BRIAN CHITEMBA ZIMBABWE is on the grey list of the Financial Action Task Force (FAFT) for deficiencies on dealing with anti-money laundering and counter-terrorism threats.
FAFT placed the country on the monitoring list in October 2019. Zimbabwe is listed together with some troubled countries such as Syria, South Sudan, Burkina Faso, Mali and Uganda.
According to statistics from the Zimbabwe Anti-Corruption Commission (Zacc), the country has lost over US$3 billion through illicit financial flows (IFF), such as money-laundering, fraud and corruption.
In response to the continued illicit financial deals that are causing unabated depreciation of the local currency against the United States dollar, the Reserve Bank of Zimbabwe (RBZ), has blocked some companies from syphoning hard currency from the forex auction and channelling them towards the parallel market. Allegations of arbitrage at the foreign currency auction system have been raised.
The consequences of a rife parallel forex market are dire. This week, exchange rates on the black market hit US$1: ZW$240. On the official market, the forex rate is US$1: ZW$124.
Retailers are pegging prices in local currency at a rate equivalent to the parallel market. This means that the majority of workers who earn salaries pegged in the currency have lost significant buying power.
The poor are getting poorer while the rich who control the black market are lining up their pockets.
The RBZ’s investigating arm, the Financial Intelligence Unit (FIU), froze bank accounts belonging to some big firms such as Halsted Brothers, Transervet, Electrosales and Enbee Store.
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The companies need the apex bank’s authority to withdraw funds as investigations into money laundering intensify.
The FIU has previously frozen several bank accounts and mobile money agents to deal with rogue elements who are fuelling the black market.
However, the rent-seeking behaviour has not stopped. The FIU actions, while plausible, have yielded minimal results as shady financial flows remain problematic.
Hence, the RBZ, police, Zacc and the Special Anti-Corruption Unit in the Office of the President and Cabinet (Sacu) need to have more sting. What is obtaining speaks to a lethargic approach towards the anti-graft drive.
Even when President Emmerson Mnangagwa came into office in 2017, he vowed to weed out corrupt elements in his administration.
Some high profile arrests were made. However, strong criticism of catch and release was raised. The anti-corruption movement fizzled out. The threats remained hot air; all foam and no beer!
The same problem that Zimbabwe faced during the late former President Robert Mugabe’s regime still exists today.
The FIU has to fully plug financial problems in line with the provisions of section 3 of the Bank Use Promotion and Suppression of Money Laundering Act (Chapter 24: 24). The culprits found on the wrong side of the law must lose ill-gotten wealth and serve deterrent jail time.
