Zimbabwe introduces more measures to curb illegal foreign currency dealings

Zimbabwe today announced additional measures to curb illegal foreign currency dealings which it said were being fuelled by speculative and store of value demand as well as criminal and money laundering activities.

Finance Minister Mthuli Ncube said the country had more than US$3 billion in foreign currency reserves with US$1.8 billion in banks and US$1.2 billion in official reserves and could not understand the stampede which has forced the local currency to drop to as much as $200 to the United States dollar when the auction rate is $88.55.

“The result has been that despite large and small corporates, SMEs and individuals having access to the RBZ auction system, the existence of the parallel market has provided an opportunity for price benchmarking at parallel market rates notwithstanding the fact that some of the businesses are accessing their full requirements for foreign exchange via the official channels. These practices were the intended targets of S1127,” Ncube said.

He said to strengthen measures to curb the illegal dealings:

1. The Zimbabwe Revenue Authority will be carrying out impromptu audits of corporate activities with a view of quantifying potential tax liabilities arising out of illegal foreign currency trading.
2. The Zimbabwe Revenue Authority will also be carrying out compliance Audits with respect to compliance with the Location Tax introduced during the 2021 fiscal year.
3. The FIU will continue to closely monitor and analyse financial transactions to identify, expose and take action against perpetrators of money laundering and other financial crime.
4. The capacity of the FIU and other law enforcement agencies to investigate and prosecute violations of the Bank Use Promotion Act, as well as various AMLCFT laws, will be enhanced.
5. Regulatory bodies including the Public Accountants and Auditors Board, will also be working on a framework to impose appropriate financial and professional sanctions on members of the accounting, auditing and other professions who may be complicit in superintending over illicit affairs by corporate entities which they are charged with running.
6. Business who disregard the law and continue price their goods on the parallel market rates will have their licenses suspended.
7. Members of the public are also strongly encouraged to report to the FIU and the National Economic Conduct Inspectorate, all business entities directly or indirectly benchmarking prices at parallel market exchange rates.

The current crackdown has netted 77 individuals and eight financial institutions but there is speculation that the central bank is dealing with the small fry and not the big fish.

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