Zimbabwe - Threat Assessment - 2020 Page 1 of 34 of 6.67/1000 estimated as living in modern � slavery. Zimbabwe has a rating of "C" response. Section 1 - Executive Summary Sanctions & Terrorism: No Comprehensive Grey Lists: Zimbabwe is not listed by the US as Sanctions against the country, though some a Country of Primary Concern in respect of ML former senior leaders are still designated. For & FC, but is listed by FATF, and the EU on their Proliferation - Tier 3 PPI (Proliferation) Index, “Grey” lists. reflects the lowest threat level, but a low score of 254/1,300 for controls. Terrorism ratings NRA: Zimbabwe published its first National from GTI 2019 give Zimbabwe a “Low” impact Risk Assessment (NRA) in June 2015. Overall (Score 2.834/10). ML risk was “High” and national vulnerability "Medium”. The 5 highest proceeds generating Response & Resilience, FATF & OC Index: predicate offences are (i) smuggling (ii) illegal Zimbabwe was evaluated against FATF dealings in gold and precious metals (iii) standards and a report published in 2016. A corruption (iv) fraud and (v) tax evasion. follow up report published in 2019 showed a significant improvement. Zimbabwe scored Corruption: TI CPI - 2019 - ranked 158/180 3.33/10 for resilience (response), ranked 32/54 countries, with a score of 24/100 in 2019. Africa, and 9/13 for Southern Africa in the OC Some improvement from 2018, ranked Index. 160/180 with a score of 22/100. The 2019 TRACE Bribery Risk Matrix - "High" risk score of Indices: Freedom House 2019 Freedom in the 72, ranked 180/200. World Report - score of 29/100 - "partly free" and rated “slowing improvement" 44.7/100 in Organised Crime Index: High Criminality - Mo Ibrahim Index of African Governance. Basel Low Resilience. Criminality 5.41/10 (ranked AML Index 2019 - ranked 13th worst of 125 19th out of 54 countries in Africa, 3rd of 13 countries, with a score of 6.87/10 Southern African countries). Main criminal markets are illegal mining (8/10), illegal Overall Ratings: Zimbabwe is rated overall wildlife crimes (7.5/10), human trafficking “High” Risk, 9 out of 10 Southern African (5/10), drugs - synthetics (5/10) and cannabis countries and 25th out of 40 in FCN’s SSA (4.5/10). On criminal groups State-Embedded Threat Assessment with a score of 37/100, but Actors (8.5/10) and Criminal Networks (7.5/10) with an “Improving” trend. are rated the highest.

Modern Slavery: US Trafficking in Persons FCN Rating: “High” Risk 37/100 2020 - Tier 2. The GSI Index 2018 reports Trend “Improving” 105,000 modern day slaves, with an incidence

Zimbabwe - Threat Assessment - 2020 Page 2 of 34 Section 2 - Country Dashboard :

Zimbabwe ↗ Improving Capital & Population: Harare & 14.5 million - 72% under poverty line President: (since 2017) GDP: US$18 billion (2017) (1.1% SSA GDP)/ Govt Revenues: US$3.8 bio Economic Sector Breakdown: Agriculture (12%), Industry (22%), Services (66%) Exports: US$4.3 billion (2017 est.) platinum, cotton, tobacco, gold, ferroalloys, textiles/clothing to South Africa 50.3%, Mozambique 22.5%, UAE 9.8%, 4.9% (2017) Imports: US$5.4 billion (2017 est.) machinery and transport equipment, other manufactures, chemicals, fuels, food products from South Africa 47.8%, Zambia 20.5% (2017)

Score: 37/100 “High” FCN Risk Rating Proceeds / Laundering (Average Country Score is 32 - SSA) range 9.5% - 11.5% GDP / 60 - 70% of Proceeds Rank: 25/40 SSA - 9/10 Region SA

Organised Crime Costs of Corruption range up to approx 32 - 34% of Proceeds range up to approx 15 - 20% of Proceeds (State Embedded 8.5/10, Criminal Networks 7.5/10, Foreign Actos 5/10, Mafia Style 3.5/10)

Customer Sector Country Total Criminal Proceeds in Sub Risks Risks Risks Saharan Africa in US$ Billions - FCN Customers with Banks (in particular South Africa (tobacco 2020 (not including fraud and elevated exposures to retail and and gold smuggling), corruption and tax evasion) criminal activities such correspondent banks) Botswana (minerals, as: illegal mining (gold fuel, fraud), Mauritius & diamonds) & DNFBPs in particular (externalisation and smuggling, illegal real estate and proceeds from gold Mining Fishing wildlife crime, human precious metals and smuggling), & Zambia 10 2.5 trafficking, fraud with stones dealers, (poaching and Wildlife 2 Goods Piracy corruption (e.g PEPs) followed by second tobacco smuggling) 9 which also helps hand car dealers Third Countries facilitate these crimes China, (cash being Logging & tax evasion as a high Other FIs such as externalised by 12.5 Modern Slavery risk concern also Bureau de-Change, businesses), 8.3 MSBs MMOs China & Vietnam & to higher risk (medium risk) (wildlife products), Drugs 3 sectors and/or UAE, (gold and other Theft geography risks Informal sectors precious metals), 15 India, UAE, Israel (diamonds)

FCN SSA Country Risk Rating - “Moderate” Threats -

GTI GSI INCSR TI CPI US TIP WEF OC GFI IFF’s Overall US Terror IUUF Index OC Index US END Wildlife

FCN SSA Country Risk Rating - “Low” Response -

PPI Gov Free GSI Basel OCI NRA FATF 40 FATF 11 Overall Seizures US$ FATF/EU Lists

Zimbabwe - Threat Assessment - 2020 Page 3 of 34 Economy & Trade: Zimbabwe’s economy2 Section 3 - Country Information relies heavily on its mining and agricultural sectors. Agriculture represents approx 12% of People & Geography: Zimbabwe means GDP, with industry 22% and services 66%. “great houses of stone,” derived from the Exports: US$4.3 billion - platinum, cotton, Shona language. Victoria Falls, one of the tobacco, gold, ferroalloys, textiles/clothing to seven wonders of the world is in Zimbabwe South Africa 50.3%, Mozambique 22.5%, UAE and lies close to the Zambezi River. 9.8%, Zambia 4.9%. Imports: US$5.4 billion - Zimbabwe's capital is Harare and it is the machinery and transport equipment, other largest city, followed by Bulawayo. Zimbabwe manufactures, chemicals, fuels, food products has a population of approx 14.5 million (by from South Africa 47.8%, Zambia 20.5% (2017). mid 2020), with approx 32% in urban areas. Migration statistics show that 411,000 migrants Environment: The main environmental3 arrived in 2019, 933,000 emigrated1. challenges facing Zimbabwe are: land degradation, deforestation, inadequate Recent History & Leadership: Zimbabwe, had quantity and quality of water resources, air free elections in 1979 and independence (as pollution, habitat destruction and loss of Zimbabwe, from ) in 1980, after a biodiversity, waste (including toxic waste), long guerrilla uprising and sanctions, with natural hazards (mainly recurring droughts), as the nation's first prime and climate change. Zimbabwe is not included minister, and then president since 1987, until in the Environmental Performance Index4 2018. his resignation in November 2017. His tenure as president was initially widely supported, but Tourism: Travel and tourism in Zimbabwe in time serious economic difficulties led to a generated US$1.2 billion in 2019 employing challenge to his authority. In general elections 161 thousand people (6.2%) and representing held in March 2008 the opposition, the 6% of Zimbabwe GDP. Domestic spending on Movement for Democratic Change, under tourism and travel stood at 80% while leader , won the most votes international spending was 20%. Main tourists in the presidential poll, but not enough to win come in from South Africa (20%), Malawi (18%), outright. A run-off election in June 2008, Zambia (14%) Namibia (9%) & Mozambique involved considerable violence against (8%), with outbound tourists going to South opposition party members which led to the Africa (62%), Botswana (17%), Zambia (8%), withdrawal of Tsvangirai from the ballot. A Mozambique (4%) & Malawi (6%)5. government of national unity in which Mugabe remained president and Tsvangirai became Finance: According to the ESAAMLG report of prime minister, lasted 4 years until Mugabe 2016, the financial sector was dominated by was reelected president in 2013. In November banks, “with a total asset value of USD 7.2 2017, Vice President Emmerson Mnangagwa billion, with 52% of the total banking assets in took over following a military intervention that the hands of the top 5 banks.” Zimbabwe’s forced Mugabe to resign. In July 2018, 2020 financial profile6 includes the following Mnangagwa won the presidential election, (for people aged over 15); 28% have bank with optimism that a new dawn for Zimbabwe accounts, 1.3% have a credit card, 49% have a was possible. Mugabe died in September mobile money account, 9.5% make online 2019. payments, internet penetration is at 33% via 4.8 million internet users - 12 million mobile connections or 83% of the population.

