Zimbabwe FIU fines 4 banks over weak AML Controls

Zimbabwe's Financial Intelligence Unit (FIU) fined four banks up to US$30 000 each last year after uncovering serious lapses in anti-money laundering (AML) and counter-terrorist financing (CFT) systems, the Zimbabwe Independent has established.

The FIU's 2024 annual report revealed that the penalties were imposed between February and April, with 14 enforcement actions taken in total. The banks — whose names were not disclosed — were cited for failures in customer due diligence, transaction monitoring, and compliance with targeted financial sanctions.

"Between February and April 2024, four banks were penalised by the FIU for AML/CFT violations. Infringements involved failure to implement customer due diligence procedures, ongoing due diligence, special monitoring of transactions, and implementation of targeted financial sanctions. Penalties ranged from US$5 000 to US$30 000," the watchdog said.

The FIU also flagged risks arising from the rapid digitisation of financial services, remote onboarding, and misuse of "KYC Lite" products — simplified identity checks that criminals exploit. Director-general Oliver Chiperesa warned that Zimbabwe risked failing its 2026 international AML/CFT evaluation unless enforcement was strengthened.

"So far, the statistics on prosecution of financial crimes and seizure of illicit assets fall short of demonstrating an effective national AML/CFT system," Chiperesa said. "The country must redouble efforts in 2025 to improve effectiveness ahead of the evaluation."

The FIU rated money laundering risks in the banking sector as "medium", but identified "medium-high" vulnerabilities in corporate and private banking as well as trade finance. Non-bank institutions such as law firms, real estate agents, and luxury goods dealers were also fined between US$2 500 and US$22 000 for AML/CFT breaches in the second half of 2024.

Illicit proceeds remain a major concern. The FIU estimated that six predicate crimes — smuggling, illegal gold and gemstone dealings, corruption, fraud, tax evasion, and drug trafficking — generated about US$6,15 billion during the review period, equivalent to US$1,23 billion annually. Domestic crimes accounted for 55% of the dirty money.

The watchdog warned that Zimbabwe's highly informal, cash-driven economy, with more than 90% of transactions conducted in physical currency, is worsening its exposure to laundering. The widespread use of US dollars in real estate, mining, and automobile sales was also cited as a key vulnerability.

Zimbabwe's weaknesses mirror wider regional trends. A study published last week in the Journal of Risk and Financial Management found that 23 shell companies based in Zimbabwe and South Africa funneled US$450 million in illicit financial flows, with authorities failing to detect 42% of cross-border laundering linked to trade mis-invoicing and cash deals.

In response, the Reserve Bank of Zimbabwe has tightened compliance rules under its 2025 mid-term monetary policy statement. A new AML/CFT/CPF Guideline, which came into effect on June 1, 2025, requires banks and microfinance institutions to vet shareholders, directors, and executives against United Nations sanctions lists and to declare sources of income and wealth.

Despite these steps, the FIU cautioned that Zimbabwe's "persistent low levels of economic formalisation and continued reliance on cash" remain a major obstacle to building an effective defence against money laundering and terrorist financing.