The Reserve Bank of Zimbabwe (RBZ) has raised alarm over the growing use of the country’s real estate sector as a vehicle for illicit financial flows (IFFs), warning that the market is increasingly being used to launder proceeds from crime.
In its 2024 Financial Stability Report, the central bank identified real estate—alongside car dealerships and precious minerals—as one of the sectors most vulnerable to money laundering due to weak regulatory oversight and the widespread use of cash.
“Real estate, car dealers, and precious stone or metal dealers are the sectors that are most susceptible to money laundering,” the RBZ stated. “This is partly due to the extensive use of cash transactions and partly due to weak anti-money laundering controls in these sectors.”
The findings suggest that Zimbabwe’s property market, long perceived as a safe haven for storing wealth, is being increasingly exploited to clean illicit funds generated through tax evasion, corruption, fraud, and smuggling.
Although the RBZ did not provide figures for the scale of IFFs in the sector, lawyers and estate agents have previously raised concerns over the volume of untraceable US dollar transactions being used to purchase high-value properties—often by politically exposed persons or wealthy individuals seeking to rapidly offload undeclared cash.
Last year, legal professionals told The Zimbabwe Independent they had handled multiple transactions involving millions of dollars in cash with no clear paper trail or proof of source of funds, pointing to the risks of real estate becoming a hub for financial crime.
The central bank’s findings echo broader concerns about Zimbabwe’s highly informal economy, where an estimated US$2.5 billion circulates outside the formal banking system, making it difficult to monitor financial flows or enforce compliance.
“The high informalisation of the economy and the dominance of US dollar cash transactions present serious challenges in effective monitoring and control of money laundering,” the RBZ said.
Zimbabwe’s third National Risk Assessment, conducted using a World Bank methodology, rated the country’s money laundering risk as “medium,” but flagged real estate as a major vulnerability, particularly because of its role in absorbing proceeds from illegal activities.
Experts say the sector’s opacity is worsened by regulatory loopholes, inconsistent enforcement of property registration and ownership verification, and a lack of integration with financial intelligence systems.
As authorities step up efforts to combat IFFs, there are calls for stronger due diligence requirements for property transactions, mandatory reporting of suspicious deals, and stricter enforcement of Know Your Customer (KYC) standards among estate agents and legal practitioners.
Real estate analysts warn that unless urgent reforms are introduced, the sector risks becoming entrenched as a parallel shadow financial system that undermines macroeconomic stability, fuels inequality, and erodes public trust.
This article tweaked for real estate sector was first published by Zim Independent
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