By CHEN WILLIAMS
Africa-Press – Zimbabwe. ZIMBABWE’S high levels of informalisation remain one of the biggest challenges to the country’s fight against money laundering, it has emerged.
This comes as the sector, which is estimated to be 64,1% of the economy, has over the years seen most business transactions continuing to be conducted outside formal systems and in cash.
Launching the country’s third National Risk Assessment (NRA) and the Anti-Money Laundering/Countering the Financing of Terrorism (AML-CFT) strategy for 2025–2029 in Harare on Wednesday, Finance, Economic Development and Investment Promotion deputy minister Kudakwashe David Mnangagwa spoke of how the informal economy is complicating monitoring efforts.
“Now one of the notable findings in the NRA report relates to the level of informalisation of our economy when a proportion of the transactions or a significant proportion of the transactions are being concluded in cash outside of the formal financial system and thus beyond the line of sight of the FIU [Financial Intelligence Unit], Zimra [Zimbabwe Revenue Authority] and other law enforcement agencies,” Mnangagwa said.
He added that government policies under the forthcoming National Development Strategy 2 (NDS2) would aim to encourage greater formalisation.
“The national development strategy too will set out key policies that will move the country along this path and as we get to the NDS2 launch, you will see a few announcements and policy refinements that ensure that there’s ease of doing business and will allow for more formalisation of the informal,” he noted.
FIU director-general Oliver Chiperesa echoed the concern, stressing that the informal sector and its reliance on cash transactions make detection of illicit activities more difficult.
“But what enables this vulnerability, mainly a cross-cutting issue, is the high level of informalisation of our economy and the predominance of cash transactions, which make some of the transactions harder to detect,” he said.
Chiperesa explained that anti-money laundering authorities often trace how cash circulates in the economy, which frequently appears in high-value sectors such as property and vehicles.
“What we then do is to try to look at the manifestations of those cash transactions,” he said.
“They normally manifest themselves through purchase of high-value assets such as real estate, cars, which is why you have us in the NRA report focusing on supervising real estate agents to see where the cash is coming from.
“The real estate agents must also implement anti-money laundering measures.”
While the FIU cannot directly enforce the adoption of electronic payments or the use of the Zimbabwe Gold (ZiG), Chiperesa said the agency focuses on following cash transactions to their endpoints.
“So we may not be able as the FIU to implement policies directly that encourage the use of electronic money and the use of our local currency, but what we do is to follow through on those cash transactions where they then manifest themselves,” he remarked.
The FIU director-general emphasised that the very purpose of the NRA was to identify activities generating illicit financial flows.
“So the whole purpose of an NRA is simply to identify and assess which major illicit activities in the country are generating the greatest illicit financial flows going into the pockets of criminals and their associates,” he said.
“So this is where we look at the major financial crimes that generate those illicit proceeds.”
Chiperesa further stressed that government’s policy refinements under NDS2 will be critical in pushing for greater formalisation, which in turn will strengthen anti-money laundering oversight.
“As you heard from the deputy minister, he advised that in the NDS2 there are going to be refinements of policies and measures to move towards encouraging formalisation of businesses,” he said.
“So I’m quite sure that the government is aware of the need to put in place policies and measures that encourage formalisation as the Minister assured us.
“So as anti-money laundering authorities, we want to support those policies and initiatives because they help us on our side to be able to track transactions and be able to tackle illicit activities.”
Source: NewsDay
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