THE Ministry of Finance says it will now classify activities on the parallel market as money laundering. The treasury’s move is a bold attempt to curb currency manipulation and stabilise the economy.
The parallel market, also known as the black market, has flourished in recent years as locals struggled to access US dollars at the official exchange rate.
On the parallel market, the greenback trades at a significantly higher rate than the official peg, offering a tempting but risky option for those seeking to hedge against inflation or purchase imported goods.
Finance Ministry permanent secretary George Guvamatanga said authorities will be taking a hard stance to curb currency manipulation.
“We tested the market by offering US$1 million… and the market … could only take US$784 000 out of the funds offered indicating that they don’t have liquidity. Whoever is going to the parallel market … there is no need for them to do so and in fact, we should call it what it is because it is an illegality – that’s money laundering,” he told journalists.
“Going forward, we are actually going to deal with all these activities that are called money changing…Its money laundering and we are going to deal with it as money laundering… It’s a serious global offense anywhere in the world. There will be severe implications for anyone who tries to manipulate the currency.”
According to a report by the central bank, trading of foreign currency outside formal financial channels continues to be a significant risk to financial stability.
The Financial Intelligence Unit (FIU) has increased scrutiny and analysis of financial transactions and required banks to conduct enhanced monitoring to identify and report suspicious transactions.
The FIU used various powers to stabilise the economy, including freezing bank accounts and levying administrative penalties on offending companies and blacklisting companies and individuals for repeat offenses.
Last week, authorities apprehended illicit moneychangers and closed the bank accounts of businesses accused of exclusively dealing in US dollars.
In 2022, Zimbabwe was removed from the Financial Action Task Force’s (FATF) grey watchlist following an on-site evaluation exercise.
Zimbabwe was placed on the grey list in 2019, following an evaluation process that identified several deficiencies in the country’s anti-money laundering standards.
Following a site visit by its experts, FATF said significant progress has been made in addressing the strategic anti-money laundering or combating of financing terrorism deficiencies previously identified.
FIU director general Oliver Chiperesa last year told this publication that there is need to come up with solutions and be more effective in terms of fighting the illicit financial flows.
“Zimbabwe is one of the most compliant countries in the region in terms of its laws and institutional framework in terms of money laundering. The FATF has recognised that. But a lot of work still needs to be done in terms of effectiveness in implementing those laws. Having good laws is one thing and we are proud of that but also effectively using those laws to fight money laundering and bringing results is where we still find ourselves with a mountain to climb,” Chiperesa said.
