VZCZCXRO9002
RR RUEHDU RUEHJO RUEHMR
DE RUEHSB #0070/01 0231429
ZNR UUUUU ZZH
R 231429Z JAN 06
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 9479
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUJA/AMEMBASSY ABUJA 1041
RUEHDS/AMEMBASSY ADDIS ABABA 1057
RUEHLO/AMEMBASSY LONDON 0552
RUEHNR/AMEMBASSY NAIROBI 3436
RUEHFR/AMEMBASSY PARIS 0874
RUEHRO/AMEMBASSY ROME 1505
RUEAWJA/DEPT OF JUSTICE WASHDC
RHEHNSC/NSC WASHDC
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 0520
RUCNDT/USMISSION USUN NEW YORK 1256
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 HARARE 000070 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
AF FOR DAS T. WOODS 
AF/S FOR B. NEULING 
STATE FOR INL 
NSC FOR DNSA ABRAMS, SENIOR AFRICA DIRECTOR C. COURVILLE 
USDOC FOR ROBERT TELCHIN 
TREASURY FOR J. RALYEA, FINCEN 
PASS USTR FOR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
JUSTICE FOR OIA AND AFMLS 
 
E.O. 12958: N/A 
TAGS: EFIN KCRM KTFN PTER SNAR ZI
SUBJECT: ZIMBABWE 2005-2006 INSCR: PART II: FINANCIAL 
CRIMES AND MONEY LAUNDERING 
 
REF: A.) SECSTATE 210324 B.) CHISHOLM-NEULING JANUARY 
 
     18 E-MAIL 
 
-------------------------- 
Summary and Recommendation 
-------------------------- 
 
¶1. (U) Zimbabwe faces a serious and growing problem with 
official corruption and many other common risk factors 
associated with money laundering.  Zimbabwe has the legal 
framework in place to combat money laundering but the 
growing economic vulnerability of Zimbabwean officials and 
the decline of judicial independence raise concerns about 
the capacity and integrity of Zimbabwean law enforcement. 
Although the country is not a regional final center, we 
nevertheless propose moving Zimbabwe from the category of 
"Other Countries/Jurisdictions Monitored" to the category 
"Countries/Jurisdictions of Concern".  End Summary and 
Recommendation. 
 
------------- 
Risk Factors 
------------- 
 
¶2. (U) While it does not appear that the scope of money 
laundering here has a significant international element, 
Zimbabwe does have an increasing number of significant 
money laundering vulnerability factors.  Factors that would 
justify categorizing Zimbabwe as a "Jurisdiction of 
Concern" include: 
7Qa flourishing parallel exchange market, 
7Qwidespread evasion of exchange controls by 
legitimate businesses, 
7Qcompany ownership through nominees, 
7Qan increasingly understaffed, under-skilled bank 
supervisory authority, 
7Qa lack of trained investigators or regulators for 
financial crime enforcement, 
7Qfinancial institutions that are determined to 
bypass the regulatory framework, 
7Qlimited asset seizure authority in practice, 
7Qa laissez-faire attitude towards elements of the 
business community, 
7Qready acceptance of U.S. dollar in transactions 
and 
7Qsignificant gold exports and illegal gold trading. 
 
--------------------------------------------- ---- 
ZimbabweQs Anti-Money Laundering Legal Framework 
--------------------------------------------- ---- 
 
¶4. (U) Narcotics-related money laundering was previously 
criminalized in Zimbabwe's Anti-Money Laundering Act.  In 
2004, the GOZ passed the Anti-Money Laundering and Proceeds 
of Crime Act ("The Act") that applied the anti-money 
laundering law to all serious offenses.  The Act required 
banks to maintain records sufficient to reconstruct 
individual transactions for at least six years.  It 
mandated a prison sentence of up to five years.  The Act 
also addressed terrorist financing and authorized the 
tracking and seizure of assets.  Given the GOZ's history of 
selective use of the legal system against its opponents, 
the Act has raised human rights concerns, although its use 
to date has not been associated with any reported due 
process abuses or provoked any serious public opposition. 
 
 
HARARE 00000070  002 OF 002 
 
 
¶5. (U) Zimbabwe is a party to the 1988 UN Drug Convention 
and has signed, but not yet ratified, the United National 
Convention against Transnational Organized Crime.  Zimbabwe 
has yet to sign the UN International Convention for the 
Suppression of the Financing of Terrorism.  Zimbabwe joined 
the Eastern and Southern African Anti-Money Laundering 
Group (ESAAMLG) in August 2003 but has yet to sign the 
ESAAMLG Memorandum of Understanding. 
 
--------------------------------- 
Anti-Money Laundering Enforcement 
--------------------------------- 
 
¶6. (U) Over the past two years, the GOZ has arrested many 
prominent Zimbabweans for activities that it calls 
"financial crimes".  Most of these "crimes" involved 
violations of currency restrictions that criminalize the 
externalization of foreign exchange activities conducted by 
many Zimbabwean businesses with substantial volumes of 
imports or exports (i.e. transferring assets offshore).  To 
date, the Act has not been employed in the prosecution of 
individuals for such offenses. 
 
¶7. (U) The GOZ prefers to prosecute financial crimes under 
the Criminal Procedures and Evidence Act because it allows 
for those charged to be held in custody for up to 28 days. 
The Reserve Bank of Zimbabwe (RBZ), and not the Ministry of 
Anti-Corruption, is the lead agency for prosecuting money 
laundering offenses. 
 
¶8. (U) When requested, the local banking community has 
overtly cooperated with the GOZ in the enforcement of laws 
involving tracking of assets; however, increasingly 
burdensome GOZ regulations and a hostile business climate 
have led to growing circumvention.  The banking community 
and the RBZ have cooperated with the U.S. in global efforts 
to identify individuals and organizations associated with 
terrorist financing. 
DELL