RBZ warns against illegal cash dealings

Source: RBZ warns against illegal cash dealings | The Herald November 1, 2016

Business Editor

THE Reserve Bank of Zimbabwe has warned business and individuals against illegal cash dealings which are restricting equitable circulation of cash within the economy and is stepping up monitoring systems to ensure all businesses bank all their cash receipts.In a statement, the central bank noted that the gap between demand and supply of foreign currency exchange was engendering undesirable practices that include illicit cash dealing and rent-seeking behaviour that are worsening the availability of forex. The central bank has noted that some cash generating businesses, especially retailers and wholesalers, have not been banking all their cash receipts as required by the law.

Instead, they are offering cash to companies and individuals, who would make RTGS or Internet-account transfers of the equivalent amount, plus the agreed interest. And in some instances, the illegal cash buyers are making third party transactions to suppliers of goods and service on behalf of some businesses, in return for corresponding cash payments to the companies.

The illegal cash transactions are promoting and encouraging money laundering, tax evasion and the smuggling of cash.

“With immediate effect, suppliers of goods and services shall not accept RTGS on inter-account transfers made by third parties on behalf of their customers,” said the RBZ.

“For avoidance of doubt, a supplier or service provider shall only accept payment emanating from the bank account of the customer making the purchase. Banks will be required to report all RTGS or inter-account transfers that are suspected to involve selling and purchasing cash.”

The RBZ, through its Bank Use Promotion and Suppression and Money Laundering Unit, would be stepping up monitoring activities to ensure businesses comply with the legal requirement to bank all cash receipts while reporting any suspected illicit cash deal to police.

The RBZ also noted that some individuals and businesses were buying high denominations foreign currency bills for a premium in exchange for low denominations bills. Those buying the high denominations were doing so mostly to facilitate smuggling of cash.

“The bank wishes to warn those engaging in such practices to desist from doing so with immediate effect,” said the RBZ.

“The public is urged to report such practices to the Reserve Bank, which will work with the law enforcement agencies to bring the perpetrators to book.”

There are also instances where people are selling cash at a premium only for minimum $5 000. Zimbabwe has been facing cash shortages since early this year, largely due to externalisation of foreign currency, subdued exports and high imports and low investments. This situation has resulted in delays in the settlement of foreign transactions payments and liquidity shortages in the economy, as banks also use the nostro accounts to import cash.

In a research note last Friday, international investor services and credit rating agency Moody’s said Zimbabwe’s economy faces growing cash and liquidity challenges ahead of the Government’s planned launch of bond notes. “Growing cash and liquidity challenges in the Zimbabwean banking sector have intensified ahead of the Government’s planned introduction of bond notes,” said Zuzana Brixiova, a Moody’s Vice President — senior analyst and co-author of the report.

“Although the bond notes are intended to ease the cash shortage, there are concerns in Zimbabwe that they represent the first step towards the return of a domestic currency. This has exacerbated net deposit withdrawals and cash hoarding.”

The developments in the banking sector are taking place against the backdrop of domestic economic crisis fuelled by low global and regional growth, lower-for-longer commodity prices, and severe drought. These factors have combined to exacerbate existing domestic challenges stemming from deflation, growth stagnation, weakening fiscal stance and persistently low productivity in Zimbabwe.

The country’s external competitiveness has been impeded by a sizeable real exchange rate over-valuation, driven in part by the multi-currency regime peg to the resurgent US dollar.


  • comment-avatar
    Joe Cool 6 years ago

    Or – “how to make a sieve watertight”.

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    Is the RBZ checking on all the ministers and other thieving ZanuPF cadres who are stealing the US$ cash and banking it overseas? Did Zimra/RBZ check Mnangagwa’s luggage at the airport on his way to bankers paradise Switzerland to see how much currency he was taking out?

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    Morty Smith 6 years ago

    RBZ and it’s ZANU parent are the exclusive and only cause of cash problems in Zimbabwe. They are squealing (like pigs) loud now because they are beginning to hurt. None of them seem to understand that the situation is developing in exact time with their stupid self defeating actions. You cannot repeal the basics of economics with statutory instruments and threats. This is not a ZANU style election, but the real world where ZANU power is useless. Private persons will take whatever action is necessary for their own wellbeing

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    reader 6 years ago


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    I have said months ago the economy is going to crash conpletely by Christmas, all the signs are there , these plastic money transactions are just a ballance transfer between accounts and not backed with real noney. The wholesalers will need real mney to import the goods, but the banks don’t have any likewise there will be no fuel as that has to be paid for in real noney. The whole economy is based on a gigantic fraud and it is about to blow up.

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    Doris 6 years ago

    Don’t do as I do, do as I say!