Zimbabwe financial flows under scrutiny

A HIGH level Financial Action Task Force (FATF) team is in the country to meet private and public sector institutions to assess implementation of Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) international standards.

This comes after Zimbabwe was listed on the "Greylist" of non-compliant jurisdictions by FATF in 2019 and the country was given up to September 2021, to address the highlighted deficiencies.

The Reserve Bank of Zimbabwe (RBZ) through its Financial Intelligence Unit (FIU) has been submitting periodic progress reports to the FATF, detailing the progress being made by the country.

The FATF is an inter-governmental body founded in 1989 whose mandate is to develop policies and recommendations for adoption by all countries for purposes of combating money laundering, financing of terrorism and proliferation of weapons of mass destruction.

FIU is however optimistic of a positive assessment despite disruptions brought about by the Covid-19 pandemic.

"Zimbabwe is one of the countries currently listed by the FATF on the so-called "Greylist" of non-compliant jurisdictions. The country was added to the list in October 2019 and was given two years to work on and address the deficiencies

"The deficiencies noted in the 2016 Mutual Evaluation Report automatically qualified Zimbabwe to be placed under FATF monitoring (greylist). The 2016 Report identified deficiencies both relating to Technical Compliance (adequacy of legal and institutional framework) and Effectiveness (implementation/enforcement)," the FIU said.

According to FIU, countries are periodically evaluated and added to the list on the grounds of deficiencies identified in the country's mutual evaluation report.

Due to limitations of resources, FATF could not assess all the countries on the Greylist at the same time, therefore used the prioritisation criteria targeting countries whose financial sector size is US$5 billion and above.

Failure to address the deficiencies within the deadline results in removal from the Greylist to the "Blacklist", which currently has two countries, Iran and North Korea.

"At its October 2021 Plenary, the FATF determined that Zimbabwe had satisfactorily addressed all the deficiencies listed in its Action Plan, and this was achieved within the two year period that had been set by the FATF.

"In terms of the FATF procedures, once it is determined that a country has completed its Action Plan, the next step is for the FATF to send a team of experts to the country, to make an on-the-ground assessment of the country's progress and to assess whether there is high level political and stakeholder commitment to ongoing implementation of AML/CFT Standards," FIU said.

After the meeting currently happening in Victoria Falls, a report will be compiled and presented to the FATF Plenary next month who will then determine if Zimbabwe should be removed from the list based on the progress and commitment of the country.

According to FATF, Zimbabwe is supposed to comply with protocols it would have signed and the country is a signatory to a number of protocols on money laundering and it should be noted that Zimbabwe needs to comply with these protocols and this includes the 40 recommendations from FATF.

Despite the progress made, local financial institutions are of the argument that implementing FATF recommendations will include making the FIU a standalone body like what is done in other organisations. But under the latest legislation, the FIU has remained under the RBZ and with the director being appointed by the RBZ governor.