RBZ bans third party funds transfers as illicit cash dealings increase

In an effort to stop illicit cash dealings ahead of the introduction of bond notes, the Reserve Bank of Zimbabwe has banned the transfer of funds by third parties to suppliers of goods and services. This comes as some business entities and individuals are reported to be selling cash at a premium against RTGS or bank transfers.

In a statement, the RBZ cash generating businesses especially retailers and wholesalers have not been banking all their cash receipts, as required under the Bank Use Promotion Act. Most of these retailers are offering cash to companies and individuals who make RTGS or interaccount transfers of the amount plus an agreed premium into the vendors account. Most of these dealers work from minimum US$5 000 cash while commission ranges from 5-25 percent.

“With immediate effect, suppliers of goods and services shall not accept RTGS or interaccount transfers made by third parties on behalf of their customers.

“For the avoidance of doubt, a supplier or service provider shall only accept payment emanating from the bank account of the customer making the purchase.”

The RBZ said such practices were not only illegal but also have negative effects on the economy as they hamper the efficient and equitable circulation of scarce foreign exchange resources within the economy through the banking system.

“The RBZ wishes to warn businesses and individuals engaging in these illicit practices to desist forthwith.”

The central bank said all banks will be required to report all RTGS/inter-account transfers that are suspected to involve selling/purchase of cash.

According to the statement, the RBZ’s Bank Use Promotion 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 will also focus on identifying illicit cash transactions and referring such cases to law enforcement agencies.

The RBZ has also warned those engaging in the trade of high denomination foreign exchange bills for a premium, in exchange for low denomination bills to desist from doing so with immediate effect.

“The public is urged to report such practices to the RBZ.”

Analysts say that the move by the RBZ in such an informal economy puts more pressure on the need for cash while there is a possibility that service providers will charge more for RTGS than cash. Financial Gazette