Re­tail­ers ma­jor cul­prits

Chronicle (Zimbabwe) - - Business Chronicle - Pros­per Ndlovu

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.

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