RBZ's FIU Sanctions, Blacklists Companies Manipulating Forex Exchange Rate
The Financial Intelligence Unit (FIU) has imposed sanctions on over 200 local businesses for manipulating the foreign currency exchange rate through illicit black market currency trading and abusing the official foreign exchange auction.
The FIU, which is the Reserve Bank of Zimbabwe (RBZ)’s investigations arm, referred over 140 cases of alleged financial crimes relating to currency manipulation to law enforcement agencies for further investigations over the same period.
As of 06 March 2022, 82 cases of alleged breaches of financial regulations had been referred to the Criminal Investigations Department (Commercial Crimes Division), while six cases were handed over to the Central Intelligence Organisation Counter Terrorism Unit.
The Zimbabwe Anti-Corruption Commission (ZACC) is also investigating 11 other cases, while the Zimbabwe Revenue Authority is conducting further investigations into 41 cases referred to the taxman by the FIU.
A single case is with the RBZ’s Exchange Control Division.
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Some of the businesses that were flagged by the FIU were the alleged top financiers behind black market foreign currency trading.
Other businesses were accessing forex through the RBZ Foreign Currency Auction before pegging prices of their goods and services using the black market exchange rates.
The response measures to arrest the blatant sabotage of the Zimbabwe Dollar have also witnessed the FIU freezing bank accounts belonging to dozens of businesses.
The central bank has also put banks with weak Know Your Customer systems on notice, with the threat of severe financial sanctions looming large.
KYC systems are standards designed to protect financial institutions against fraud, corruption, money laundering and terrorist financing.
In an interview with The Sunday Mail, FIU director-general Mr Oliver Chiperesa said the ongoing blitz was targeting illicit currency manipulation through local banking systems. He said:
There are those companies that we have fined ourselves as the FIU using administrative sanctions, they were around 150 last year.
To date, there are now 206 companies fined by the FIU through administrative sanctions.
Then there are cases that we refer to law enforcement agencies, that is the ZRP, ZACC and ZIMRA and so on. We have so far referred 141 cases.
He, however, said the prosecution of cases referred to law enforcement agencies was below par.
Mr Chiperesa said as a result of the FIU’s investigations, dozens of companies have been blacklisted from accessing the RBZ forex auction. He added that:
- Every week, companies are being disqualified from the auction for various forms of abuse.
- Repeat offenders will be barred from accessing the auction altogether.
- There are some banks that are submitting applications on behalf of their clients without doing enough due diligence.
- RBZ has now come up with stiff penalties against banks who have lax Know Your Customer platforms (KYC) and who are found to have facilitated fraudulent applications to come through to the auction.
- The FIU will not spare businesses that are pegging prices of their goods and services using the parallel market exchange rate while accessing foreign currency through the RBZ auction.
Last month, the FIU ordered the freezing of bank accounts for four companies – Geribrian trading as Transervet, Powerspeed trading as Electrosales, Halsted and Enbee – citing suspicious activities related to money laundering activities.
A Chinese restaurant in Harare, Shangri-La, was also slapped with a US$30 000 fine for pegging prices way ahead of the official exchange rates last month.
More: The Sunday Mail
