Money laundering in East and Southern Africa: An overview of the threat

This research paper provides an overview of money laundering threats within the East and Southern African Anti-Money Laundering Group (ESAAMLG) region. It examines the strategic importance of laundering for organised crime and corruption, identifies common typologies (internal, incoming, and outgoing), and details specific predicate crimes such as drug trafficking, armed robbery, and currency speculation. The document also analyzes the region's vulnerability as a destination for illicit funds due to offshore financial regimes and regulatory weaknesses.

• Money laundering is strategically vital for organised crime because it obscures the underlying criminal activity, allows for the reinvestment of profits into future crimes, and facilitates the creation of transnational criminal networks. Law enforcement can disrupt criminal viability by removing the economic gain derived from these illegal profits.
• Drug trafficking is a primary source of funds for laundering across the region. In South Africa, the market is the largest, with over 100 known syndicates often laundering assets through residential properties, legitimate businesses, and front companies. In Malawi, dagga is grown primarily around Nkhotakota and exported to Zimbabwe, Namibia, and South Africa.
• Currency speculation has become a highly lucrative syndicated crime in Zimbabwe due to the disparity between official and market exchange rates. This activity involves a range of actors from street traders to government ministers and is facilitated by the diaspora sending foreign currency into the country.
• Armed robbery proceeds are frequently laundered through real estate and cash-intensive businesses. In Kenya, robbers often purchase property in downmarket areas of Nairobi or outskirts in the name of female companions, or invest in the 'matatu' passenger transport business.
• The 'Goldenberg scandal' in Kenya involved collusion between entrepreneur Kamlesh Pattni and high-ranking state officials, costing the state an estimated US$500 million. Funds were laundered through the Exchange Bank and invested in projects such as the Grand Regency hotel in Nairobi.
• Tax and customs duty evasion are widespread regional problems. In Uganda, the Uganda Revenue Authority has faced significant corruption; between September 2000 and December 2001, fictitious claims by exporters resulted in estimated losses of USh20 billion (US$14 million).
• The region is vulnerable to incoming money laundering due to 'open door' investment policies and the presence of offshore financial centres. Mauritius and the Seychelles are noted as particularly vulnerable; the Seychelles previously offered citizenship to any investor providing at least US$10 million regardless of the source.
• Outgoing money laundering often involves the physical movement of bulk cash or the use of alternative remittance systems to obscure trails. In Tanzania, some launderers have shifted their centres from Dubai to India, Jakarta, and Hong Kong to avoid suspicion following the September 11 attacks.
• A 2002 PriceWaterhouse-Coopers study categorized the susceptibility of ESAAMLG countries to money laundering: 50% are high-risk (Kenya, Malawi, Seychelles, Tanzania, Uganda, Zambia, and Zimbabwe), 35.7% are medium-risk (Botswana, Lesotho, Mauritius, Mozambique, and South Africa), and 14.3% are low-risk (Namibia and Swaziland).
• The Walker model estimated that in 1998, US$22 billion was laundered through southern African financial systems, with US$15 billion generated internally and US$7 billion infused from outside the region (primarily North America, East Asia, and Europe).

APA

Goredema, C. (2003). Money laundering in East and Southern Africa: An overview of the threat. Institute for Security Studies. https://issafrica.s3.amazonaws.com/site/uploads/69.pdf

Chicago

Goredema, Charles. Money laundering in East and Southern Africa: An overview of the threat. Institute for Security Studies, 2003. https://issafrica.s3.amazonaws.com/site/uploads/69.pdf.

Wikipedia

{{cite report |last1=Goredema |first1=Charles |title=Money laundering in East and Southern Africa: An overview of the threat |publisher=Institute for Security Studies |date=April 2003 |url=https://issafrica.s3.amazonaws.com/site/uploads/69.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{goredema2003money, author = {Goredema, Charles}, title = {{Money laundering in East and Southern Africa: An overview of the threat}}, institution = {Institute for Security Studies}, year = {2003}, month = apr, url = {https://issafrica.s3.amazonaws.com/site/uploads/69.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }