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  • Writer's picturerutendo matinyarare


John Mushayavanhu is holding the Zig, Zimbabwe’s new currency. To protect the currency he will need to stop illegal externalization and money laundering.
John Mushayavanhu the new Reserve Bank Governor of Zimbabwe holding ZIGs.

Last week, I wrote an article about how sanctions and externalization have been the primary causes of our currency issues over the years. However, now that sanctions have been lifted, Zimbabweans continue to sabotage the local currency by being the biggest externalizers globally.

Now, the question is: how do we stop this externalization? More critically, how do we bring these externalized funds back into our financial system?

I recall when the current President took office, he had a list of some of the country’s most notorious externalizers whom he threatened to name, shame, and punish if they did not repatriate the funds they had externalized in tax havens. Did those individuals ever return what they had externalized?

Regardless of what occurred then, the fact remains that unless Zimbabwe takes measures to curb this externalization, it will persist as the primary cause of our foreign currency hemorrhage, and, like a hemophilic, any currency we introduce will eventually die of bleeding.

Illegal externalization constitutes illicit money flows and money laundering, which are condemned by the #FATF (Financial Action Task Force) and the U.S. government.

Consequently, given that our government has opted to participate in the global financial system and to adhere to FATF regulations, aimed at combatting money laundering and “terrorist financing”, we might as well leverage this system to stem illicit flows and recover Zimbabwean funds hidden worldwide.

Given that most transactions are now digital, concealing money is nearly impossible today, due to the paper trail it leaves. Therefore, our Reserve Bank (RBZ) must collaborate, not only with the FATF and FATF Style Organizations in Africa, but also with international firms specializing in tracing illicit financial flows, perpetrators and beneficiaries.

Many of these firms, like Audere International, are comprised of former MI6, Mossad and CIA agents who maintain close ties with personnel in tax havens and financial institutions worldwide.

With these connections, they are better equipped than most African countries to track the movement of money through the Western financial system accurately, to locate laundered funds.

This expertise is an advantage these former Western agencies have over African nations, but their skills can be shared with Zimbabwe for a percentage of the funds recovered.

Once externalizers are identified, our FIU (Financial Intelligence Unit) and SIU (Special Investigation Unit) can leverage FATF's inter-jurisdictional cooperation powers, to request tax havens and non-tax haven financial institutions to undertake non-prosecutorial blocking of accounts, investigations and if necessary, seizures and repatriation.

In the meantime, tax havens can be compelled by FATF to perform due diligence on blocked funds and beneficiaries or face greylisting.

Armed with this information, our SIU, Reserve Bank and tracing firms, can compel fund owners to account for how they moved funds out of the country. Where responses are unsatisfactory, non-prosecutorial seizures can be carried out, under FATF regulations and through collaboration with FATF-style organizations, to return the funds to the country.

The process outlined above is an integral part of FATF’s 40 guidelines, intended for implementation by all nations seeking to participate in the global financial system.

Now, here's the crux: I, for one, do not endorse these rules because they have often been used by the West against African nations, to impoverish them. However, if the West wants this system to endure, they have no option but to permit Africans to utilize it to stem illicit flows and externalization; otherwise, sooner or later, the Global South will reject the system for BRICS alternatives.

Therefore, it is through this window of opportunity that Zimbabwe must utilize this system to replenish our forex reserves.

By Rutendo Bereza Matinyarare.