ZIMBABWE’S Financial Intelligence Unit (FIU) has sounded the alarm over the growing use of hawala, an underground money transfer system, by businesses and high net-worth individuals to move funds offshore and conceal income from tax authorities, exposing what officials say is a widening shadow financial network operating beyond formal scrutiny.
The warning is contained in the 2024 Tax Crimes National Risk Assessment, which shows Zimbabwe lost US$1,5 billion to recorded tax crimes between January 2019 and December 2023, equivalent to 12,81% of known tax revenue during the period, underscoring the scale of leakages draining the fiscus.
In findings first reported by the Zimbabwe Independent, the assessment states: “It was noted that businesses and high net worth individuals are keen on finding tax havens where they can conceal income and assets from tax authorities.”
The FIU report further warns that “the cross-border nature of hawala transactions is being used as a tool to transfer funds offshore without proper documentation or reporting, making it easier for individuals and companies to conceal income and assets from tax authorities”.
“The threat is resulting in unreported offshore secret bank accounts, real estate properties, investment income, trusts, as well as ownership of secret offshore companies,” it added.
The disclosure marks one of the clearest official acknowledgments yet that hawala, a trust-based value transfer system operating outside conventional banking channels, is now entrenched within Zimbabwe’s financial ecosystem.
Typically by-passing banks and leaving little or no paper trail, hawala transactions have long been used for remittances across South Asia, the Middle East and parts of Africa.
Authorities now say the same system is increasingly being repurposed locally to shift funds across borders beyond regulatory oversight. The warning comes as enforcement agencies intensify operations against suspected networks.
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In 2025, Chinese businessman Ke Ji Xiao appeared before the Harare Magistrates’ Court facing charges of money laundering and contravening the Exchange Control Act after allegedly operating a hawala system from premises in Alexandra Park.
Prosecutors told the court that detectives from the CID Asset Forfeiture Unit were conducting investigations under “Operation Pressure Valve”, targeting fuel and LPG retail sites, illegal hawala systems and money laundering syndicates.
According to court submissions,
US$192 575 in cash was recovered from Ke’s premises.
The State alleges he accepted local cash deposits and used networks abroad to pay foreign suppliers directly, by-passing formal banking channels and Reserve Bank of Zimbabwe approval.
He was granted US$1 000 bail and ordered to surrender his passport. The matter is still before the courts.
The National Risk Assessment places hawala within a broader and deeply troubling tax crime landscape marked by entrenched underreporting, corporate tax manipulation and weak compliance enforcement.
For the five-year period under review, total taxes owed by taxpayers amounted to US$11,7 billion. During that time, 1 811 tax crime cases were recorded with a combined value of US$1,5 billion.
Underreporting of income accounted for the bulk of the losses. The report noted that under-reporting cases totalled 1 664 out of the 1 811 recorded. Of the US$1,5 billion revenue loss, US$1,4 billion resulted from underreporting.
Corporate income tax was the hardest hit. According to the assessment, corporate income tax recorded revenue losses of US$1,1 billion through known tax crimes, followed by value added tax (VAT) at US$361 million.
Authorities flagged manipulation of sales records by retail and wholesale companies, failure to account for VAT on imported or smuggled goods, and non-remittance of taxes in the currency of trade as recurring patterns.
Transfer pricing abuses were identified as another major risk.
The report states: “Companies are shifting profits to low tax jurisdictions through transfer pricing manipulation”.
Multinational corporations were cited as engaging in practices that distort profit allocation and reduce tax liabilities in Zimbabwe.
In one case cited, “a multinational mining company with a parent entity outside local tax jurisdiction” paid management fees to its parent as a percentage of turnover, contrary to local legislation requiring proof of the nature of the expense.
“Failing to differentiate mining income from non-mining income (ring fencing of income) resulted in tax loss of
US$9 177 918. This is attributed to Zimbabwe being regarded as a high tax jurisdiction,” the report states.
The informal economy was highlighted as structurally vulnerable.
“Underreporting of income is prevalent in the informal economy, where many economic activities go underreported, leading to a significant loss of tax revenue for the government,” the assessment states.
In one example, “company Y underdeclared income which was obtained from projects for Value-Added Tax and income tax purposes”.
The report further noted that expatriates were paid a foreign currency component by a holding company outside Zimbabwe without Pay-As-You-Earn being withheld.
It also warns that “the prevalence of cash transactions in the informal economy makes it easier for businesses and individuals to underreport income and evade taxes without leaving a paper trail”.
Fraudulent documentation emerged as another key risk, with taxpayers creating fake receipts or invoices to support false deductions and maintaining multiple sets of financial records.
In one case, a cigarette manufacturing company entered into a toll manufacturing agreement with a foreign firm. Investigations revealed the scheme was fraudulent, resulting in a tax loss of US$19,97 million.
Although the overall tax crime threat was rated “medium”, the scale of losses, and the rise of cross-border mechanisms such as hawala, points to increasingly sophisticated evasion tactics.
While “the overall money laundering threat risk was assessed to be medium low,” the outgoing perceived threat, involving the transfer of illicit proceeds outside Zimbabwe, was rated medium.
