Zimbabwe -- Travel Rule Implementation Regulatory Overview

Zimbabwe has made progress in regulating Virtual Asset Service Providers (VASPs) for Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) purposes, but the FATF Travel Rule specifically (FATF Recommendation 16 concerning virtual assets) has not yet been fully implemented for VASPs.

Here's a breakdown of the status:

Status of FATF Travel Rule Implementation in Zimbabwe

1. Whether Adopted:

   • Partially (Framework for VASPs): Zimbabwe, as an FATF member, is committed to implementing FATF Recommendations. In October 2022, Zimbabwe promulgated the Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022), which for the first time designated VASPs as "financial institutions" for AML/CFT purposes. This means VASPs are now subject to general AML/CFT obligations such as customer due diligence (CDD), record-keeping, and suspicious transaction reporting (STR).
   • Not Adopted (Travel Rule Specifics): While VASPs are regulated, the specific requirements of the FATF Travel Rule – mandating the collection and sharing of originator and beneficiary information for virtual asset transfers – have not yet been specifically legislated or enforced. The FATF's Mutual Evaluation Report for Zimbabwe (October 2022) highlighted this as an area needing improvement, stating that measures to implement the Travel Rule were not yet in place.

2. Effective Date:

   • General VASP Regulation: The Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022) became effective upon its gazetting in October 2022. This is the effective date for VASPs to be considered reporting entities under Zimbabwe's AML/CFT framework.
   • Travel Rule: There is no effective date for the Travel Rule in Zimbabwe, as the specific legislative and regulatory measures for its implementation are still pending.

3. Threshold Amounts:

   • For Travel Rule: Since the Travel Rule is not specifically implemented, there are no specific threshold amounts for the collection and transmission of originator and beneficiary information on VA transfers.
   • For General AML Reporting (as Financial Institutions): VASPs, like other financial institutions, are subject to existing thresholds for currency transaction reporting (CTR) and suspicious transaction reporting (STR) as stipulated by the Money Laundering and Proceeds of Crime Act. These thresholds typically apply to fiat currency transactions but would extend to the fiat equivalent of virtual asset transactions if deemed suspicious or exceeding certain reportable limits in the context of their general AML obligations. The standard FATF Travel Rule threshold for VASP-to-VASP transfers is USD/EUR 1,000, but this is not currently enforced in Zimbabwe.

4. Which VASPs are Covered:

   • The Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022) provides a broad definition of VASPs, covering:
     • Exchange between virtual assets and fiat currencies.
     • Exchange between one or more forms of virtual assets.
     • Transfer of virtual assets.
     • Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.
     • Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
   • Essentially, any entity in Zimbabwe that performs these services professionally and for financial gain is considered a VASP and falls under the purview of the AML/CFT Act.

5. Technical Implementation Requirements:

   • For Travel Rule: As the Travel Rule is not specifically implemented, there are no specific technical implementation requirements for the secure sharing of originator and beneficiary information for VA transfers.
   • For General AML/CFT: VASPs, as regulated financial institutions, are generally required to have internal systems and controls for:
     • Customer Due Diligence (KYC processes).
     • Risk-based assessment and management.
     • Record-keeping of transactions and customer data.
     • Monitoring transactions for suspicious activities.
     • Reporting suspicious transactions to the Financial Intelligence Unit (FIU).
     • Having an appointed AML/CFT Compliance Officer.
     • Staff training.
   • While these are general AML requirements, they indirectly necessitate a certain level of technical capability to manage and store data securely.

6. Penalties for Non-Compliance:

   • While there are no specific penalties for Travel Rule non-compliance (as it's not yet implemented), VASPs that fail to comply with their existing AML/CFT obligations under the Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022) can face significant penalties, which typically include:
     • Administrative Penalties: Fines, directives, warnings, or restrictions imposed by the supervisory authorities (e.g., Financial Intelligence Unit, Reserve Bank of Zimbabwe).
     • Criminal Penalties: For serious breaches (e.g., failure to report suspicious transactions, facilitating money laundering), individuals and corporate entities can face substantial fines and imprisonment.
     • Revocation of License/Operating Authorization: VASPs found to be non-compliant may have their licenses or authorizations to operate revoked.

Referenced Legislation and Guidance

• Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022): This Act designates VASPs as financial institutions for AML/CFT purposes.
  • While a direct government gazette URL is hard to find for this specific amendment without a subscription, you can often find summaries or the full text via legal databases or financial news sites. A general link to the Ministry of Justice, Legal and Parliamentary Affairs website might be: Ministry of Justice, Legal and Parliamentary Affairs Zimbabwe
• FATF Mutual Evaluation Report for Zimbabwe (October 2022): This report provides a detailed assessment of Zimbabwe's AML/CFT framework, including specific findings on Virtual Assets and the Travel Rule.
  • URL: FATF Mutual Evaluation Report of Zimbabwe - October 2022 (Key section: Executive Summary, and specifically Chapter 4 on Recommendation 15/16 for VAs and VASPs)

In summary, Zimbabwe has taken the crucial step of bringing VASPs under its AML/CFT regulatory umbrella, but the specific requirements of the FATF Travel Rule for data sharing on VA transfers are still awaiting concrete legislative and regulatory action.