FATF Status

Zimbabwe is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

FATF Statement re AML Strategic Deficiencies:   4 March 2022

The FATF welcomes Zimbabwe’s significant progress in improving its AML/CFT regime. Zimbabwe has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2019. Zimbabwe is therefore no longer subject to the FATF’s increased monitoring process.

Zimbabwe should continue to work with ESAAMLG to improve further its AML/CFT system, including by ensuring its oversight of NPOs is risk-based and in line with the FATF Standards.

Compliance with FATF Recommendations

The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Zimbabwe was undertaken in 2022. According to that Evaluation, Zimbabwe was deemed Compliant for 20 and Largely Compliant for 16 of the FATF 40 Recommendations.  It remains Highly Effective for 0 and Substantially Effective for 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Zimbabwe was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR) but has not been included since. Key Findings from the last report are as follows: -

Zimbabwe is not a regional financial center, but it does face problems related to money laundering and corruption. Serious financial crime in Zimbabwe generally appears in the form of various violations of exchange control rules; underground banking; cross-border crime; organized syndicates, both domestic and international; non-transparency in diamond production receipts; and increased cooperation among criminal networks and links with legal business activity, resulting in corruption and bribery.

Regulatory and enforcement deficiencies in Zimbabwe’s AML/CFT regime expose the country to illicit finance risks, but there are no reliable data as to the actual extent of the problem. Commercial banks, building societies, moneylenders, insurance brokers, realtors, and lawyers in Zimbabwe are all vulnerable to exploitation by money launderers. Nearly all transactions in Zimbabwe are carried out with either the U.S. dollar or the South African rand.

The United States, Canada, Australia, and the EU have imposed targeted financial sanctions and travel restrictions on some political leaders and a limited number of private companies and state-owned enterprises for complicity in human rights abuses or for undermining democratic processes or institutions in Zimbabwe. Effective November 1, 2014, the EU lifted Article 96 restrictions, which previously limited EU development assistance to Zimbabwe. Currently, the EU maintains active restrictions against President Mugabe, Grace Mugabe, and Zimbabwe Defense Industries, and an arms embargo. The EU reviews its restrictions annually. Although the EU delisted the Zimbabwe Mining Development Corporation (ZMDC) and the Minerals Marketing Corporation of Zimbabwe (MMCZ) from its list of sanctioned entities in September 2013, the United States maintains sanctions on the ZMDC and MMCZ.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           24

World Governance Indicator – Control of Corruption             8

Across all sectors, corruption is a very high risk for companies operating in Zimbabwe. Investors face both high-level corruption in the form of nepotism, patronage and abuse of power, as well as petty bribery and extortion. The Prevention of Corruption Act prohibits active and passive bribery, gifts and facilitation payments in the public and private sectors, but such practices are common. Companies can be held criminally liable. The maximum punishment for corruption offenses is 20 years' imprisonment, fines, or both, but the government enforces the law selectively, targeting mostly political opponents. For further information - GAN Integrity Business Anti-Corruption Portal

Zimbabwe presents a challenging, and yet potentially rewarding, investment climate.  The country’s skilled labor, high literacy rate, mineral wealth, agricultural potential, bountiful wildlife, and natural landscapes present commercial opportunities for U.S. firms.  Sectors that currently attract the most investor interest include agriculture (tobacco in particular), mining, energy, and tourism.  Authorities estimate the economy grew by four percent in 2022 while the International Monetary Fund (IMF) estimates Zimbabwe’s economy grew by 3.5 percent in 2021.

The Government of Zimbabwe (GOZ) adopted an “open for business” policy in 2018 to encourage more foreign direct investment (FDI).  For example, the GOZ set an ambitious $12 billion target for the mining sector by the end of 2023 and is calling for increased investment in renewable energy.  Despite these pronouncements, the Zimbabwe government has not implemented enough investor-friendly policies to attract robust investment and corruption remains a major concern.  FDI into Zimbabwe remains below regional peers.

Debt also hinders Zimbabwe’s economic growth and development.  Zimbabwe owes over $14 billion ($6.3 billion of which is in arrears and penalties) to international financial institutions and bilateral creditors, equating to about 66 percent of the country’s GDP.  The country’s high external debt (public and private) limits its ability to access official development assistance at concessional rates.  Domestic banks do not offer financing for periods longer than two years, with most financing limited to 180 days or less.

To ease doing business, the government formed the Zimbabwe Investment and Development Agency (ZIDA) in 2020, intended as a one-stop-shop to promote and facilitate both domestic and foreign investment in Zimbabwe.  Zimbabwe’s incentives to attract FDI include tax breaks for new investment by foreign and domestic companies and making capital expenditures on new factories, machinery, and improvements fully tax deductible.  The government waives import taxes and surtaxes on capital equipment.  It has made gradual progress in improving the business environment by reducing regulatory costs, but policy inconsistency and weak institutions have continued to frustrate businesses.  Corruption remains rife and there is little protection of property rights, particularly with respect to agricultural land.  Historically, the government has committed to protect property rights but has also expropriated land without compensation.

The government in February 2023 reduced the proportion of foreign exchange that businesses surrender to the Reserve Bank of Zimbabwe (RBZ) at the interbank rate after selling goods and services in foreign currency on the domestic market from 20 percent of the receipts to 15 percent.  It also reduced the proportion that exporters must surrender from 40 percent of foreign currency earnings at the unfavorable interbank rate to 25 percent.

The 2020 Finance Act (No 2) amended the Indigenization Act to remove language designating diamonds and platinum as the only minerals subject to indigenization (requiring majority ownership by indigenous Zimbabweans), ending indigenization requirements in all sectors.  The government has issued statements to reassure investors that no minerals will be subject to indigenization, including diamonds and platinum.

The United States has targeted financial sanctions on 60 individuals and 39 entities from Zimbabwe.  The U.S. Government imposed these sanctions because of the actions and policies of certain members of the Government of Zimbabwe and other persons that undermine democratic institutions or processes in Zimbabwe, violate human rights, or facilitate corruption.  U.S. companies can do business with Zimbabwean individuals and companies not on the specially designated nationals (SDN) list.

Country Links

Reserve Bank of Zimbabwe​