Zimbabwe: Will RBZ Win Fight Against Cash Cartels?

Reserve Bank of Zimbabwe.
28 January 2020

The Reserve Bank of Zimbabwe (RBZ) recent cautionary statements against companies alleged to be complicit in the foreign exchange deals on the parallel market are turning into empty hype, short of action.

For the benefit of doubt, let's presuppose the Central Bank's Financial Intelligence Unit (FIU) has been doing its job with utmost competence, how then does it so happen that every time a company is linked to the illicit activities, it does how ever go free after "investigations"?

In fact, each time the RBZ makes an intervention, there are more questions than answers left begging.

Last week, the exchange rate ran amok with the Zimbabwean dollar tumbling by nearly 15 percent to close the week at ZWL$ 25 against the American dollar from ZWL$ 22 at the beginning of the week.

On Friday, the FIU identified a Chinese firm, China Nanchang to have released millions of dollars in local currency on to the market, spiking exchange rate escalations.

As expected the FIU issued a statement, "The FIU has ordered the freezing of the identified account pending further analysis and is undertaking ongoing surveillance to identify more culprits involved in the parallel market transactions, particularly on the Ecocash platform,"

However, one would assume that the FIU as part of its day to day activities analyses flow of money on all formal channels and should not wait until the exchange rate escalates before it takes action.

Instead, the nation is now accustomed to empty threats on known perpetrators.

Moreover, there haven't been stern punitive measures taken to deter other companies complicit in the activities.

As such, one can be pardoned to assume the scourge is flourishing under the fortress of political backing.

In June last year, Finance and Economic Development Minister, Mthuli Ncube in an informal meeting with journalists said authorities were aware of a company supplying the black market participants with RTGS balances to buy out foreign currency on the market.

The minister did not want to disclose the company yet these are the authorities expected to fight the scourge of illicit money trading.

In September that year, the RBZ froze bank accounts of four companies that were suspected to be engaged in money laundering activities and amongst the accused, was Sakunda Holdings, owned by Mr Kudakwashe Tagwirei, a close ally to the President Emmerson Mnangagwa who also sits in the Presidential Advisory Council.

Although acquitted of all suspicious activities following completion of investigations by the FIU, the company remains heavily tainted in a US$ 2 billion Command Agriculture scandal.

Again towards the end of the year, authorities pushed for the suspension of several Ecocash agent lines on suspicion of illicit money trading activities.

Could it be that the FIU is incompetent enough to wrongfully suspect companies complicit in fueling foreign currency trading activities on the parallel market every time or there is a lot happening which we are just not being truthfully told.

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