Zim Property Sector Under Scrutiny for Money Laundering

Strengthening Real Estate Sector to Combat Illicit Financial Flows

The Financial Intelligence Unit (FIU) has urged Zimbabwe’s real estate industry to enhance its mechanisms for identifying and preventing illicit financial flows (IFFs). A senior official highlighted that the sector is increasingly becoming a hub for transactions that divert significant funds from the economy. In an interview, FIU director-general Oliver Chiperesa emphasized that the country's growing informal sector, combined with high levels of cash transactions in property sales and other trades, is being exploited as a conduit for illicit funds.

Chiperesa explained that cash-heavy transactions are often directed toward high-value assets such as real estate and vehicles. He noted that these transactions serve as indicators of potential money laundering activities. "What we then do is to try to look at the manifestations of those cash transactions," he said. "They normally manifest themselves through the purchase of high-value assets such as real estate and cars, which is why you have us in the National Risk Assessment (NRA) report focusing on supervising real estate agents to see where the cash is coming from."

He further stressed that real estate agents must implement robust anti-money laundering measures to prevent their platforms from being used for illegal activities.

The Challenge of Informal Economic Activity

Recent economic data shows that Zimbabwe has rebased its economy to a valuation of $45.7 billion, with the Zimbabwe National Statistics Agency reporting that 76.1% of economic activity occurs in the informal sector. This high level of informality presents a major regulatory challenge. Chiperesa pointed out that the prevalence of cash transactions makes it difficult to track and detect illicit financial activities.

Analysts warn that deep-rooted informality, which has developed over many years, poses a serious threat to economic growth. They argue that without effective regulation, the informal sector could continue to undermine the stability of the national economy.

Emerging Trends in Money Laundering

In recent months, the FIU has reported a rise in companies diverting foreign currency into cash-heavy businesses. These firms often rely on directors and couriers to move funds outside formal channels. Investigations have uncovered instances where companies channelled forex earnings into personal accounts, withdrawing large sums and storing the cash in safe deposit boxes.

Other cases involve funneling substantial amounts of money to fuel dealers and basic goods retailers, such as sugar and cooking oil merchants, to convert electronic balances into hard cash. According to the FIU, Zimbabwe has lost approximately $6.15 billion to money laundering-related crimes over the past six years, with car dealerships, gold smugglers, and large corporations playing key roles in enabling these activities.

Monitoring Cash Circulation in the Economy

Chiperesa explained that anti-money laundering authorities monitor how cash circulates in the economy as part of efforts to combat IFFs. The central bank estimates that at least $2.5 billion in hard cash circulates within the informal economy, a figure recorded when informality accounted for 60% of all economic activity. With the informal sector now generating more funds annually, it has become one of the country’s largest sources of undocumented transactions, complicating efforts to police illicit financial flows.

Under the current framework, the FIU cannot directly enforce the adoption of electronic payments or the use of the Zimbabwe Gold to reduce cash transactions and improve traceability. However, Chiperesa emphasized that the unit focuses on tracking cash transactions where they manifest themselves.

Identifying Major Illicit Activities

The purpose of the National Risk Assessment (NRA), according to Chiperesa, is to identify activities that generate illicit financial flows. "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."

Government Policies and Future Directions

Chiperesa also highlighted the government's policy refinements under the National Development Strategy (NDS) 2, the economic blueprint currently being formulated for the 2026 to 2030 period. He referenced remarks by Deputy Minister of Finance, Economic Development, and Investment Promotion David Mnangagwa, who emphasized the need for policies and measures to encourage the formalization of businesses.

"The government is aware of the need to put in place policies and measures that encourage formalisation," Chiperesa said. "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 tackle illicit activities."

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