Zimbabwe - Threat Assessment - 2020 Page 4 of 34 Section 4 - Country Ratings & Country Risk Heat Map

Source Zimbabwe � Source Zimbabwe � Source Zimbabwe �

World Economic Forum 63.9/100 Transparency International (TI) 24 / 100 Proliferation Index - PPI Tier 3 Organised Crime Index* Corruption Perceptions Index* (158/180) Threat Lowest Threat Level

OC Index “High” Criminality TI & Afrobarometer 25% Proliferation Index - PPI 254/ 1300 Criminality* Citizens Views and Experiences of Corruption paid bribes in last 12 months Controls* 5.41/10 Report Low Controls score

OC Index 6.13/10 TRACE 72/100 Global Terrorism Index 2.834/10 Criminal Actors Bribery Risk Matrix GTI - Impact* “Low” impact

OC Index 8.5/10 Global Slavery Index 6.67/1,000 US Dept of State No State Embedded Actors GSI Incidence* Country Reports on Terrorism*

OC Index 7.5/10 Global Slavery Index 105,000 Global Cybersecurity Index O.192/10 Criminal Networks No of estimated Modern Day Slaves 2018 (113/152)

OC Index 5/10 Global Slavery Index “C” Rating Mo Ibrahim Governance Index 44.7/100 Foreign Actors Country Response Rating* (Ratings: AAA, AA, A etc) (49.9 - All Africa)* “Slowing Improvement”

OC Index 3.5/10 US Dept of Labor No Rating Freedom House 29/100 Mafia Style Gangs Child Labour Freedom Index* “partly free”

OC Index Synthetic’s 5/10 US Dept of State Tier 2 Rated Heritage Foundation 43.1/100 Drugs Trafficking Trafficking in Persons* Economic Freedom Index Cannabis 4.5/10, “Repressed” Heroin 4/10 / Cocaine 2.5/10

OC Index 3.5/10 IOM Migration 933,000 E/ 411,000 I Basel AML Index* 6.87/10 Arms Trafficking E - Emigration / I - Immigration 13th worst of 129

OC Index 3/10 Illegal Unreported and Unregulated Not Included FIU Egmont No People Smuggling (IUU) - IUU Fishing Index Member

OC Index 5/10 EU Listing of Countries for Illegal No Interpol Yes Human Trafficking Fishing Member

OC Index 4/10 US DoS - Wildlife Trafficking Yes Asset Confiscations Estimated below 1% Illegal Timber Focus / Countries of Concern* Focus Country over 1% of Proceeds*

OC Index 7.5/10 Environment Performance Index Not Included Country National Risk Assessment* 2015 Published Illegal Wildlife

OC Index 8/10 EUIPO & OECD Counterfeit Goods 0 Financial Information Sharing No Illegal Mining Propensity of Exports Partnership

OC Index 3.33/10 Tax Justice Network Not Included US Dept of State Not Listed Resilience* Financial Secrecy Index INCSR Vol I & Vol II*

OC Index 5/10 EU List of None Co operative Not Included European Union List* Yes AML Jurisdictions for Tax purposes

OC Index FATF Standards 3.5/10 OECD - Global Forum Not Included 78% Law Enforcement on Transparency & Exchange Info for Tax Purposes 40 Recommendations*

OC Index 3/10 Global Financial Integrity US$59 million 2017 - FATF Standards 6% International Co- operation Illicit Financial Flows* 11 IO’s on Effectiveness* 17.55%

OC Index 3/10 Embassy’s from N Korea, Syria, Iran Embassies of Iran and Cuba FATF Standards 70% Economic Regulatory Environment or Cuba Core 10 Recommendations

Illegal Drug Dependency / 105,295/0.77% Embargoes - Country Sanctions Limited Sanctions FATF Standards 0% Disorders Number/Share (Comprehensive - UN, US, EU, UK) Core 4 IO’s on Effectiveness

Numbeo Crime Survey 2020 57.47/100 OFAC Listed Parties 67 Entries FATF Counter - Measures Yes SD List (31/129) with Local Addresses Strategic Deficiencies List*

* Symbol Indicates the information is included in the FCN Country Index

FCN Final Ratings - Zimbabwe �

Financial Crime News 50/100 Financial Crime News “High” Risk - 37/100 Threat Rating “Moderate” Threat Financial Crime Rating 26/40 SSA - 9/10 SA

Financial Crime News 23/100 Trend Improving Response Rating “Low” Response (TI CPI, Mo Ibrahim, FATF, Basel Index & GTI - 3-5 years)

Zimbabwe - Threat Assessment - 2020 Page 5 of 34 Section 4 Continued - Country Threats Heat Map

There are many threats that effect Zimbabwe, which are in most part targeted towards its resources, it’s trading status and its port as well as its natural resources, the people, wildlife, metals, minerals, gems, forests, crops and fish. The effect of endemic corruption increases the threats and reduces the ability to effectively respond. For more details in summary form see below.

Zimbabwe - Threat Assessment - 2020 Page 6 of 34 Section 5 - Key Threats

In this Section 5, the most important criminal US$900 million per year, down from the markets, are assessed and summarised based US$1.8 billion figure in the last NRA in 2015. on available sources 5.2 US INCSR/FinCEN: Zimbabwe is not listed 5.1 National Risk Assessment (NRA): The as one of 80 countries categorised by the US first Zimbabwe NRA7 was published in 2015. State Department as a “Country of Primary Overall, the country's ML threat was assessed Concern" in respect of financial crimes in its as "High" and national vulnerability to ML was 2020 Report (INCSR)9. However, in its 2016 assessed as "Medium". The five highest Report, Zimbabwe was listed as a “Country of proceeds generating predicate offences in Primary Concern”, and the following risks Zimbabwe are (i) smuggling (ii) illegal dealings identified: “Serious financial crime in in gold and precious metals (iii) corruption (iv) Zimbabwe generally appears in the form of fraud and (v) tax evasion. various violations of exchange control rules; underground banking; cross-border crime; According to the NRA, in 2015, the main organised syndicates, (both domestic and predicate crimes generated about US$1.8 international); non-transparency in diamond billion a year in 2013, translating to about 11% production receipts; and increased of 2013 GDP. The proceeds, according to the cooperation among criminal networks and links NRA, were mostly generated from illegal with legal business activity, resulting in mining in gold and diamonds (US$600 corruption and bribery. Regulatory and million), smuggling (US$500 million), enforcement deficiencies in Zimbabwe’s AML/ externalisation of currency and tax evasion CFT regime expose the country to illicit finance (US$340 million), fraud and corruption (US$50 risks, but there is no reliable data as to the million) and others (US$240 million). actual extent of the problem.” Main sources and or destinations for the Zimbabwe not listed proceeds were South Africa (40%), China US INCSR 2019 (30%), and others including Zambia, Malawi Botswana, Mozambique, Mauritius and the According to the FinCEN Advisory10 UAE. Findings from a second NRA, whilst not (FIN-2019-A007) issued in November 2019, yet publicly available, has made headlines as “Zimbabwe is making progress since the 2016 the Ministry of Finance and Economic MER, but some deficiencies remain concerning Development in February, 2020, announced such as understanding of ML/CFT risk, that the assessed value of threat proceeds supervision of FIs and DNFBPs, framework for during the period 2014-2018 was estimated at beneficial ownership, and gaps in the targeted US$4.5 billion8, giving an annual average of financial sanctions regime.”

Zimbabwe - Threat Assessment - 2020 Page 7 of 34 Zimbabwe was losing at least revenues from diamonds, but also white- US$1billion annually to corruption owned agriculture businesses seized by the Transparency International Zimbabwe - 2016 government, made him, as well as his family

5.3 Corruption: Corruption is not only a and entourage, extremely wealthy, with significant generator of illicit funds, but also an suspicions of wealth in property holdings 13 enabler of other serious crimes, which protects around the world . those involved from investigation, prosecution The system also helped Mugabe retain power and/or conviction. as diamond revenues were used to finance the

Estimates of losses due to corruption of up to ZANU-PF security apparatus that he needed 14 30% of state revenues have been reported for his political survival ”. elsewhere in Sub-Saharan Africa (SSA), which if During 37 years in power, President applied to Zimbabwe, would generate US$1.7 Mugabe plundered the Country’s billion. In 2016, it has been reported that natural and others resources Zimbabwe was losing at least US$1 billion Various annually to corruption11, according to Transparency International Zimbabwe (TIZ), Zimbabwe’s new president, Emmerson with the police, local councils, the vehicle Mnangagwa, a long-time loyal Mugabe ally inspection department and the education with a track record of holding top department identified as among the most management positions in the security forces, corrupt institutions. put corruption high on his agenda, stating, “my government will have a zero tolerance towards , a politician with the opposition corruption15”. One of his first actions was to Movement for Democratic Change (MDC) announce a 100-day amnesty period for party who served as finance minister in the individuals to return any financial assets they country’s coalition government from 2009 to had stashed abroad. According to the 2013, stated that, “my problem was not only Zimbabwean government, US$591 million was the millions that Mugabe had stolen, but the returned, with another US$827 million further billions that disappeared in other channels. targeted from 1,800 published names, which Today we know that about US$15 billion include manufacturers, miners, small disappeared during my tenure alone12”. This businesses, state-owned entities and even would have amounted to approximately 22% churches.16 of Zimbabwe’s GDP. According to TI’s Global Corruption Barometer During his 37 years in office, Robert Mugabe Africa 201917 (Citizens’ Views and Experiences used his authority to create a complex and of Corruption), 60% of Zimbabweans surveyed opaque system of natural resource plundering. think corruption increased in the previous 12 His decades-long institutional looting of

Zimbabwe - Threat Assessment - 2020 Page 8 of 34 months and 25% of public service users paid a TI & Afrobarometer Findings 2019 (% Survey) - � bribe in the previous 12 months.

