Zim loses US$1.2bn

LIVINGSTONE MARUFU AND ROBIN PHIRI

Zimbabwe lost over US$1.2bn in illicit financial flows in 2024, as cash-based transactions in a highly informalised economy made it difficult for authorities to track the money, latest official data show. The figure underscores the alarming scale of capital flight, which undermines the country’s economic stability, erodes investor confidence, and weakens growth prospects.

National Anti-Money Laundering Advisory Committee chairperson Varaidzo Zifudzi said illicit proceeds were mostly channeled into properties, mining, and car dealerships.

“In terms of these proceeds from the 16 offenses about US$1.23bn was lost, which equated to 3.4% of Zimbabwe’s Gross Domestic Product which was at US$35.2bn. And common sectors where the laundered funds were channeled to included mainly our car dealers and the real estate sector. Other predicate offenses contributed significantly to money laundering, and these include smuggling, illegal dealing in gold and precious stones, corruption, tax evasion, fraud and drug trafficking,” she said.

The assessment rated the country’s overall money laundering risk as medium, combining medium-low threats with medium-high vulnerabilities across 11 sectors. Real estate and dealers in precious metals and stones—particularly gold smuggling—were found to carry medium to high risk, with high vulnerability levels due to large cash transactions, weak compliance functions, and exposure to high-risk clients. The committee recommended stiffer penalties and urgent amendments to the Estate Agents Act, improved compliance mechanisms, enhanced supervision, and stronger reporting of suspicious transactions.

“Recommendations for the mining sector: there is need to extend the scope of Anti-Money Laundering implementation to all entities that are involved in the sector, for now they’re just concentrating on the big entities, everyone should be covered. Then payers must continue to increase capacitation and resourcing of their compliance function and formulate Anti-Money Laundering and Countering the Financing of Terrorism policies and procedures,” Zifudzi said.

The banking sector was assessed as medium risk, with weaknesses including insufficient AML supervision, use of high-risk products such as corporate banking, and involvement of politically exposed persons (PEPs) and high-net-worth individuals. “Enhanced supervision for the banking sector, there is need to strengthen AML supervision to ensure the supervisory team has the requisite skills and experience… Then implementation of the risk-based approach in supervision and monitoring to ensure resources are channeled to high-risk areas,” Zifudzi said.

The car dealer sector was flagged as the highest risk, with widespread unregulated high-value cash transactions and no effective entry controls. The committee called for a new regulatory framework and mechanisms to monitor dealers. Lawyers were rated medium-high vulnerability, mainly when handling real estate transactions for wealthy clients and PEPs. The committee urged the Law Society of Zimbabwe to draft AML guidelines and build capacity for risk-based supervision.

For accountants, vulnerability was medium-low, reflecting limited cash handling and a smaller number of companies undertaking designated activities prone to money laundering. Zifudzi said, “There was limited use of cash, with most transactions being processed through the banking sector. Then the recommendations under this sector, AML compliant governance structure, supplement a registration requirement for new accounting firms joining in, increase Anti-Money laundering knowledge amongst staff, resourcing of the PAAB with an AML compliant resource person is required. Then the need to enforce administrative and criminal sanctions for non-compliance.”

Casinos were considered low to medium-low risk, with a small number of players, though increasing participation by foreign nationals raised vulnerability. Zifudzi noted the need to study AML risks arising from betting activities, describing it as a new phenomenon. Meanwhile, insurance and pension funds largely demonstrated strong AML controls, with low cash activity and most premiums and contributions processed through formal channels.

Zifudzi said the informalised economy exacerbated money laundering risks, as most business transactions are done in cash, predominantly in US dollars. “The anonymous nature of cash is difficult to track, making it a prime vehicle for money laundering. The reliance on cash transactions, especially in foreign currency, increased the risk of smuggling. Then border controls on cash were considered a bit weak, with over 90% of transactions occurring in cash and mainly in US dollars. This trend aggravates exposure in sectors like real estate and mining where illicit activities through cash transactions thrive,” she said.

The report concluded that while awareness and AML compliance have improved across some sectors, serious vulnerabilities remain, particularly in real estate, gold smuggling, and car dealerships, posing systemic threats to Zimbabwe’s economy. Participants in the assessment came from government, academia, and the private and public sectors, ensuring a thorough review of risks. The committee also engaged U.S. consultants and other experts to strengthen the findings, while highlighting that enhanced implementation of the risk-based approach has helped prevent some sectors from being used as conduits for money laundering.

“This is except for the car dealers sector, where AML controls are yet to be deployed. Then awareness programs were being launched and are still continuing to be held across all sectors and stakeholders to improve understanding. So these issues helped to reduce the threat of money laundering to the country. Then in terms of the threat, there are key predicate offenses that were identified during the assessment. So in total, the assessment identified 16 predicate offenses to money laundering. However, among those, only six predicate offenses contributed significantly to money laundering, and these include smuggling, illegal dealing in gold and precious stones, corruption, tax evasion, fraud and drug trafficking,” she said.