Zimbabwe makes strides on anti-money laundering

ZIMBABWE has made substantial strides on its action plan on money laundering, which may lead to its removal from the Financial Action Task Force's (FATF) "grey list".

The FATF was established by the Group of 7 (G7) advanced economies to protect the global financial system.

The listing could have cost Zimbabwe dearly on foreign lines of credit and global financial intermediation.

Recently, the FATF removed Botswana and Mauritius from its close monitoring list and noted Zimbabwe had made progress since October 2019 when it made a high-level political commitment to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to strengthen the effectiveness of its Anti-Money Laundering (AML)/Combating Financing of Terrorism (CFT) regime.

FATF president, Mr Marcus Pleyer, said Botswana and Mauritius completed their white list action plans and were removed from the grey list following an on-site visit.

The FATF said Zimbabwe had substantially completed its action plan and an on-site visit was now being organised to assess the situation to verify if the implementation of Zimbabwe's (AML/CFT) reforms had begun and that the necessary political commitment remained in place to sustain its implementation in the future.

Some of the reforms, which Zimbabwe has instituted include developing risk-based supervision framework for financial institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs), including through capacity building among the supervisory authority; developing adequate risk mitigation measures among FIs and DNFBPs, including by applying proportionate and dissuasive sanctions to breaches; creating mechanisms to ensure that competent authorities have access to timely and up-to-date beneficial ownership information; and addressing remaining gaps in the targeted financial sanctions framework.

"The FATF will continue to monitor the Covid-19 situation and conduct an on-site visit at the earliest possible date," said Mr Pleyer.

Data on how much Zimbabwe has lost due to the grey list is not publicly available but recently, Pakistan, which is also on the list said that the FATF grey listing starting in 2008 till 2019, may have resulted in cumulative real gross domestic product losses of approximately US$38 billion.

For Zimbabwe, the greatest impact is mainly seen through the decline in correspondent banking relationships and foreign direct investment, which stood at US$21 million in the five months to May 2021.

Turkey, Mali and Jordan have all been added to the grey list, while Malta was added to the list in June this year.

Turkey said it was working with the to be removed from the grey list for failing to head off money laundering and terrorist financing, its inclusion in which could hurt foreign investment.