The institutions considered most corrupt are the police (57%), MPs (37%), government 71.0 60.0 57.0 officials (36%), local government officials 25.0 (35%), business executives (35%), the ”Increasing” ”Doing Badly” ”Paid Bribe” ”Most Corrupt - Police” president’s office (28%) and judges and magistrates (25%). The least corrupt were that “in spite of recent constitutional reforms, religious and traditional leaders (15%) and the country continues to face major NGOs (11%). These are marginal changes from governance challenges, manifested through the 2015 survey results. various forms of corruption, ranging from petty, bureaucratic and political corruption to Transparency International’s (TI) Corruption grand forms of corruption involving high level 18 Perceptions Index (CPI) 2019 ranked officials. Corruption is also characterised by Zimbabwe 158/180 countries, with a score of the deeply entrenched system of political 24/100 in 2019. A score below 50 is indicative patronage…” of a country struggling with corruption issues. In 2018, it ranked 160/180 with a score of Huge sums of money being lost 22/100. through corruption...we have lost US$1,8 billion through these leakages TI - CPI Scores (out of 100) - � Zimbabwe Anti Corruption Commission - 2020

Zimbabwe’s Anti-Corruption Commission (ZACC) chair, Loice Matanda Moyo, was 24.0 24.0 21.0 22.0 reported21 as suggesting that the country is losing significant sums every year. Speaking at 2010 2013 2016 2019 the Transparency International Zimbabwe (TIZ) 24 out of 100 score and 158 out 180 perceptions and indexes on corruption countries for perceptions of corruption conference in January, 2020, she said, “as TIs CPI 2019 ZACC we are worried with the huge sums of money being lost through corruption. We, have The 2019 TRACE Bribery Risk Matrix (2019) lost US$1,8 billion through these leakages and places Zimbabwe in the “high” risk category as a commission we are also worried with the ranking it 180 out of 200 surveyed countries catch and release syndrome hence we have with a risk score of 7219. engaged the attorney general's office and Further, TI’s Zimbabwe’s Overview of national prosecution office to fight the catch Corruption and Anti-Corruption reported20” and release22," and added that since the

Zimbabwe - Threat Assessment - 2020 Page 9 of 34 establishment of the commission last year, Main criminal markets are illegal mining “their warehouse are now full of recovered and illegal wildlife crime properties from corrupt activities.” Africa’s OC Index 2019

The main Criminal Actors (overall score 5.4 Organised Crime: According to the 6.13/10) are State-Embedded Actors (8.5/10), OC Index - Criminal Actor Types - Importance - � Criminal Networks (7.5/) and Foreign Actors (5/10).

8.5 State embedded actors are the most 7.5

5.0 influential individuals in organised 3.5 criminal activity

Criminal Networks State Embedded Foreign Actors Mafia Style Africa’s OC Index 2019

Organised Crime (OC) Index (Africa 201923), 5.5.1 Environmental or “Green” Crime’s: Zimbabwe is ranked 19th out of 54 countries in Illegal Mining and Smuggling: Zimbabwe is Africa (3rd of 13 Southern African countries) OC Index Criminal Markets - Importance - � for the level of crime.

High Criminality - Low Resilience Africa’s OC Index 2019 7.5 8.0

5.0 5.0 Overall the OCI describes Zimbabwe as High 4.0 4.5 3.5 3.0 Criminality (score 5.41/10) - Low Resilience (score

Synthetics Wildlife HT Mining Logging Arms Cannabis People Smugg 3.33/10). generously endowed with natural resources The Africa OC Index highlighted that, “Criminal such as diamonds, coal, gold, platinum, networks and state-embedded actors act copper, nickel, tin, clay, and other metallic and together to exploit the country’s resources, non-metallic ores24. especially non-renewable resources such as diamonds, but also fauna.” Zimbabwe produced around 4% of the worlds diamonds in value The OC Index identified the top 5 criminal 2013 markets as illegal mining (8/10) - particularly Zimbabwe produced around 4% of total world the trade of precious metals - gold and diamond production in 2013, with 10.4 million diamonds, illegal wildlife crimes (7.5/10) - carats, valued at US$538.5 million25. mainly rhino and elephant poaching, human trafficking (5/10), drugs - synthetics (5/10) and The FATF Report 2016 stated that, “The cannabis (4.5/10). Ministry of Mines and Mining Development is responsible for the regulation of the precious stones and metals dealers, and earned USD3.7

Zimbabwe - Threat Assessment - 2020 Page 10 of 34 Zimbabwe - Threat Assessment - 2020 Page 11 of 34 billion from 2013 to 2015. The Zimbabwe rates in the country, many Zimbabweans have Investment Authority (state entity) exclusively turned to illegal gold mining. In 2017, an handles all applications for gold and mining estimated 400,000 miners were operating in activities in Zimbabwe. Between 2009 and July the criminally controlled gold mining industry.” 2014 the monetary value of applications was According to a UNIDO (Follow the Money: about US$1.3 billion for diamonds and US$729 Zimbabwe) report26”, published in April 2018, million for gold. There are a total of 60,107 large amounts of gold are reportedly gold mine title-holders, of which 90% are small- smuggled out of Zimbabwe, primarily to South scale miners. The small-scale mines contribute Africa, with higher prices and currency risk about 26% of gold production in the country. management being major motivating factors. However, the number of registered miners who deliver gold to the Fidelity Printers and By law, gold miners are required to sell their Refineries (FPR) were 2257 only. The remaining production to the state, which exports the gold majority engage in illicit gold sales. and in exchange receives needed foreign currency. The state though, pays the miners in The “FATF” Report 2016 also stated that, part in foreign currency, and in part in local “Diamonds are marketed and sold by a currency. Miners complain that the local statutory body known as the Minerals currency is increasingly worthless, and they can Marketing Corporation of Zimbabwe. There are achieve much higher prices in foreign currency eight diamond producing companies which are by smuggling it and selling it in South Africa all Kimberly Process Certification Scheme (for example), with estimates of losses to compliant. There are 10 registered diamond Zimbabwe at US$180 million27 a year. cutters and polishers. The authorities indicated that 98% of the transactions in the diamond Diamond extraction in Zimbabwe requires sector involve foreign buyers, and payment was government approvals. All companies seeking all made through wire transfers.” approval must form a joint venture with Marange Resources, a vehicle representing the The Africa OC Index (2019) identified non- Zimbabwe Mining Development Corporation renewable resource crimes as the top criminal (ZMDC), which aims to safeguard the markets in Zimbabwe. According to the Africa government’s interest in deals. OC index, “Zimbabwe is in the top ten countries worst affected by the illicit market for In October 2019, the US barred the trading of non-renewable resources, with a score of 8/10. rough diamonds from Zimbabwe, accusing the This is driven predominantly by an upsurge in country of using forced labour at its diamond illegal gold and diamond mining and trade fields in Marange28. (estimated in the public media to be worth 5.5.2 Environmental or “Green” Crime’s: hundreds of millions of dollars) by criminal Illegal Wildlife Poaching and Trafficking: networks. With extremely high unemployment Zimbabwe - Threat Assessment - 2020 Page 12 of 34 Zimbabwe is one of only 6 SSA countries that borders. The country is also a major hub for receives over 1 million visitors a year, with the illicit pangolin trade. many of these ecotourists drawn by iconic According to Zimbabwean local rangers30, the wildlife, such as buffalo, elephant, rhino, ivory trade is big business, with a complex, giraffe, leopard, lion, zebra and antelope. The globalised, organised crime web behind it. black rhino and elephant have been Locally poachers "are 'recruited' by significantly affected and numbers reduced by middlemen, normally from areas further afield, poaching. who provide them with weapons, ammunition A link between tourism, biodiversity and and money in return for ivory or other wildlife countering wildlife crime was emphasised by products," a successful poacher can earn Zimbabwe’s former Minister of Tourism, Walter amounts of US$150 to US$200 per kilogram of Mzembi, in 2016, where he stated that ivory (an adult African elephants tusk weighs ‘Poaching remains, in my view, the biggest scar on average between 23 - 45 kgs), which is then on the conscience of humanity, and threatens sold on to buyers who may pay from US$1,000 tourism development considering that wildlife to US$2,100 per kilogram for ivory. is the backbone of the tourism industry. We Based on information, ivory trafficking routes have aptly named it biodiversity terrorism29”. from Zimbabwe have included, couriers flying Wildlife crime...is “biodiversity from Harare via Dubai to Hong Kong, with terrorism” ivory secreted in purpose made worn vests Zimbabwe’s former Minister of Tourism, Walter Mzembi - and hidden in luggage31. A 2018 sting in 2016 Zimbabwe, led to an investigation into Grace According to the Africa Organised Crime Mugabe, (the wife of the former president), Index (2019), the illicit wildlife market is suspected of involvement in the illegal ivory pervasive in the country, scoring 7.5/10 in the trade, using her status to send packages via Index. Zimbabwe is a major source country for Harare airport without checks being animal products, primarily elephant ivory and undertaken32. The allegations included rhino horn. Over the past decade, elephant evidence that ivory businesses, legal in populations have decreased dramatically, Zimbabwe (though exports are restricted), suggesting high levels of poaching, often were also involved. Rhino poaching in carried out using cyanide poisoning. Rhinos Zimbabwe has been linked to Zimbabwe’s are poached in large numbers for their horns. Central Intelligence Organisation that has Poachers often take advantage of porous been implicated in supplying firearms to borders and use cross-border smuggling poaching syndicates, giving protection to routes to enter the country, poach animals and poachers and buying rhino horn from smuggle the horns or trophies back across poachers, who are linked to organised criminal

