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The law enforcement challenges of evolving money laundering techniques
The cartels have developed a technique that is “new” to law enforcement. To compound the challenge to authorities, the central bank has lost absolute control of the U.S. dollar to local currency exchange rate. This has given rise to another threat: a thriving black market that has taken over as the official market. This has presented several opportunities for money laundering. A case of catch-up has commenced. Given the multiple other challenges that the local law enforcement is facing, there is a clear need for international cooperation.
Conclusion
The U.S has at least a moral obligation, if not a legal obligation, to ensure the proper use of the greenback in those territories and sovereign states that have dollarized. By tearing a page out of the BMPE playbook, cartels in Zimbabwe can externalize the proceeds of crime overseas, destabilizing economies and threatening security of the region and beyond. If the U.S. has offered to assist the Mozambican government in combating the insurgency, it should also curb money laundering in the region. Otherwise, its efforts will be similar to clapping with only one hand.
Dr. Prosper Maguchu, CAMS, anti-corruption lawyer
This research was made possible by funding from Scholars at Risk.
1 Kurt Schuler, “Some Theory and History of Dollarization,” Cato Journal, https://www.cato.org/sites/cato.org/files/serials/files/cato-journal/2005/1/ cj25n1-13.pdf
2 “Statement by Acting Finance Minister to Parliament,” Parliament of Zimbabwe, https://www.parlzim.gov.zw/national-assembly-hansard/ content/80-vol-35/?start=20
3 “Frequently Asked Questions About the Bond Notes,” Reserve Bank of Zimbabwe, November 1, 2016, https://3-mob.com/wp-content/ uploads/2016/11/FrequentlyAskedQuestionsBondnotes.pdf
4 Ibid.
5 “Statutory Instrument 142 of 2019,” Ministry of Finance and Economic Development, http://www.zimtreasury.gov.zw/index.php?option=com_ content&view=article&id=179:stat utory-instrument-142-of-2019&catid=92&Itemid=762
6 Jeff Thomas, “Zimbabwe: When the Black Market Becomes the Real Market,” International Man, https://internationalman.com/articles/zimbabwe- when-the-black-market-becomes-the-real-market/
7 “Introduction of a Foreign Exchange Auction Trading System,” Reserve Bank of Zimbabwe, June 17, 2020, https://www.rbz.co.zw/index.php/publications- notices/notices/press-release/870-introduction-of-a-foreign-exchange-auction- trading-system-17-june-2020
8 Reserve Bank of Zimbabwe, June 17, 2020.
9 Farai Mutsaka “Zimbabweans mend shabby dollar notes amid economic crisis,” ABC News, November 13, 2020, https://abcnews.go.com/Business/ wireStory/zimbabweans-mend-shabby-dollar-notes-amid-economic-crisis- 74186870
10 Ibid.
11 Rory Pilossof, “‘Dollarisation’ in Zimbabwe and the Death of an Industry,”
Review of African Political Economy, Vol. 36, No. 120, 2009, pp. 294-299. 12 Ibid.
13 Ed Malo, Dollarization and Foreign Countries That Have Dollarized To the U.S. Dollar, (GRIN Publishing, 2015) 1.
14 Marcia Kwaramba, “Zimbabwe’s restrictions on mobile money transfers are a blow to financial inclusion,” The Conversation, October 14, 2020, https:// theconversation.com/zimbabwes-restrictions-on-mobile-money-transfers- are-a-blow-to-financial-inclusion-147109
15 “Monetary Policy Statement,” Reserve Bank of Zimbabwe, August 21, 2020, https://rbz.co.zw/index.php/22-monetary-policy/905-august-2020- monetary-policy-statement
16 Joseph Cotterill, “Cash Trails: Workers abroad offer lifeline for Zimbabwe’s economy,” Financial Times, August 12, 2019, https://www.ft.com/ content/6303aede-b2c3-11e9-bec9-fdcab53d6959
17 Whitehead Zikhali, “Changing money, changing fortunes: experiences of money changers in Nkayi, Zimbabwe,” Canadian Journal of African Studies, September 21, 2020, https://www.tandfonline.com/doi/abs/10.1080/ 00083968.2020.1802610?journalCode=rcas20
18 Sarah Bracking and Lloyd Sachikonye, “Remittances, Poverty Reduction and Informalisation in Zimbabwe 2005-6: A Political Economy of Dispossession?” Brooks World Poverty Institute Working Paper No. 28, September 10, 2008, https://ssrn.com/abstract=1265516
19 “Sending money from SOUTH AFRICA to ZIMBABWE,” World Bank, https:// remittanceprices.worldbank.org/en/corridor/South-Africa/Zimbabwe
20 “The Market for Remittance Services in Southern Africa,” World Bank, https:// documents.worldbank.org/en/publication/documents-reports/ documentdetail/986021536640899843/the-market-for-remittance- services-in-southern-africa
21 Adolfo Barajas et. al, “Do Workers’ Remittances Promote Economic Growth?” International Monetary Fund, July 1, 2009, https://www.imf.org/en/ Publications/WP/Issues/2016/12/31/Do-Workers-Remittances- Promote-Economic-Growth-23108
22 “Report on Cartel Power Dynamics in Zimbabwe,” Maverick Citizen, January 2021, https://www.dailymaverick.co.za/article/2021-02-09-how-cartels- operate-and-their-impact-on-the-people-of-zimbabwe/
23 “Financing a parallel government?” Global Witness, June 20, 2012, https://www.globalwitness.org/en/archive/financing-parallel-government- Zimbabwe/
24 “Anti-money laundering and counter-terrorist financing measures: Zimbabwe Mutual Evaluation Report,” Eastern and Southern Africa Anti-Money Laundering Group, September 2016, https://www.fatf-gafi.org/media/fatf/ documents/reports/mer-fsrb/ESAAMLG-Mutual-Evaluation-Report%20 of%20Zimbabwe-2016.pdf
25 Statutory Instrument (S.I.) 145 of 2017.
26 “Zim loses US$3bn to illicit financial flows,” The Herald, February 26, 2020, https://www.herald.co.zw/zim-loses-us3bn-to-illicit-financial-flows/
27 “U.S. Government Assistance in Zimbabwe in 2019,” U.S. Embassy in Zimbabwe, January 16, 2020, https://zw.usembassy.gov/u-s-government- assistance-in-zimbabwe-in-2019/
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