eBusiness Weekly
Michael Tome
Economists have called for dialogue between the Government and private sector players whose bank accounts were frozen following allegations of money laundering by the Reserve Bank of Zimbabwe’s Financial Intelligence Unit.
On Tuesday the FIU froze the bank accounts of four private companies for possible money laundering.
The FIU instructed banks to immediately stop any withdrawals by the companies except if instructed by the financial intelligence unit itself.
Economists have, however, indicated that a significant number of businesses were trading using the parallel market exchange rate-related prices and were no exception to the allegations that the four companies find themselves in.
They posited that businesses were operating in a difficult position given the widening gap between official and black market exchange rates.
Professor Gift Mugano implored the parties involved to come up with an amicable position to solve the alleged money laundering claims citing that if not handled properly the situation might have dire effects on the general conduct of business.
“At this stage what is required is that business and government should sit down and have genuine dialogue around the challenges affecting business and the government desired goal.
“You know we have Statutory Instrument 127 that is where the issue is coming from because the exchange rate regime which is ruling is not matching with the black market rate,” said Prof Mugano.
He highlighted that many local businesses were charging parallel market benchmarked prices and the Government needed to formulate mechanisms that enhance convergence of the parallel market and official exchange rates.
“You do not need a rocket scientist to know the current pricing regime, just go to all shops and hardwares, their prices reflect black market rates. I think the consequences of stern Government action will be very dire and we have been on this road in 2007 where Government came in with controls which resulted in shortages,” he added.
Another economist, Eddie Cross, said the government should move in to understand where the pricing regime by the companies was emanating from, and concurred with Prof Mugano in giving a warning of adopting such punitive measures.
“If this action is not reversed I think that private sector will take really strong action to defend their interests.
“If you are going to take action against businessmen for trading at the parallel market rate you might as well risk every businessman in the country because they are no exception. Businesses are using the Purchasing Managers’ Index (PMI) rate to determine the retail prices at present time in my view,” said Cross.
In a circular directed to all banks, the FIU indicated that it had noted unusual business conduct by some private companies which include Geribrian T/A, Transervet, Powerspeed investments Pvt Ltd T/A, Electrosales, Halsteds Brothers Pvt Ltd, and Enbee Store.
In the recent Monetary Policy Statement RBZ implored directors of banks to continuously acquaint themselves with their responsibilities with regards to AML-CFT issues as articulated in the AML-CFT Risk-Based Guideline.
In December 2021 the Insurance and Pensions Commission (IPEC) ordered its members to co-ordinate with the FIU to identify and assess money laundering and terrorist financing risks that may arise in relation to the introduction of new products and new business practices in the insurance and pensions industry.