Zimbabwe - Threat Assessment - 2020 Page 13 of 34 groups with operations across the border in The GSI also acknowledges that in 2018 the South Africa33. Zimbabwe government increased its training and awareness efforts to law enforcement Besides ivory and rhino horn, pangolins are officers, judges, immigration officers and also trafficked from Zimbabwe. Whilst it is legal created an inter-ministerial committee to trade python skins, and crocodiles, both resulting in an improvement from a 3/10 to these popular wildlife products are also 5/10 rating, but still overall at “C”. thought to be smuggled out of Zimbabwe, to avoid customs fees and to earn foreign 105,000 modern day slaves currency34. Global Slavery Index - 2018 Zimbabwe is categorised as a Tier 2 country in According to the US State Department35, the 2019 US Trafficking In Persons Report38, Zimbabwe is included as one of 28 “Focus which was reconfirmed in the recently Countries”, but is not a “Country of Concern”. published 2020 Report. Focus Countries are considered to be a “major source of wildlife trafficking products or their The 2019 report highlighted that “human derivatives, a major transit point of wildlife traffickers exploit domestic and foreign victims trafficking products or their derivatives, or a in Zimbabwe, and traffickers exploit victims major consumer of wildlife trafficking from Zimbabwe abroad. Traffickers exploit products.” women and girls from Zimbabwean towns bordering South Africa, Mozambique, and 5.5.3 Environmental or “Green” Crime’s: Zambia in forced labour, including domestic Illegal Logging: Approximately 40% of servitude, and sex trafficking in brothels Zimbabwe’s land area is forested, of which 5% catering to long-distance truck drivers on both is considered as primary forest, with sides of the borders. Traffickers subject deforestation a major problem36. Zimbabwean men, women, and children to Nevertheless, whilst illegal logging is a forced labour in agriculture and domestic contributor, much of the illegal logging is service in the country’s rural areas, as well as mainly due to demand for local firewood, domestic servitude and sex trafficking in cities rather than by organised criminal gangs for and surrounding cities and surrounding towns. export. Illegal logging scores only 4/10 in the Family members recruit children and other OC Index for Zimbabwe. relatives from rural areas for work in cities 5.6 Modern Slavery: According to the Global where traffickers exploit them in domestic Slavery Index (GSI)37 (2018) there are 105,000 servitude or other forms of forced labour. Some modern day slaves live in Zimbabwe, based on children, particularly orphans, are lured with an incidence rate of 6.67/1000 people. promises of education or adoption. Traffickers recruit girls for child sex trafficking in Victoria

Zimbabwe - Threat Assessment - 2020 Page 14 of 34 Zimbabwe - Threat Assessment - 2020 Page 15 of 34 Falls. Traffickers subject children to forced syndicates use Zimbabwe as a transit country, labour in the agricultural and mining sectors especially for cocaine and cannabis bound for and force them to carry out illegal activities, foreign markets. Recent evidence indicates including drug smuggling. Traffickers exploit that Zimbabwe itself has a growing consumer women in domestic servitude, forced labour, market for these drugs too. The substances and sex trafficking in Kuwait…”, with allegations that are most commonly used in Zimbabwe made against those in the Kuwait Embassy in include alcohol, cannabis, heroin, glue and Harare39 cough mixtures. Historical usage of US$ in Zimbabwe provides South African drug Many Zimbabwean adult and child migrants traffickers, with an opportunity to exchange enter South Africa with the assistance of taxi drivers who transport them to the border at OC Index - Drug Trafficking - Importance - � Beitbridge, or nearby unofficial crossing locations, where traffickers subject them to 5.0 4.5 4.0 labour and sex trafficking. Chinese 2.5 construction and mining companies in Cocaine Synthetics Cannabis Heroin Zimbabwe reportedly employ practices drug proceeds in SA Rand into US$ for further indicative of forced labour, including verbal, laundering in Zimbabwe or in nearby countries physical, and sexual abuse, and various means (e.g. Zambia, Botswana), under the guise of of coercion to induce work in unsafe or US$ cash from supposed real estate sales in otherwise undesirable conditions.” Zimbabwe. 13% of children engaged in child According to the OC Index42, “the domestic labour market for synthetic drugs is growing and UN Children’s Fund - 2010 Zimbabwe is also a transit country for the drugs According to the US Bureau of International bound for South Africa.” Labour Affaires40, “children in Zimbabwe engage in the worst forms of child labor, Cannabis (locally referred to as “mbanje”) including in commercial sexual exploitation, remains the most popular illicit drug mainly mining, and tobacco production. Children also because it is grown locally or smuggled in engage in child labor in agriculture.” from neighbouring countries such as Malawi and Mozambique. Zimbabwe is a transit 5.7 Drug Trafficking: According to the country for drugs destined for other countries Interpol’s National Central Bureau (NCB) in in the region such as South Africa. Local Zimbabwe41, whilst the country’s primary crime Zimbabweans are often used to transport areas of concern include wildlife crime, these drugs, and are usually paid in drugs, as particularly stock theft, it also includes firearms, opposed to cash, which then enters the local human beings and trafficking in drugs. Drug market. Zimbabwe - Threat Assessment - 2020 Page 16 of 34 Zimbabwe - Threat Assessment - 2020 Page 17 of 34 According to the OC Index, the “illicit drugs currency) linking Zimbabwe as the biggest markets in Zimbabwe have a moderate tobacco producer on the continent, with its influence, in particular the illicit trade in neighbour South Africa which is the largest synthetics and cannabis. The domestic market and most profitable consumer market and for synthetic drugs is growing and Zimbabwe is cigarette production hub in the region. also a transit country for drugs bound for South Besides Zimbabwe to South Africa trade, illicit Africa. Cannabis is widely cultivated and cigarettes are also sold in and trafficked consumed in Zimbabwe and provides a trading through neighbouring countries Botswana, commodity for export. As in many other illicit Namibia, and Mozambique. The illicit cigarette markets in the country, organised criminal market is dominated by ‘genuine’ contraband groups control the trade.” (as opposed to counterfeit products, which were predominant in the 2000s). The price of a 5.8 Theft / Stolen Good’s and similar crimes: pack of cigarettes on the black market is Crime rates in the 2 years to 2019, have estimated at a third of the price of a pack for jumped with housebreaking, robbery and theft which full taxes have been paid. Whilst there is increasing by close to 50%43, as economic a domestic illicit market in Zimbabwe, illicit conditions have worsened. According to tobacco is produced from independent official statistics, between 2017 and 11 months factories in Zimbabwe in order to smuggle to of 2018, murder cases rose 19%, while South Africa and neighbouring countries45. housebreaking cases increased by 46%. Car Smuggling is carried out by both small scale theft rose by 37%, robberies by 34% and other operations, with bribes at border crossings and thefts were up 49%. There were also significant by organised gangs with access to protection increases in fraud, up 13% over the period, from high ranking figures. Losses to the South armed robbery (11%), illegal possession of African tax authority are estimated at firearms (8%) & theft from cars (8%). A US 2019 approximately US$360 million a year (up to Travel Advisory44 warns American citizens that 2016). “Violent crime, such as assault, carjacking, and home invasion, is common. Smashing the 5.10 Cash Barons. Zimbabwe is experiencing windows of cars with the intent to steal, which a severe cash shortage, following the can harm the driver or passengers, is also reintroduction of the local currency in 2019. As common,” reads the advisory and includes the a result, prices for goods are cheaper if cash is statement, “Local police lack the resources to offered versus via mobile money, or by debit respond effectively to serious criminal card. This has led to so called “cash barons” incidents.” providing cash, sometimes at up to 30% more for banknotes. The cash barons are usually 5.9 Tobacco Smuggling: The illicit tobacco found in the centre of the capital, Harare, or in market in Southern Africa is one of the largest busy markets. It is alleged the cash barons are markets (alongside diamonds, gold and Zimbabwe - Threat Assessment - 2020 Page 18 of 34 able to get hold of notes because of corrupt effectively monitor transactions to identify relationships with some bank officials. Though those linked to ML. it is now illegal to use foreign currency to buy 5.12 Emerging Threats 2 - Virtual Currency: local goods, many people still take the risk and According to a 2018 Circular, the Zimbabwe some businesses charge in both US and Reserve Bank48, informed regulated entities Zimbabwe dollars. The illicit foreign exchange that, “Financial regulators around the world trade remains a lucrative activity, and one that have identified the dangers and risks attracts illicit participants. presented by virtual currencies to financial 5.11 Emerging Threats 1 - Mobile Money stability which include risk of loss due to price (MM): MM has in recent years emerged as the volatility, theft or fraud, money laundering and most popular payment method in Zimbabwe other criminal activities. Further, given the country’s high mobile penetration cryptocurrencies can be used to facilitate tax rate. According to the Reserve Bank of evasion as well as externalisation of funds in Zimbabwe, MM transactions constituted over violation of a country’s laws,” and as a result 90% of the volume and 18% of the value (total directed financial institutions were restricted in value US$97.5 billion) of transactions in the dealing with virtual currencies. country in 201746. 5.13 Tax Evasion: Tax evasion is highlighted 90% of payments via mobile money in the 2015 NRA as one of the major concerns Reserve Bank of Zimbabwe - 2017 from a Zimbabwean perspective, and the “externalisation of currency” and tax evasion is According to a white paper published by estimated at US$340 million. The “FATF” Temenos47”, “mobile money customers often Report 2016 also describes the kinds of tax need little in the way of identification. The evasion that occurs, which “involve i) company whole process often bypasses the country’s transferring funds as payments for expensive financial reporting system. That makes it almost imported items (over-pricing), ii) individuals impossible for authorities to monitor m- using personal accounts to externalise payments, even if they had the expertise which company funds to avoid paying tax, and iii) they often don’t”. under-valuation of imported goods or The cash currency shortage persisting in smuggling of goods to avoid paying duty.” The Zimbabwe has incentivised the population to Tax Justice Network does not include use mobile money for most transactions, Zimbabwe in its Financial Secrecy Index49. resulting in transaction volumes in Mobile 5.14 Overall Threat Level: According to FCN, Network Operator (MNO) platforms far the overall FC Threat level in Zimbabwe is outstripping normal banking transactions in rated as a “Moderate” threat with a score the economy, presenting a challenge to 50/100 and ranked equal 18/40.

