Zimbabwe warns against proliferation of “shadow banks”

Zimbabwe has warned against the proliferation of “shadow banks” through which companies are avoiding banking their cash but are instead using safe deposit boxes at their commercial banks or security companies to keep their money.

Central bank governor John Mushayavanhu said this practice was not only a violation of the Bank Use Promotion and Suppression of Money Laundering Act which requires businesses to bank all their cash but also promotes tax evasion and money laundering.

Mushayavanhu said in his Monetary Policy Statement that the central bank had noted the increasing abuse of safe deposit boxes and the proliferation of “shadow banks”.

“It has been observed that some businesses are not banking all or most of their cash receipts and are, instead, keeping such cash in safe deposit boxes held with financial institutions and security companies,” he said. 

“This trend is not only a violation of the Bank Use Promotion and Suppression of 

Money Laundering Act [Chapter 24:24] which requires businesses to bank all their 

cash receipts, but it also promotes tax evasion and money laundering.”

Mushayavanhu said the central bank was working with the Financial Intelligence Unit and other Law Enforcement Agencies to curtail such practices and encourage the use of normal 

banking channels.

Zimbabwe has 14 commercial banks, four building societies and a savings bank. It has 300 financial institutions.

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