RBZ Ignored Warnings About Suspicious EcoCash Agents For Months

Most people were surprised by the Zimbabwe central bank moves to instruct EcoCash to freeze the accounts of all agents that process transactions above ZW$100,000 (about USD2,000 or USD4,000 when you use the generous official exchange rate) per month.

$100k is a crime

The problem with this directive is that it is just a blanket punishment. Effectively, the Reserve Bank of Zimbabwe is saying that if you are not a listed company, a bank, an international organisation or the government, then you are not allowed to transact above this arbitrary figure of $100k.

Even if there is just one legitimate business in this class, common sense tells you that it is not right nor fair to cut the service for that one business just to ‘catch’ the rest. It’s even worse. The central bank could have applied more targeted sanctions without punishing businesses for having high transactions. They had information on which accounts to target.

The RBZ didn’t follow up on suspicious transactions

A letter that was attached to the papers submitted to the High Court seeking reversal of the RBZ directive reveals that the central bank has not been acting on flagged accounts. The letter written to the Financial Intelligence Unit by EcoCash CEO, Natalie Jabangwe on the 24th of April 2020 says:

We note that, as shown in Table 2 below, since implementation of the new limits we submitted 17 STRs* and only five have been responded to with requests for additional information, the rest (12) we have not heard anything from you with some getting to a month old since submission. Prior to implementation of the new limits, since beginning of the year we submitted 68 STRs and got 22 responses with 1 case being referred to the police. In 2019 we submitted 100 and got 50 responses. Whilst we are fully aware of our obligation to detect and report and we will continue to do so, the low response rate can be disheartening and cause for concern to us especially when you then keep accusing us of not detecting and reporting cases of abuse of the platform.

*STR: Suspicious Transaction Report

Here’s an example of one of the reports ignored by the Financial Intelligence Unit:

All the example transactions that Jabangwe cites in her letter appear suspicious indeed. It’s surprising that the majority of them did not get as much as a follow up from the authorities. Of the 85 transactions flagged by EcoCash from January 1 up to the time of sending the letter, 32% had some sort of follow up and only one was reported to the police.

Is it that there are some untouchable individuals and businesses that can only be ‘accidentally’ caught up in a blanket drag net but not individually investigated without political or other consequence? I wonder what we will uncover if we thoroughly trace the final beneficiaries of some of these companies.

Even the police was surprised

In the same letter, the EcoCash boss wrote:

On 15th September last year, we were invited for a meeting at Criminal Investigations Department Headquarters (CID HQ) to discuss ways of ensuring that channel partners who were abusing the EcoCash platform were brought to book. We advised them the process that we follow in terms of reporting STRs to your office and we gave them statistics of STRs that we had submitted to your offices. They were impressed with the number of STRs we had submitted but expressed shock at the small number of Compliance Orders that they had received from your office.

The other major challenge they mentioned was the requirement of serving Compliance Orders as notices to offenders before any criminal proceedings could be done. The notice periods were 7 and 14 days depending with the offence. These requirements were affecting the effectiveness of the AML/CFT measures. We thus call on the relevant institutions to play their respective roles to ensure that there is combined effective collaboration in implementing the AML/CFT measures.

It’s curious that holders of very suspicious accounts were given up to 14 days notice to comply yet the RBZ issues an ‘with immediate effect’ directive that affects any business that has high transaction volumes.

When inconsistencies like these surface we are left to conclude that the RBZ lacks much moral authority to direct the freezing of accounts more so in a blanket manner as they have done.

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