Zimbabwe - Threat Assessment - 2020 Page 19 of 34 Zimbabwe - Threat Assessment - 2020 Page 20 of 34 Section 6 - Sanctions & Terrorism

In this Section 6, the focus in on sanctions and although it is expected that these will be re terrorism threats. applied against by the UK.

6.1 Sanctions: Zimbabwe remains a country Zimbabwe is a Tier 3 PPI (Proliferation) Index that has sanctions applied to some of the country with a "Low " response, (254/1,300). former and current members of the regime According to the FATF 2016 Report, and to certain activities, by the US, EU and UK, Zimbabwe was rated “Low” for “Effectiveness” although these have been reduced since for IO11 on Proliferation Finance. initially imposed as a result of human rights Iran and Cuba have embassies in Zimbabwe. abuses by the Mugabe regime. US Sanctions Despite long standing ties to North Korea, introduced in 2003 remain in place on particularly on military matters, trade otherwise individuals, restricting travel to the US and appears to be minimal52. potential seizures of assets if in the US with the EU and UK having similar sanctions, though 6.2. Terrorism / Extremism: The MER 2016 more limited, as to the number of names, and rated IO9 and IO10 as “Moderate” and related to defence and security matters. summarised that “the level of TF risk in Zimbabwe is low based on consideration of a US financial and travel restrictions apply to number of factors including sound CFT legal approximately 85 Zimbabweans, as at the end and regulatory framework, a generally low level of 2019, including President Emmerson of terrorism activities in the region, good Mnangagwa, as well as 56 companies or understanding of TF threats and risks by organisations and an arms exports ban is in relevant competent authorities and good place50. In October 2019, the US barred the understanding of inherent TF risks by FIs.” trading of rough diamonds from Zimbabwe, accusing the country of using forced labour at Global Terrorism Index - Impact - � (Scores out of 10 - lower scores are better) its diamond fields in Marange51.

The EU has extended its current sanctions to 2.8

1.7 1.6 February 2021, which includes a travel ban and 1.2 0.4 0.2 asset freezes against Zimbabwe defence 2014 2015 2016 2017 2018 2019 companies, due to alleged human rights activities by defence and security forces. The According to the Global Terrorism Index (GTI) UK lifted sanctions on Robert Mugabe in 2019, Zimbabwe was rated “Low” impact, with February 2020, due to his passing, and a 2.834/10 score. Zimbabwe is not included in suspended sanctions on his former wife Grace the US Country Reports on Terrorism, 201853. Mugabe, following a decision at the EU level,

Zimbabwe - Threat Assessment - 2020 Page 21 of 34 Zimbabwe - Threat Assessment - 2020 Page 22 of 34 Section 7 - Money Laundering

In this Section 7, the focus is on Zimbabwe’s Customer Sector Country Risks Risks Risks vulnerability to money laundering. Customers with Banks (in particular South Africa (tobacco elevated exposures to retail and and gold smuggling), According to the NRA, the banking sector and criminal activities correspondent Botswana (minerals, such as: illegal mining banks) fuel, fraud), Mauritius DNFBPs (real estate, dealers in precious metals (gold & diamonds) & (externalisation and and stones, and second hand car dealers – smuggling, illegal DNFBPs in particular proceeds from gold wildlife crime, human real estate and smuggling), & who have cash intensive operations and an trafficking, fraud with precious metals and Zambia (poaching corruption (e.g PEPs) stones dealers, and tobacco absence of AML/CFT controls - were identified which also helps followed by second smuggling) facilitate these crimes hand car dealers Third Countries as the sectors most vulnerable to ML risk. & tax evasion as a China, (cash being high risk concern also Other FIs such as externalised by Despite the vulnerability of banks, the “MER” Bureau de-Change, businesses), & to higher risk MSBs MMOs China & Vietnam report found that, “the large-sized banks and sectors and/or (medium risk) (wildlife products), geography risks UAE, (gold and other FI’s affiliated to international financial groups Informal sectors precious metals), India, UAE, Israel (in terms of control or ownership) have (diamonds) demonstrated a good understanding of the inherent ML risks they face,” as opposed to the 7.2 Cash Based Money Laundering: Most the small-sized banks and FI’s” but that “there transactions are carried out by mobile devices is limited or no understanding of ML risks in the or in cash, where that is available. Some parts entire DNFBP sector.” of the country, still do not have banking services, and so cash laundering or exchange Criminal proceeds are generated in Zimbabwe is straightforward. It is still not unusual for through theft or sexual exploitation of forced relatively large cash transactions to be labour, but also in neighbouring countries and undertaken, including for high value assets, overseas, through smuggling goods, and such as real estate, vehicles, gold and gems. In through sales of illegal wildlife products in June 2020, the Government placed restrictions destination markets such as Asia. The amounts on the use of mobile money in response to laundered in Zimbabwe will include domestic alleged mobile money malpractices. proceeds, and some proceeds generated in neighbouring countries, or overseas, though 7.3 Trade Based Money Laundering: Trade these will be limited. Domestic proceeds may based money laundering is another technique also be laundered overseas, for example that is used. See Section 8 for more details. monies from corruption. 7.4 Other Money Laundering: Securities, 7.1 Higher Risk Areas: Higher risk areas Transaction and VC laundering are not (including from the NRA) are set out below. In considered significant. many cases a single risk factor may not be evidence of actual higher risk.

Zimbabwe - Threat Assessment - 2020 Page 23 of 34 Section 8 - Illicit Funds including Estimated Criminal Proceeds

In this Section 8, the focus is on Zimbabwe’s Whilst not all IFFs are made up of criminal vulnerability to illicit financial flows and illegal activity, a significant proportion will be. proceeds and to the laundering of criminal According to the sources and analysis carried and other illicit funds. out in this Threat Assessment, estimates for It is estimated that Zimbabwe suffered from criminal proceeds, laundered funds and, funds illicit financial flows (IFFs), with on average generated by corruption and organised crime, US$2.7 billion a year, from 2004-2013 amongst others, (see Appendix 1 for rationale) according to the African Union54, and US$950 are as follows: million from 2008-2017, according to Global • Total estimates for criminal proceeds Financial Integrity55 (GFI), estimated to have combined of 9.5 to 11.5% of left the country, through trade Main Criminal Markets % of Estimated Proceeds for All Sub Saharan Africa overall - FCN (not including GDP and with 15 - 20% of this misinvoicing. Corruption, Fraud, Smuggling / Tax Evasion) estimated as costs of According to GFI, the most corruption. common method for Logging 24% Goods 13% • Total estimates for monies transferring illicit financial funds, available for laundering through is through trade mispricing. Sex Exploitation Fishing 8% 11% the formal sector is 60 - 70% of

Wildlife GFI believe this method or 3% Drugs criminal proceeds and 32 - 34% 4% series of techniques may involving organised crime, with Mining 14% Theft 56 Forced Labour represent up to 80% of illicit 20% most significant criminal actors 3% financial flows, and can involve being “State Embedded Actors”, abusive and or aggressive closely followed by “Criminal transfer pricing, trade mispricing and mis- Networks" and “Foreign Actors”. invoicing, for example intentionally overpaying • The largest criminal markets in Zimbabwe for imports of goods or services (or will include corruption, fraud, smuggling / underpaying for exports or services) is a tax evasion, and those crimes identified as straightforward way of illegally transferring the largest markets across SSA (see Pie monies out of a country. Chart), with green crimes and drugs, but The risks increase in trade with so-called particularly illegal mining, cold, diamond and advanced economies. tobacco smuggling.

