Financial Action Task Force Removes Zimbabwe from Grey List, Easing Financial Isolation

Good News for Zimbabwe’s Economy

In a rare piece of good news for Zimbabwe’s economy, the global financial crime watchdog, the Financial Action Task Force (FATF), has removed the country from its “grey” watchlist. The decision comes after a site visit by FATF experts who concluded that Zimbabwe had made sufficient financial regulatory reforms to warrant the removal.

Background

Zimbabwe was placed on the grey list in October 2019 due to concerns over its lack of safeguards to prevent the flow of dirty money. However, since then, the country has taken steps to improve its risk-based supervision for financial institutions and other private businesses, developed penalties for violators, and increased access to up-to-date beneficial ownership data.

FATF Congratulates Zimbabwe on Progress

The FATF congratulated Zimbabwe on its significant progress in addressing strategic anti-money laundering (AML) and combat financing of terrorism (CFT) deficiencies. As a result, Zimbabwe will no longer be subject to the FATF’s increased monitoring process.

Impact on Zimbabwean Banks

Despite this development, Zimbabwean banks are unlikely to experience an immediate lifting of financial isolation. The country has lost at least 102 corresponding banking relationships over the past decade due to Western sanctions, poor regulation, and currency crisis. International banks remain wary of falling foul of US sanctions for handling Zimbabwean business.

Significance for Zimbabwe’s Economy

The removal from the grey list is seen as a major step forward for Zimbabwe’s economy, which had been struggling with financial isolation. Finance Minister Mthuli Ncube had anticipated this development in his 2022 budget statement, hoping it would boost investor confidence and make it easier for local banks to secure new correspondent banking relationships.

Context and Concerns

The African Caribbean and Pacific has previously described the listing process as “unilateral and discriminatory”, highlighting concerns over the impact on African countries. Other African countries that were previously listed by FATF, including Ghana, Mauritius, and Botswana, were also removed from the list at previous meetings.