating US$15 billion is lost annually through gold and diamond smuggling - the RBZ's latest findings widen the scope of concern to the real estate and motor vehicle markets, exposing how financial crime continues to bleed the economy.
"The high informalisation of the Zimbabwean economy and the widespread use of US dollar cash also present challenges in effective monitoring and combating money laundering," the RBZ added.
Although the RBZ stopped short of quantifying the scale of illicit flows in these sectors, insiders have long warned of the risks. Legal practitioners told the Zimbabwe Independent last year that they had been processing millions of US dollars in untraceable cash transactions for property acquisitions - often for wealthy individuals seeking to quickly launder funds through high-value assets.
The RBZ identified the main drivers behind these illicit financial flows as tax evasion, corruption, fraud, drug trafficking, smuggling, and illegal dealings in precious stones and metals.
The findings come as the Zimbabwe Revenue Authority (Zimra) intensifies its anti-smuggling operations, leveraging technology, including drones and advanced surveillance, to intercept contraband valued at US$10.6 million during the first half of 2024 alone.
Zimra's Gladman Njanji, head of marketing and corporate affairs, revealed that the tax authority had seized alcohol, groceries, electronics, meat products, and clothing at border points such as Beitbridge. Recovered duties from these operations amounted to nearly US$5.4 million, while additional duties owed on goods still detained stand at over US$5 million.
Since launching its blitz, Zimra has recorded over 1,000 smuggling-related cases, including 384 seizures and 645 detentions.
Despite these efforts, the scale of the problem remains alarming. The Zimbabwe National Chamber of Commerce (ZNCC) has warned that the country is losing up to US$2.2 billion annually through smuggling, contributing to the collapse of legitimate industries and the loss of around 20,000 jobs.
"The porous nature of Zimbabwe's borders facilitates the smuggling of goods, which undermines the formal economy and fosters widespread illegality," the ZNCC said in a submission to Treasury.
The ZNCC warned that illicit imports were devastating the retail and textiles sectors, accelerating deindustrialisation and fuelling a vicious cycle of unemployment.
Authorities say smugglers are exploiting informal trade networks, using buses and trucks to move large consignments and abusing loopholes in the travellers' rebate system, which allows duty-free imports below US$200.
In response, Zimra is ramping up enforcement, requiring small businesses to register and adopt point-of-sale systems, with non-compliant operators facing closure. This forms part of a broader government initiative to formalise the informal economy and restore fiscal discipline.
With over 60% of Zimbabwe's economy now informal and US$2.5 billion circulating outside the banking system, policymakers face mounting pressure to plug revenue leaks, tighten regulation, and safeguard the country's fragile economy.
Analysts warn that unless authorities escalate action beyond headline seizures and public pronouncements, illicit financial flows will continue to undermine efforts to stabilise Zimbabwe's economy and rebuild investor confidence.
Source - The Independent