Zimbabwe - Threat Assessment - 2020 Page 24 of 34 Section 9 - Resilience & Response

In this Section 9, the focus is on Zimbabwe’s According to the 2016 MER, the ratings for level of resilience and response. “Technical Compliance” with the Forty (40) Recommendations were as follows; 11 9.1 FATF: The Zimbabwe Country Mutual Compliant (C), 9 Largely Compliant (LC), 14 Evaluation was conducted by the Eastern and Partially Compliant (PC), 6 Non-Compliant (NC) Southern Africa Anti-Money Laundering Group – Recommendations 7, 8, 15, 19, 24, 25). On (ESAAMLG) and published in September 2016. “Effectiveness”, out of the 11 Immediate According to the Mutual Evaluation Report Outcomes (IOs), Zimbabwe was rated at a (MER)57, “Zimbabwe has a relatively new AML/ “Moderate” level of rffectiveness” for 2 IOs and CFT regime following the recent “Low" for 9 IOs. comprehensive review of its legal A follow up report58 and institutional was published in framework. September 2019, Implementation of which focussed on the new measures is “Technical emerging”. Compliance” with the 40 Whilst the MER Recommendations, acknowledged that reporting that the country had Zimbabwe had seen an demonstrated an improvement on its improvement, with AML/CFT system 22 Compliant (C), since the last mutual 11 Largely evaluation in 2007, Compliant (LC), 6 the MER found that, Partially Compliant “overall, implementation has been constrained (PC) and 1 Non-Compliant (PC) – by the limited resources facing the competent Recommendation 24, Transparency and authorities and the courts, to effectively carry Beneficial Ownership of Legal Persons. out their mandate in the fight against ML and TF. Zimbabwe should invest heavily in ML/TF Based on a simple scoring model developed specific capacity-building programmes and set by FCN, Zimbabwe is rated as at 78% for aside sufficient financial resources to ensure “Technical Compliance” and 6% for effective implementation and achievement of “Effectiveness”, with an overall average of the desired AML/CFT outcomes.” around 65% and 30% respectively across more

Zimbabwe - Threat Assessment - 2020 Page 25 of 34 than 80 countries where results have been authorities; and (5) addressing remaining gaps reported by mid-2019. in the TF and PF-related TFS frameworks and demonstrating implementation.” In view of the above ratings, Zimbabwe was placed under enhanced follow-up by 9.2 Resilience to Organised Crime: ESAAMLG, and listed on the FATF "Grey" list of According to the OC Index 2019, Zimbabwe is jurisdictions with strategic deficiencies, on 18 rated at “Low Resilience” with an overall score October 2019. is 3.33/6, and ranked 32/54 in Africa, 9/13 in Southern Africa, with “weaknesses that stem As at June 2020, FATF59 stated that, “Since from the very top of the State apparatus. The October 2019, when Zimbabwe made a high- level of State control of criminal markets in the level political commitment to work with the country is high, coupled with a very poor anti FATF and ESAAMLG to strengthen the organised crime platform.” A number of effectiveness of its AML/CFT regime and component parts which make up the overall address any related technical deficiencies, “Resilience” score are: AML - 5/10, Economic Zimbabwe has taken initial steps towards Regulatory Environment - 3/10, Law improving its AML/CFT regime, including by Enforcement - 3.5/10 and International establishing a legal framework to collect Cooperation 3/10. beneficial ownership information of legal person and arrangements. Zimbabwe should The NRA identified the lack of institutional continue to work on implementing its action capacity building in competent authorities at plan, including by: (1) improving national level as a weakness, and the quality of understanding of the key ML/TF risks among AML supervision for FIs was also highlighted as the relevant stakeholders and implementing one of the key sources of vulnerability. the national AML/CFT policy base on the 9.3 Law Enforcement: Whilst information on identified risks; (2) implementing risk-based law enforcement action in Zimbabwe is scarce supervision for FIs and DNFBPs including and no report has been published yet by the through capacity building among the FIU, the 2016 Zimbabwe MER60, stated that supervisory authority; (3) ensuring “there has not been any freezing or development of adequate risk mitigation confiscation of property specific to ML or TF measures among FIs and DNFBPs, including by undertaken in Zimbabwe. In general, there is applying proportionate and dissuasive very little appetite in Zimbabwe to apply the sanctions to breaches; (4) developing a freezing and confiscation measures, even in the comprehensive legal framework and face of the high number of statistics or mechanism to collect and maintain accurate information on investigation and prosecution of and updated beneficial ownership information predicate crimes. The assessors attributed this for legal persons and arrangements, and finding to a lack of specialised expertise to ensure timely assess by the competent Zimbabwe - Threat Assessment - 2020 Page 26 of 34 conduct parallel financial investigation with a Interpol but is not a member of the Egmont view to identifying and investigating potential Group, and has not published statistics and/ or ML cases and for consideration by the NPA.” reports covering its work, such as STR reports, financial crime risk trends etc. The FIU has A report from Space for Giant, focussing on issued a number of typology bulletins63, for Law Enforcement action and outcomes on example in 2017, covering ML risks through illegal wildlife cases61 published in 2019, “hoarding and selling of cash for speculative reveals active prosecutions in this area. purposes,” & in 2018, highlighting ML risk Zimbabwe brought 345 wildlife cases, with through “cash dealing through Tobacco Farmer high conviction rates and long sentences payouts” & “use of loans in buying and selling meted out. of cash”, & in 2019 highlighting “ML risk and Traffic Report - 2019 illegal foreign currency dealings through For example, between 2015-2018, a total of mobile money services,” & “through Money 345 wildlife cases were brought ,with most Transfer Agents, Diplomats and NGO’s.” There cases related to bushmeat cases targeting are no Financial Information Sharing kudu, impala and buffalo, and 35 elephant Partnerships. related cases, 21 pangolin cases and 1 rhino 9.6 Freedom: The Freedom in the World case. Of those accused, 77% were 201964 report accords Zimbabwe the status of Zimbabwean nationals followed by Zambian “partly free” with a low score of 29/100, bough nationals (22%) and Chinese nationals (1%), up from “not free” the year before. The report with over 60% involving only a single accused, highlights “Endemic corruption, weak rule of with conviction rates around 76% (for elephant law, and poor protections for workers and land cases - 86%), and sentencing at over 80% rights remain among Zimbabwe’s critical custodial sentences of more than 9 years. challenges.” According to the Heritage 9.4 Asset Seizures: No reporting of asset Foundation’s 2019 Index of Economic seizures has been made by the Zimbabwe Freedom65, Zimbabwe’s economic freedom government. Nevertheless it can be safely score is 43.1/100, making its economy one assumed that asset seizures are significantly described as “repressed” and ranked 174/180. below 1% of estimated criminal proceeds. 9.7 Governance: Mo Ibrahim Foundation 9.5 Financial Intelligence Unit (FIU): The Governance scores Zimbabwe at 44.7 /100 Zimbabwean Financial Intelligence Unit was (African average is 49.9) and 39th out of 54 in established in 2004 and is in the administrative Africa, with a “slowing Improvement”. establishment of the Reserve Bank of 9.8 Basel AML Index: Zimbabwe has an AML Zimbabwe, “but has its own governing statutes, score66 of 6.87/10 ranked 13/129 countries in giving it a mandate distinct from that of the 2019. central bank”.62 The FIU is a member of

Zimbabwe - Threat Assessment - 2020 Page 27 of 34 Section 9 - Resilience & Response Continued

Based on the FCN Sub-Saharan Africa Risk Rating Model, Zimbabwe is rated “High” risk at 37/100 with “Threats” at 50/100 “Moderate”, and “Response” 23/100 “Low”.

Ranges for individual components are summarised below, with “Low Response” - RED, “Moderate Response” - Amber and “Higher Response” - Green, (see Section 4 for actual ratings). Key component ratings show the progress for FATF MER ratings, and for OC Index for “Resilience”, and over time in the Mo Ibrahim African Governance Index, and the Basel AML index are also shown.

