THE Reserve Bank of Zimbabwe (RBZ) has directed banks to monitor illegal forex trading.
Local banks have been urged to configure their automated transaction systems in order to implement robust mechanisms that detect illegal foreign currency transactions.
This comes after the Apex Bank, through its Financial Intelligence Unit (FIU), said it has noted increasing abuse of debit cards linked to Zimbabwe dollar-denominated bank accounts.
In a statement, the FIU said: “card-holders were approaching customers who intend to buy goods or services in foreign currency and offer the use of their cards in return for foreign currency at an agreed exchange rate.”
It said in the course of discharging Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations, banks are expected to identify and report these transactions as suspicious and, in case of repeated abuse, close the accounts and report to the FIU.
“Banks should implement a robust automated transaction monitoring mechanism to identify debit cards and the linked bank accounts that are being used frequently in a pattern that raises suspicion that the customer is abusing the card to pay for goods and services on behalf of third parties,” said the FIU.
Having identified such transactions and accounts, a bank should carry out further analysis to establish the source of funding into the accounts as well as the purpose and legitimacy of the payments.
If the bank determines that the account is being abused for third party payments, the financial institution must make a Suspicious Transaction Report (STR) to the FIU.
“In addition to filling STRs, banks should consider taking immediate steps to withdraw banking services in respect of the offending customer. In appropriate cases, the bank may, in its discretion, issue a final warning to a customer, before making a final decision to close the account.”
Among other indicators, the FIU said banks should pay attention to, and investigate red flags especially where more than one indicator is presented with respect to a single bank account.
Such red flags are reflected in situations where a bank account receives regular inflows from sources or for a purpose that cannot be readily verified, followed by frequent debit card payments to retailers and service providers.
In some instances, a debit card is used several times in a day in the same shop in a manner inconsistent with normal shopping patterns, and a debit card that is used to buy goods and services either in the same shop or in different outlets in a regular pattern that is not consistent with normal shopping patterns.
“Banks are required to configure their automated transaction monitoring systems specifically to detect the abuse highlighted above; to report to the FIU by no later than 18 October 2021 on the specific measures implemented; thereafter report any suspicious transactions as required to the FIU, as well as details of any accounts that would have been closed as a result of such closure.”
Meanwhile, Government through the Ministry of Finance and Economic Development last week announced that it was implementing a raft of additional measures to curb the illegal trading of forex and the benchmarking of prices using the parallel market rates.
The move came amid concerns that foreign currency abusers and money laundering kingpins have continued to defy the law, despite their arrest, a situation that has resuscitated financial market distortions.