Retailers major culprits
THE Reserve Bank of Zimbabwe has with immediate effect banned Real Time Gross Settlement (RTGS) transfers by third parties as it moves to curb illicit cash dealings that are blamed for frustrating efficiency in the financial services sector.
The central bank has also ordered banks to report all suspicious RTGS or inter account transfers that could be involved in selling and purchasing of cash.
RTGS are specialist funds transfer systems where the transfer of money or securities takes place from one bank to another on a “real time” and on a “gross” basis.
The move comes at a time when the country is grappling with biting cash shortages believed to be fuelled by rampant money laundering, illicit cash deals, hoarding and externalisation of hard cash.
“With immediate effect, suppliers of goods and services shall not accept RTGS or inter account transfers made by third parties on behalf of their customers. For avoidance of doubt, a supplier or service provider shall only accept payment emanating from the bank account of the customer making the purchase,” said the RBZ in a notice yesterday.
It noted that the gap between demand and supply of foreign exchange has resulted in undesirable practices in the form of illicit cash dealings and rent seeking behaviour, which has exacerbated foreign exchange constraints within the economy.
“Some business entities and individuals are reported to be selling cash at premium against RTGS or bank transfers from the cash buyers’ accounts.
“Some cash generating businesses, especially retailers and wholesalers, have not been banking all their cash receipts, as required under the Bank Use Promotion Act (Chapter 24:24). Instead, they offer cash to companies and individuals, who would make RTGS or inter account transfers of the equivalent amounts, plus an agreed premium, into the cash vendor’s account,” said RBZ.
In some cases, the central bank said, the illicit cash buyers make third-party RTGS payments to suppliers of goods and services, on behalf of some businesses, in return for corresponding cash payments from the business entitities.
“Such practices are not only illegal, but also have a negative effect on the economy as they hamper the efficient and equitable circulation of scarce foreign exchange resources within the economy through the banking system,” it said.
“The underhand cash transactions also promote and encourage money laundering, tax evasion and cash smuggling out of the country. The Reserve Bank warns businesses and individuals engaging in these illicit practices to desist forthwith.”
To that effect, the apex bank said its Bank Use and Suppression of Money Laundering Unit will be stepping up monitoring activities to ensure that businesses comply with the legal requirement to bank all cash receipts. Inspectors of the unit would be on standby to identify illicit cash transactions and referring such cases to law enforcement agents.
In a related development the RBZ also noted with concern that some individuals and businesses were buying high denomination foreign exchange bills for a premium in exchange for low denomination bills.
It said those involved are doing so mostly to facilitate smuggling of cash out of the country.
“Such practices are illegal as they are associated with money laundering and externalisation of funds. The public is urged to report such practices to the Reserve Bank, which will work with law enforcement agents to bring perpetrators to book,” said RBZ.
Meanwhile, the apex bank said it will continue importing low denomination bills as a way of curbing smuggling of foreign exchange bills out of the country.