FOUR banks have been placed under intense scrutiny and will face stiff penalties from the Financial Intelligence Unit (FIU) on allegations of involvement in illicit financial crimes that have led to the fall of the local currency on the parallel market and rampant price increases.
Recently, President Mnangagwa said banks and companies involved in local currency manipulation and wanton increases of prices of goods and services were under probe and could lose their operating licences.
The FIU, a unit under the Reserve Bank of Zimbabwe (RBZ), has been analysing data harvested from local banks’ internal and suspense accounts to unmask financial institutions responsible for pumping excess liquidity into the market.
Banks have been accused of using suspense and other internal accounts to buy foreign currency on the parallel market, fuelling the black market foreign currency exchange rate.
This has led to an increase in prices of goods and services.
A suspense account is one used to temporarily hold doubtful entries and discrepancies pending their analysis and permanent classification.
In an interview with The Sunday Mail, FIU director-general Mr Oliver Chiperesa said the FIU had zeroed in on four out of the 16 banks operating in the country as it ups the stakes to flush out currency manipulators.
“We have identified thousands of suspense accounts from the 16 banks. For me to say which accounts have we looked at, it’s a tall order. We are looking at the accounts to see which accounts could have been abused. We know banks which are high risk.
“We look at all the transactions and select banks and accounts that are moving high volumes of money. So far, we are analysing data from four banks. It’s a process which will take a long time, but by the end of June we will have finished analysing data from three of the banks,” he said.
Mr Chiperesa said further scrutiny on more accounts will be motivated by what comes out from the transactions that have been pored over so far.
“This is in line with the risk-based approach used by the FIU in its work. We endeavour to identify and assess all areas of high risk on an ongoing basis and we move in to take a closer look at the transactions. So far we are still gathering and analysing the data, and we should have completed our analysis in the next few weeks.
“In our work, the FIU normally focuses on the transactions of the banks’ clients and not on the banks themselves but this is a special investigation,” he added.
Economist Mr Eddie Cross said the FIU’s investigations are welcome to curtail rampant illicit financial activities caused by the parallel market.
“Government has introduced a number of refinements which I think are now having a significant impact on the market. The RBZ is bringing the auction price into convergence with the interbank market and that has been achieved in the past few two weeks. The RBZ has been further directed to liberalise the interbank market, being conducted by the private banks. The result of these two measures I think has already had a very significant impact on the parallel market rate which has been stabilising.”
Mr Cross added:
“I hope that this will continue, to liberalise the interbank market until it’s in a position to take over the foreign exchange market as a whole. I think that once that is achieved sanity will return on our money market and the Zimbabwe dollar will regain some strength and begin to be a proper mean of exchange inside Zimbabwe.”
Member of the RBZ’s Monetary Policy Unit Mr Persistence Gwanyanya said authorities are implementing all measures necessary to protect consumers that are already burdened by price increases caused by the Russia-Ukraine conflict.
“In the global economy space, we are currently facing serious challenges which resulted from the conflict in Russia and Ukraine and the consequences, therefore, at a time where we were battling as a global economy with Covid-19 pandemic. We, therefore, need all measures to control what we can on our own outside of the geo-political factors.”