THE Reserve Bank of Zimbabwe has ordered all companies operating in the country to open local bank accounts as it steps up efforts to fight illicit financial flows which continue to bleed the economy.
This comes as several foreign-owned companies have been accused of hoarding foreign currency, particularly United States dollars, from Zimbabwe since the adoption of the multiple currency regime in 2009.
RBZ Deputy Governor Dr Kupukile Mlambo said, “Just to give you the magnitude, in 2015 we estimated that about US$150 million monthly was going away in illicit financial flows.
“That is why you find out that by the end of 2015 we had to cut out the use of free funds.”
He said the central bank’s Financial Intelligence Unit was closely monitoring “all suspicious transactions within the banking system”.
“Every time when a bank sees a transaction that it thinks is suspicious, it is obliged to report before processing it. We now need to find out first of all, ‘where the money is coming from, where it is going?’
“Secondly, we are trying to force all companies; all companies are required to have local bank accounts so that their transactions are done through the bank, especially foreign companies.
“There are some that were not banking their money so we are trying to have them bank their money. Retailers also have to bank their money. We check to see that this is happening,” said Dr Mlambo.
Financial institutions colluding in or abetting externalisation will be dealt with under the Money Laundering and Proceeds of Crime Act (Chapter 9:24).
ZLG Purified Water, which wholesales and retails bottled water, has been fingered by monetary authorities as not owning a local bank account. As at last Thursday, ZLG was transacting on a cash basis, implying that it still does not have a local bank account.
Overall, around US$864 million was externalised in 2015 by ordinary citizens under the auspices of free funds for numerous purposes such as sending money to foreign accounts. Corporates externalised US$1,2 billion in 2015 through export proceeds, under-invoicing and high management and expert fees.
With the country in the grip of a paper money shortage since March 2016, market watchers suggest illicit financial flows are partly to blame.
Three weeks ago, The Sunday Mail Business reported how foreign currency was leaking from Freda Rebecca Gold Mine, which is owned by ASA Resources (formerly Mwana Africa).
The firm’s top management from China allegedly awarded themselves humongous management fees, while overpricing locally available imported consumables.
Information gathered by The Sunday Mail Business shows that upwards of US$15 million could have been externalised from Freda Rebecca since the time Mr Yat Hoi Ning became the board chair of the gold mine.
He has now been kicked out.
About US$9,2 million was salted away through “shareholder loan repayments”, US$2,7 million to Chinese businesses and partners; US$2,3 million as “management fees” and US$715 000 through disposal of properties.
Recently, Builders Home was fined US$17 000 for hoarding cash and failing to bank money since July 2016 in contravention of the Bank Use Promotion Act.
Two other companies — Bathroom Boutique and Eurostar — are still to know their fate after being arraigned before the courts for similar offences. Zimbabwe is the only Southern African country using the US dollar for transactions, making it a target for cash harvesters.
Panama, which has used the US dollar as legal tender since 1904 alongside its balboa, is not particularly hurt by illicit financial flows because of its proximity to the USA.