High levels of informality impede efforts to combat money laundering

LIVINGSTONE MARUFU

Zimbabwe’s high level of informalisation  is frustrating  the Anti-Money  Laundering / Countering the Financing of Terrorism (AML/CFT) fight ,the Reserve Bank of Zimbabwe (BZ) deputy governor, Jesimen Chipika has said.

According to estimates, the informal sector contributes over 60% of the GDP and employs about 70% of the workforce.

However, it is difficult for the RBZ and the Financial Intelligence Unit (FIU) to monitor finances outside of the formal economy.

The RBZ also estimates that there could be US$2.5bn circulating in the informal sector.

According to Chipika, the struggle against financial terrorism has been hampered by this high level of informalization.

Speaking to Business Times on the sidelines of the AML/CFT ESCAY Heads of FIUs meeting this week, Chipika said: “One of the major problems in Africa is that the largest percentage of the population is not linked to the formal banking channels.

“As long as this continues to be the case, fighting money laundering is difficult as these informal dealers are outside our purview.

“Let’s drive the financial inclusion agenda so that we can monitor their activities,” Chipika said.

According to her, the nation’s efforts to support the Financial Intelligence Unit (FIU), which bears the burdensome responsibility of coordinating the implementation of AML/CFT activities by various stakeholders, should significantly improve the region’s capacity to combat financial crime, lessen illicit financial flows, and ultimately contribute to sustainable economic development on our continent.

FIU director general Oliver Chiperesa said the informal sector was giving the country a nightmare in terms of anti-money laundering fighting.

“Our jurisdiction is to track illicit financial flows in the formal sector. But when the illicit financial flows happen in the informal sector it is difficult for FIU to track and monitor,” Chiperesa said.