Zimbabwe’s anti-money laundering agency said this week it had moved to place firewalls around the flashy car dealership sector, which authorities increasingly view as a major conduit for illicit financial flows (IFFs).
In a significant escalation of efforts to combat money laundering, the Financial Intelligence Unit (FIU) said it had placed vehicle dealerships under intensified scrutiny, requiring them to comply with reporting and due diligence obligations similar to those imposed on financial institutions.
The move followed concerns that vehicle dealerships were increasingly evolving into a preferred destination for unexplained wealth in a country where luxury vehicles have turned into symbols of influence, status and sudden riches.
Speaking exclusively to the Zimbabwe Independent, FIU director-general Oliver Chiperesa said the extent of illicit financial activity flowing through vehicle dealerships had emerged as one of the country’s biggest financial crime risks.
“The government has made car dealerships a “designated sector” which is now required to implement anti-money laundering obligations, and is now being supervised by the FIU to ensure they implement legal and regulatory measures such as undertaking customer due diligence, reporting suspicious transactions and submitting other regulatory data that help the FIU and law enforcement agencies to identify any illicit proceeds that are channelled through the sector,” he said.
“The Financial Action Task Force international standards on Anti-Money Laundering do not require car dealerships to be regulated for anti-money laundering purposes, but Zimbabwe has taken the self-initiative to do so in recognition of the money laundering risk the sector poses in the country’s context.”
His remarks came only days after South Africa’s Special Investigating Unit raided Omar Motor Den in Mpumalanga, in connection with investigations surrounding a luxury Bentley Continental GT allegedly linked to procurement fraud.
The South African case exposed regional concerns about the growing use of luxury vehicles and dealerships to conceal proceeds of crime. This trend is increasingly drawing the attention of financial crime investigators across southern Africa.
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The FIU’s latest National Risk Assessment identified vehicle dealerships as the only sector classified as “high-risk” across all major indicators of money laundering exposure, vulnerability and threat.
Authorities say the findings expose how dealerships have evolved into fertile ground for laundering proceeds generated through criminal activities.
The intervention followed findings first highlighted in the Reserve Bank of Zimbabwe’s 2024 Financial Stability Report, which uncovered extensive illicit financial flows in sectors previously considered peripheral to financial crime investigations.
While public attention has traditionally focused on leakages in gold and diamonds, regulators now believe large-scale money laundering operations are flourishing in real estate and vehicle trading.
The FIU estimates that approximately US$6,15 billion in illicit proceeds was generated between 2019 and 2023, translating to roughly US$1,2 billion annually.
Chiperesa said the figure was an estimate derived through internationally-recognised risk-assessment methodologies, but stressed the findings were critical in identifying areas where Zimbabwe was suffering its biggest financial leakages.
“This was an estimate as part of the country’s money laundering risk assessment. The assessment was done using the World Bank Risk Assessment Tool, which uses available data on crime statistics, actual and estimated, to assess what is being lost through various criminal activities. The figures are mere estimate. The value is not in their mathematical correctness, but rather helps the country and the relevant state agencies to identify the areas of greatest risks where the most leakages are occurring and to take necessary intervention measures,” he added.
Investigators found that about 95% of sampled dealers were conducting transactions almost entirely in cash, while some operators were functioning without licences and regulatory oversight.
The combination of high-value assets, large cash payments and weak controls has created an environment ripe for abuse.
“It is not just lawyers handling cash on behalf of clients, real estate agencies and car dealers as well. Zimbabwe is still a predominantly cash economy where some high-value transactions are being settled in cash,” Chiperesa told the Independent.
The heightened surveillance comes as Zimbabwe’s vehicle market continues to expand rapidly.
The country’s vehicle fleet grew by about 25% between 2019 and 2023, rising from approximately 1,23 million vehicles to 1,6 million.
Authorities fear this growth may have created fresh opportunities for criminals seeking to move illicit wealth through seemingly legitimate transactions.
The FIU says criminal proceeds continue to be driven primarily by smuggling, illegal gold trading, corruption and fraud.
However, Chiperesa argued that intervention measures introduced in recent years have started producing results.
“Our Money Laundering National Risk Assessment Report, covering data for the period 2019-2023, showed that smuggling, illegal trade in gold, corruption and fraud are the financial crimes contributing the highest in terms of illicit proceeds,” he said.
“The government and various relevant state agencies, informed by the risk assessment, have already put in place various intervention measures at policy and operational level, which we are confident have been successful in reducing the leakages.”