Zimbabwe - Threat Assessment - 2020 Page 28 of 34 Section 10 - Observations & Recommendations (O&Rs)

Based on this Zimbabwe Threat Assessment, • Stakeholders should consider how to further the following Observations and enhance the response of the private sector, Recommendations (O&Rs) are made as and in so doing, incentivise an improvement follows: in “preventative measures” by moving beyond current FI / DNFPB assessments O & R for Zimbabwean Government: based on technical regulatory compliance, to one based more broadly on testing The NRA was published in 2015. The 2nd • effectiveness. NRA has been quoted by ministers but is not yet published. The NRA should be published O & R for Zimbabwean Financial in 2020. Institutions: Zimbabwean FIs may want to consider whether their AML/CTF/Proliferation The authorities should put in place action • programmes reflect the threats identified and/ plans to address weaknesses identified in the or if changes or enhancements are needed. MER, in particular the NC rating for R24 (BO Particularly important are exposures to illegal of legal persons), and to achieve mining and wildlife, and to PEPs, particular improvements to IO3 (Supervision) - LE, IO4 those associated with the former president, (Preventative Measures) - LE, IO6 (FIU) - LE including business associates. and IO8 (Confiscations) - LE. O & R for Foreign Financial Institutions: The authorities should be seeking much • Foreign FIs that have exposures to Zimbabwe, greater success in asset recoveries than from outside the country may want to consider those reported, which represent significantly the following: less than 1% of estimated criminal proceeds. • Zimbabwean PEPs are likely inherently higher The authorities should address and reduce • risk, due to high levels of corruption in levels of corruption by senior public officials, Zimbabwe, and the “State Embedded Actor” in the justice system, and in the police force, scores in the OC Index, so FIs should as well as reviewing current priorities and consider EDD+ & heightened monitoring. resourcing to ensure a renewed focus on main criminal markets and those activities • Zimbabwe can be considered “High” FC risk that pose the greatest threats and harms, from a foreign FIs perspective, relative to including “green crimes”. other countries around the world. Zimbabwe has an “Improving” trend, with TI CPI, The FIU should publish periodic statistics and • governance & freedom scores improving. reports covering its work e.g. STR reports, risk trends etc, and should seek membership • Following the publication of the FUR on of the Egmont Group. Both the 2015 NRA compliance with the 40 Recommendations, and the 2016 MER highlighted an issue of published in 2019, a number of “Key low resources and capacity negatively Recommendation” results suggest risks are affecting implementation of the AML/CFT heightened with respect to NPOs (R8 - NC). measures by competent authorities. The Whilst results for FIs and DNFPBs themselves authorities should consider increasing in key areas improved, FI Supervision (R26 - resources and capacity building programs to PC) & DNFPBs Supervision (R28 - PC), should improve effectiveness of the institutions. be a concern.

Zimbabwe - Threat Assessment - 2020 Page 29 of 34 Appendix 1 - Range Matrices by FCN

In Section 8 Illicit Funds including Criminal Proceeds, estimates for criminal funds in % terms and for costs of corruption, as well as estimates for laundering and organised crime are set out.

1. Criminal Proceeds and Corruption: Table A1 below illustrates how the final estimates for “Criminal Proceeds” and “Costs of Corruption” are estimated. By taking the level of “Criminality” in the OC Index 2019, and the score from TI’s Corruption Index 2019, FCN’s overall “Country Risk Rating”, and based on the aggregate of these 3 sources, a final range estimate for “Criminal Proceeds” can be established. For “Corruption”, the three sources are used, but ranges then depend on the level of corruption based on TI’s Corruption Perception Index 2019 score.

Table A1. Range Matrix for Estimating Criminal Proceeds & Corruption by FCN - 2020 - (Very High Rating is 4, High Rating is 3, Moderate Rating is 2 & Low Rating is 1 - with all scores aggregated for OCI Criminality, TI CPI & FCN Country Score

Bottom of the Top of the Range Corruption % of Corruption % of Corruption % of Score Range % of GDP % of GDP Proceeds If Very Proceeds If High GDP If Moderate High Levels (CPI) Levels (CPI) Levels (CPI)

12 10.5% 12.5% 15-20% 10-15% 5%-10%

11 10% 12% 15-20% 10-15% 5%-10%

10 9.5% 11.5 15-20% 10-15% 5%-10%

9 9% 11% 15-20% 10-15% 5%-10% (Includes a V High)

9 8.5% 11.5% 15-20% 10-15% 5%-10% (No V Highs)

8 8% 11% 15-20% 10-15% 5%-10%

7 7.5% 10.5% 15-20% 10-15% 5%-10%

6 7% 10% 15-20% 10-15% 5%-10% (Includes a High)

6 6.5% 9.5% 15-20% 10-15% 5%-10% (No Highs)

5 6% 9% 15-20% 10-15% 5%-10%

4 5.5% 8.5% 15-20% 10-15% 5%-10%

3 5% 8% 15-20% 10-15% 5%-10% (Includes a Moderate)

3 4.5% 7.5% 15-20% 10-15% 5%-10% (no Moderates)

2 4% 7% 15-20% 10-15% 5%-10%

1 3.5% 6.5% 15-20% 10-15% 5%-10%

Note: TI CPI scores below 50 are rated: 40-49 - Moderate to High, 30 to 39 - High, below 30 - Very High; OCI Criminality scores are rated: 6 or above - Very High, 5 - 5.9 - High, 4 - 4.9 - Moderate and below 4 - Low; FCN Scores are rated: 1-30 - Very High, 31 - 40 - High, 41 - 51 - Moderate - High, 51 - 70 - Moderate, 71 - 80 - Low- Mod, 81 - 100 - Low. For Costs of Corruption, ranges then depend on the level of corruption based on TI’s Corruption Perception Index 2019 score. For more details on source information for the OC Index, see HERE67, for TI CPI Index see HERE68.

Zimbabwe - Threat Assessment - 2020 Page 30 of 34 2. Monies available for Laundering: Table A2 below illustrates how the final estimates for the range for monies available for Laundering was established. The top of the estimated range is 76% of “Criminal Proceeds”, based on the findings of the UNODC 2011 Study, which found that of US$2.1 trillion estimated global proceeds, that US$1.6 trillion was available for laundering or 76%, and that most of this this was expected to be available to be laundered via the formal financial sector. Based on the relatively low levels of financial inclusion in most Sub-Saharan African countries, compared with the rest of the world, and the size of the shadow and informal economies, as well as the dominance still of cash within Sub-Saharan economies, the estimates available for laundering through the formal financial sector have been assessed with these factors in mind based on the range estimates set out below, from sources estimating bank account and mobile money penetration. Zimbabwe is rated “Moderate.” For more details on sources of information on financial access, see HERE69.

Table A2. Ratings Range Matrix for Laundering by FCN - 2020

Financial Access Range % for Laundering Financial Access Range % for Laundering Criminal Proceeds Criminal Proceeds

V Low Access Levels 40-50 Moderate Access Levels 60-70 < 30% bank accounts AND >40% - 50% bank accounts <30% mobile money OR >40% - 50% mobile money OR vice versa

Lower Access Levels 50-60 Higher Access Levels 70-76 >30% - 40% bank accounts > 50% bank accounts OR OR >30% - 40% mobile money > 50% mobile money

3. Criminal Proceeds Involving Organised Crime: Table A3 below illustrates how the final estimates for the range for “Criminal Proceeds” involving organised crime was established. The top of the estimated range is 46% of criminal proceeds, based on the findings of the UNODC 2011 Study, which found that of US$2.1 trillion organised crime were involved in US$960 million or approx 46%. Table A takes the different scores for organised crime in Sub Saharan- African countries reported by the OC Index and presents an estimate or range as a % of “Criminal Proceeds”, established as set out in Appendix 1 Section 1 above. Zimbabwe is rated 6.13. For more details on organised crime, see HERE70.

Table A3. Ratings Range Matrix for Involvement by Organised Crime by FCN - 2020

Criminal Actors Score in OC Index Range % for OC Financial Criminal Actors Score in OC Index Range % for OC Involvement Involvement

Below 4 /10 in OC Index 2019 22-24 Rated 6 - 6.5/10 in OC Index 2019 32-34

Rated 4 - 4.5/10 in OC Index 2019 24- 26 Rated 6.5 -7/10 in OC Index 2019 34-36

Rated 4.5-5/10 in OC Index 2019 26-28 Rated 7-7.5/10 in OC Index 2019 36-38

Rated 5-5.5/10 in OC Index 2019 28-30 Rated 7.5-8/10 in OC Index 2019 38-40

Rated 5.5-6/10 in OC Index 2019 30-32 Rated 8/10 in OC Index 2019 or above 40-46

Zimbabwe - Threat Assessment - 2020 Page 31 of 34 Message from the Editor - FCN

This Country Threat Assessment focuses on the financial crime threats and responses and is both a stand-alone publication, but can also be read in conjunction with the Global Threat Assessment, published in 2019 and the Sub-Saharan Threat Assessment published in 2020. The Sub-Saharan Threat Assessment has been supplemented by this Threat Assessment as well as for other ountries in Sub- Saharan Africa. The individual Country Threat Assessments have been co-created with dedicated financial crime fighters from the countries covered, and/or with the help of professionals familiar with the country, based on a consistent approach researching available open source information. Judgement has been applied in deciding what to include and what to emphasise. Each Country Assessment follows the same structure, and includes the same main sources, usually over 60 sources from important and credible agencies, in the form of reports, papers and/or ratings. The Country Threat Assessments include the results from the FCN Sub-Saharan Africa 2020 Risk Rating Scorecard, which includes a significant number of these sources to aggregate the threats and the responses to derive a final rating and a final ranking.

