Zimbabwe’s reintegration into the global economy and financial systems took another step forward at the end of last week when the Financial Action Task Force, an expert group set up by the G7 in 1989, agreed that we had tightened up our banking system in both theory and practice to make money laundering very difficult.
This meant we were removed from the FATF “grey list”, a watch-it list, and that in turn means it is a lot simpler for global banks to deal with our banks and for global investors to bring their money into Zimbabwe.
The default for dealing with Zimbabwean banks now is that they and the banking system they operate in are compliant with international standards.
That in turn means there is a lot less checking needed whenever someone wants to buy something from Zimbabweans, sell something to Zimbabweans or invest money in Zimbabwe.
The grey list does not mean that these transactions were banned, but that external banks needed to check more things out, and that costs money and so some did not want to bother.
We are not out of the woods yet, mind you, since the largely financial sanctions imposed by the US and some other western countries mean that some American banks in particular will still need under their country’s laws to make checks, but these are far simpler and those banks can assume that the Zimbabwean banks they are dealing with are open.
So even here we win since over-compliance with sanctions has been identified as a major cause of transfer difficulties.
Meeting agreed global standards on money laundering and potential terrorism funding was not something that Zimbabwe had to be forced to do, although we bet that there was pressure on the FATF experts to be particularly strict when they were checking us out.
We also wanted to make money laundering and dubious payments a lot more difficult, hence we passed our own Money Laundering and Proceeds of Crime Act in 2013 and tightened this up in 2020 under the Second Republic, largely to give muscle to our anti-corruption drive and make it a lot more effective as the battle against corruption moved up our agenda into the priority areas.
More to the point, we have been applying our own laws. In Zimbabwe money laundering is not really an international affair as we are not one of those countries that international criminals use to launder their money, although we do have drug syndicates operating, but these largely smuggle drugs in and smuggle cash out, rather than banking it.
And we have never been, at least since independence, one of those funders of terrorism although we obviously need to be on the lookout for anyone thinking that some small African country might well be a suitable route.
But fortunately at the moment our actions need to be keeping a good watch and guard, rather than blocking flows.
But we have enough home grown criminals, mainly those who obtain wealth through corruption and manipulating foreign currency markets, to make it vital that we insist on banks following best practice with the Reserve Bank of Zimbabwe breathing down their necks while they do this.
And since a fair percentage of our corrupt people want to move their ill-gotten gains out of the country into some safe haven far from the Zimbabwean authorities, our corruption was impacting on the international systems.
We are now using those systems to help us track down where the proceeds of corruption are hidden so we can start getting them back.
Sometimes we find that the international rules are not as tight as we hoped, since not everyone wants to admit their banks hold our criminals’ money. But still, they help.
The Reserve Bank of Zimbabwe has its own tight rules, building on the international standards and the bank’s Financial Intelligence Unit has been using those to track anything resembling a dubious transaction as we get to grips with those messing up our financial systems.
That unit, and its parent Reserve Bank of Zimbabwe, which is the banking regulator, have made it very clear to our own banks that they want exceptionally high levels of compliance with modern banking procedures and regulations so we can combat our own criminals and the wide-boys who like to mess everyone around.
We have seen this with accounts being frozen, or at least put under Reserve Bank management, plus others paying civil penalties and banks being leaned on very hard.
So we had both the law and the regulations meeting or exceeding international standards plus a willingness, an eagerness in fact, to apply those rules. The Financial Intelligence Unit has been getting to grips with those who think rules are for other people.
The criminal law processing and procedures can take forever to move through the investigation and prosecuting stages, something the Financial Intelligence Unit has complained about, but enforcement of best practice banking rules, basically the international standards with local add-ons, is something that can be done far more quickly.
This must have impressed the FATF experts when they visited Zimbabwe recently and found we not only had the rules in place but were being effective and serious about enforcing them. So being honest people they gave us the required clean bill of health.
The national and Governmental determination to engage the global community meant that there was obviously no problem in letting this group have a good look at what we are actually doing.
The FATF do not just sit back. The criminal element will always be looking for loopholes or ways to evade regulations so they can launder the proceeds of crime and corruption and move this money around the global system. So the rule makers need to be continually closing these loopholes and the blocking the detours.
But since we are just as keen on doing this as many countries and probably more keen than most, adopting and enforcing those new regulations is something we want to do, for our own purposes. But these have the large benefit of ensuring that our banking system can be used for legitimate global trade and investment without anyone panicking or even getting nervous.
The FATF decisions also mean that many others now know that our anti-corruption drive is serious and effective, something we are doing rather than just talking about.
That improves our international brand when it comes to investment and trade, as other countries have found, since business people and investors like to deal with the honest and transparent, both to preserve their own money as well as avoiding complications back home with their own regulators.
Our removal from the “grey list” is, as financial analysts have described it, a “big deal”, removing a lot of barriers.
Now we need to continue our diplomacy to get the other barriers, those imposed by political financial sanctions, removed as well although with one set of barriers removed these remaining ones are far easier to identify and no one can hide behind the FATF any more.