New rules for money transfer agencies

via New rules for money transfer agencies – DailyNews Live 5 March 2015

HARARE – Reserve Bank of Zimbabwe (RBZ) has introduced new regulations for money transfer agencies and bureaux de change, with foreigners barred from having shareholding in the institutions.

Morris Mpofu, the central bank’s exchange control director, said under the new framework, registered Zimbabwean operators shall be designated as limited authorised dealers and will be allowed to conduct both inward and outward money transfers.

“The Exchange Control shall carry out a probity test for the authorised dealers with limited authority (ADLA)’s human, financial and capital resources. In lieu of this, only Zimbabwean residents, natural or legal deemed proper and fit…shall be shareholders in an ADLA, directly or indirectly,” Mpofu said.

He said an ADLA was not necessarily expected to be licensed under the Banking Act, but needed to be authorised in terms of exchange control to conduct business.

According to Mpofu, the new exchange control framework for international person-to-person remittances shall be administered through a three-tier system.

The first tier shall be locally incorporated money transfer operators (MTOs) partnering with approved international money transfer organisations (MTOs) to carry out both inward and outward international remittances, as well as buy and sell foreign exchange on a spot basis, with a collateral deposit of $1 000.

Tier two shall be locally incorporated money transfer operators (MTOs) acting alone, or operating own systems to carry out both inward and outward international remittances, as well as buy and sell foreign exchange on a spot basis, with no collateral deposit.

The central bank will also determine the ADLA minimum share capital and collateral security deposited with it.

Collateral security submitted to the RBZ upon registration shall be refunded in the event that an ADLA deregisters and after a declaration by external auditors that the ADLA did not owe customers or partners.

“However, it the ADLA in tier two uses its own system or solely collects from customers for outward transfers as well as pay-out to beneficiaries, the ADLA shall pay a collateral deposit of $50 000, which shall be deposited to the RBZ,” said Mpofu.

While the last tier, bureaux de change shall only buy and sell foreign  currency on a spot basis and will not pay a collateral deposit.

Licensing fees for all tiers will be $1 000 for the head office, $400 per branch and annual license renewal fees will be $800 for the head office and $200 per branch.

A daily float of more than $50 000 shall be kept per branch with a daily, monthly and yearly limit for senders stipulated at $500, $5 000 and $20 000 respectively.

However, the new regulations prevent ADLA from opening correspondent bank accounts (Nostro) and conducting international investment transactions.

“ADLA shall also not enter into exclusive agreements with both local and international partners without prior written authority from the Exchange Control… and maintain a dedicated pre-funded account and all send transactions shall be electronically linked to the pre-funded account,” Mpofu said.

The prefunded account is expected to hold a minimum of a day’s cover of the average daily send transactions at all times, failure to do so, the account will not be able to perform transaction when it has insufficient funds.

ADLA will also be directly liable for international send remittance delivery failure and conduct all buying and selling of currency and international money transfers through an electronic platform or money reporting system.

The central bank also expects audited financial statements within 90 days after an ADLA’s financial year. The statements must contain internal audit reports and a comparison of the planned business performance and actual results.

To enhance monitoring and accounting of international remittances as well as mitigating against money laundering and terrorist financing, the Reserve Bank will employ a robust compliance monitoring framework.

The framework will include among other things electronic surveillance and reporting or such electronic platform that the central bank may designate for the purpose.