More Financial Crime Materials from FCN

Global Threat Phase 1 - 19 Country Sub Saharan Africa Sub Saharan Africa Assessment by FCN - Threat Assessments Country Risk Ratings Threat Assessment by 2019 by FCN - 2020 FCN - 2020

Available at: https://thefinancialcrimenews.com For Subscription for Commercial Businesses / Free to NGO’s and Policy Makers Or Contact the Editor: [email protected]

The Author of this work is John Cusack. The Editor is John Cusack, the publisher is Financial Crime News / Metriqa Limited. All rights remain with FCN/ Metriqa Limited.

John Cusack is a leading financial crime fighter, Editor of the Financial Crime News, former Global MLRO at UBS and Standard Chartered Bank, Two time Co Chair of the Wolfsberg Group (to end 2019), and adviser to a number of financial institutions, Regtech Providers, and engaged with NGO’s combatting wildlife and human trafficking.

Acknowledgements: Thanks and appreciation to a number of colleagues and collaborators who freely gave their time, to research, comment and provide advice in connection with this Malawi Country Threat Assessment, including: Hans Peter Bauer, Hannah Cusack, Vincent Heintz, Victoria Meyer, Ursula M’Crystal, Warren Mtimbanyoka and Andrew Williams.

Information to Note: The information, provided in this Country Threat Assessment is designed to help those involved in combating financial crime. The Editor (John Cusack) takes responsibility for the contents of this document, including any opinions, observations or recommendations, but does not take responsibility for referenced materials, that are the responsibility of the authors and as appropriate. References are provided for information purposes and do not constitute endorsement of any information. readers should be aware that website references listed may change

Zimbabwe - Threat Assessment - 2020 Page 32 of 34 Endnotes: 1 See: https://migrationdataportal.org/about 2 See: https://www.cia.gov/library/publications/the-world-factbook/geos/zi.html 3 See: https://sidaenvironmenthelpdesk.se/digitalAssets/1725/1725303_zimbabwe_environment-cc_policybrief-2016-04-13.pdf 4 See: https://epi.envirocenter.yale.edu/epi-indicator-report/EPI 5 See: https://wttc.org/Research/Economic-Impact 6 See: https://datareportal.com/reports/digital-2020-zimbabwe?rq=Zimbabwe 7 See: https://www.fiu.co.zw/wp-content/uploads/2017/07/NRA-Summary-July-2015-final.pdf 8 See: https://www.hararepost.co.zw/en/the-news/business-news/3719-zim-launches-2nd-national-risk-assessment-report 9 See: https://www.state.gov/2020-incsr-volume-ii-money-laundering-and-financial-crimes-as-submitted-to-congress/ 10 See: https://2009-2017.state.gov/j/inl/rls/nrcrpt/2016/vol2/253369.htm 11 See: https://www.reuters.com/article/us-zimbabwe-corruption/zimbabwe-losing-1-billion-a-year-to-corruption-report-idUSKCN1241R9 12 See: https://www.dw.com/en/zimbabwe-ex-president-robert-mugabes-stolen-fortune/a-41504122 13 See: https://www.theguardian.com/world/2017/nov/17/robert-grace-mugabe-missing-millions-money-zimababwe; https://www.reuters.com/article/us-zimbabwe-mugabe/ zimbabwe-court-appoints-mugabe-daughter-to-identify-his-assets-idUSKBN1Y9186; 14 See: https://2009-2017.state.gov/j/inl/rls/nrcrpt/2016/vol2/253369.htm 15 See: https://www.reuters.com/article/us-zimbabwe-politics/zimbabwes-mnangagwa-promises-zero-tolerance-in-corruption-fight-idUSKBN1EE25P 16 See: https://www.bbc.com/news/world-africa-43458285 17 See: https://www.transparency.org/news/feature/global_corruption_barometer_citizens_voices_from_around_the_world 18 See: https://www.transparency.org/whatwedo/publication/corruption_perceptions_index_2019 19 See: https://www.traceinternational.org/trace-matrix#matrix-results 20 See: https://www.transparency.org/whatwedo/answer/zimbabwe_overview_of_corruption_and_anti_corruption 21 See: https://www.theindependent.co.zw/2020/01/24/us2bn-lost-to-graft-annually/ 22 See: https://www.theindependent.co.zw/2020/01/24/us2bn-lost-to-graft-annually/ 23 See: https://ocindex.net 24 See: https://2009-2017.state.gov/j/inl/rls/nrcrpt/2016/vol2/253369.htm 25 See: https://www.ehudlaniado.com/home/index.php/news/entry/world-s-top-diamond-producing-countries 26 See: https://www.unido.org/sites/default/files/files/2019-02/Zimbabwe%20ASGM_28.04.18_0.pdf 27 See: https://africanbusinessmagazine.com/region/southern-africa/zimbabwes-currency-crisis-hits-gold-miners/ 28 See: https://www.businesslive.co.za/bd/world/africa/2019-10-03-us-bans-trade-in-rough-diamonds-from-zimbabwe/ 29 See: https://www.chathamhouse.org/sites/default/files/publications/research/2018-10-11-tackling-illegal-wildlife-trade-africa-vandome-vines-final.pdf 30 See: https://www.dw.com/en/risky-business-on-the-trail-of-poachers-in-zimbabwe/a-38377807 31 See: https://www.traffic.org/site/assets/files/10858/in_plane_sight.pdf 32 See: https://www.afr.com/politics/grace-mugabes-ivory-crimes-how-an-aussie-photographer-blew-open-a-smuggling-ring-20180327-h0xzzg 33 See: https://globalinitiative.net/wp-content/uploads/2018/08/TGIATOC-Zim-Organised-Crime-Report-WEB.pdf 34 See: https://zimra.co.zw/news/1770:zimra-says-no-to-the-smuggling-of-wildlife-products 35 See: https://www.state.gov/2019-end-wildlife-trafficking-strategic-review/ 36 See: http://www.fao.org/forest-resources-assessment/current-assessment/en/ 37 See: https://www.globalslaveryindex.org/2018/findings/regional-analysis/africa/ 38 See: https://www.refworld.org/docid/5b3e0a36a.html 39 See: https://allafrica.com/view/group/main/main/id/00042055.html 40 See: https://www.dol.gov/agencies/ilab 41 See: https://www.interpol.int/en/Who-we-are/Member-countries/Africa/ZIMBABWE 42 See: https://ocindex.net 43 See: https://newzwire.live/latest-crime-data-more-zimbabweans-turning-to-crime-as-economic-woes-mount/ 44 See: https://www.osac.gov/Country/Zimbabwe/Content/Detail/Report/c762ff3a-a0c5-4b79-b597-15f4aecf7390 45 See: https://www.atlanticcouncil.org/wp-content/uploads/2019/09/The_Illicit_Tobacco_Trade_in_Zimbabwe_and_South_Africa.pdf 46 See: https://itweb.africa/content/JBwErvnBaYjv6Db2 47 See: https://www.temenos.com/wp-content/uploads/2019/08/Financial-Crime-Africa-whitepaper-2019-Aug-21.pdf 48 See: https://www.rbz.co.zw/documents/publications/circulars/circular-to-banking-institutions----operations-of-cryptocurrency-exchanges-----11-may-2019.pdf 49 See: https://fsi.taxjustice.net/en/introduction/fsi-results 50 See: https://www.treasury.gov/resource-center/sanctions/Programs/Documents/zimb.pdf 51 See: https://www.businesslive.co.za/bd/world/africa/2019-10-03-us-bans-trade-in-rough-diamonds-from-zimbabwe/ 52 See: https://www.northkoreaintheworld.org 53 See: https://www.state.gov/reports/country-reports-on-terrorism-2018/ 54 See: https://au.int/sites/default/files/documents/37326-doc-k-15353_au_illicit_financial_flows_devv10_electronic.pdf 55 See: https://secureservercdn.net/45.40.149.159/34n.8bd.myftpupload.com/wp-content/uploads/2020/03/GFI-Trade-IFF-Report-2020-Final.pdf?time=1583530239 56 See: https://gfintegrity.org/gftrade/ 57 See: http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/ESAAMLG-Mutual-Evaluation-Report%20of%20Zimbabwe-2016.pdf 58 See: http://www.fatf-gafi.org/media/fatf/documents/reports/fur/ESAAMLG-Follow-Up%20Report-Zimbabwe-2019.pdf 59 See: https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/increased-monitoring-february-2020.html 60 See: http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/ESAAMLG-Mutual-Evaluation-Report%20of%20Zimbabwe-2016.pdf 61 See: https://spaceforgiants.org/wp-content/uploads/2019/07/Space-for-Giants-Zimbabwe-Court-Outcomes-Baseline-Survey.pdf 62 See: https://www.fiu.co.zw/home/overview/ 63 See: https://www.fiu.co.zw/other_publications/typologies/ 64 See: https://freedomhouse.org/countries/freedom-world/scores 65 See: https://www.heritage.org/index/ranking 66 See: https://www.baselgovernance.org/sites/default/files/2019-08/Basel%20AML%20Index%202019.pdf 67 See: https://ocindex.net

Zimbabwe - Threat Assessment - 2020 Page 33 of 34 68 See: https://www.transparency.org/cpi2019?/news/feature/cpi-2019 69 See: https://datareportal.com/library 70 See: https://ocindex.net

Zimbabwe - Threat Assessment - 2020 Page 34 of 34