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Reserve Bank of Zimbabwe (RBZ Governor Dr John Mangudya says the FIU’s role is to instil market discipline, adding the bank’s financial watchdog will stop at nothing to punish errant behaviour and promote discipline. Mangudya said RBZ’s financial intelligence unit (FIU) will continue to crack the whip on errant businesses and dodgy transactions, as it intensifies efforts to curtail market indiscipline.
The bank’s FIU has been red flagging, blocking and reversing or suspending suspicious transactions; first after subtracting 2 percent transaction cost from the gross value of the foiled dodgy transfer.
Foreign currency exchanges hands illegally, at a premium, between suppliers of RTGS dollars and buyers of a particular commodity with the local currency finding its way to the auction market.The practice amounts to abuse of the auction given the forex is bought illegally at a modest premium and the RTGS dollars finds their way to the auction to buy US dollars at a huge discount.
TechnoMag understands the widespread indiscipline in the market also entails the use of these third party accounts to make multi-million Zimbabwe dollars transfers for goods.
Some of the exchange rate volatility Zimbabwe once experienced, which drove inflation through the roof, involved holders of huge amounts of RTGS dollars used to buy forex on the black market.
Curiously, the same auction platform that brought exchange rate and inflation (price) stability is once again being abused to speculate with the elusive foreign currency needed for critical imports.
“FIU is about financial integrity and instilling discipline in the financial market. You find a small company making a huge deposit of say $20 million or $100 million and come to the auction.“What (is their business)? You find there are no records. FIU classifies transactions like that as suspicious. Such transactions can only be done by proper and big businesses,” Dr Mangudya said.
For such transactions, the central bank chief said, the FIU will continue to red flag, block, probe or call owners to explain suspicious transactions to prevent abuse of ill-gotten money and auction system.
Dr Mangudya said the FIU will always suspend or freeze bank accounts involving suspicious transfers to carry out proper investigations into circumstances and veracity of curious transactions.
The apex bank boss also said importers who benefit from the auction market and fail to acquit or reconcile relevant documentation to prove proper use of auction forex will be blacklisted.
He said that it was the responsibility of the beneficiary to acquit import documents, adding there are isolated cases of dodgy companies accessing money from the auction and externalising.
The auction system was introduced in June last year and the central bank has allotted over US$1.1 billion to deserving companies.
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