Reserve Bank of Zimbabwe Reveals Most Banks Lose Correspondent Deals Due to AML Non-compliance

The Reserve Bank of Zimbabwe (RBZ) Deputy Governor disclosed that most banks are losing clients due to non-compliance with international regulations to combat money laundering and terrorist financing. 

Jasimen Chipika, Deputy Governor of RBZ, stated that the local banks lose most correspondent deals with other banking relationships due to the lack of a legal AML framework. The RBZ revealed that Zimbabwe banks lost more than 100 correspondent banking relationships last year, which remain the local banks excluded from the international banking sector. The Deputy governor claimed that the country’s high-risk profile and inadequate CFT and AML derivatives resulted in the country being added to a Financial Actions Task Force (FATF) grey list.

At the meeting of the heads of Financial Intelligence Units of Eastern, Southern, Central Africa, and Yemen, Chipika stated, “the listing of Zimbabwe as a noncompliant country came as a curse and a blessing to us. The listing of Zimbabwe on the grey list of the non-compliance jurisdiction turned out to be a curse for the country because it saw many of our banks losing several correspondent bank relationships as well as facing serious challenges in trying to establish new ones.” 

The FATF team visited Zimbabwe last year to evaluate the compliance procedure and financial institutes controls to conduct risk assessments. It also checks the ability of the government’s attempts to enhance the CFT and AML measures. FATF gave a clean check to Zimbabwe and removed the country from the grey list. Chipika added in a meeting that countries on the grey list struggle financially. She stated, “whilst the costs on the economy are hard to quantify, these costs are undoubtedly significant.  On the other hand, we also saw the silver lining of this painful process and seized it as an opportunity to accelerate our AML/CFT reforms.”

The local banks of Zimbabwe rely on two correspondent banking relationships, Afreximbank Trade Payment Services (AfPAY) and South Africa-headquartered First National Bank. The 40 recommendations from the FATF offer an extensive range of anti-money laundering measures that prevent the criminal justice system and law enforcement, the financial sector and its regulation, and global relationships. According to the RBZ deputy governor, “now the country’s AML/ CFT regime is stronger than it was before the greylisting. In terms of technical compliance, Zimbabwe is now proudly among the best-rated countries in the region, and we are on course to become compliant with the 40 compliance recommendations before the year 2024.”

The aim of these CFT and AML obligations is to assist financial institutions in identifying business and customer identities to protect companies from financial criminals. The regulatory departments designed various checks in order to safeguard global financial stability. RBZ stated that the Financial Intelligence Unit’s capabilities were being developed, and they are aiming to improve risk-based AML/CFT oversight for local financial institutions.

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