FIU turns heat on forex manipulators
LIVINGSTONE MARUFU
The Financial Intelligence Unit (FIU) has ordered banks to freeze the accounts of four entities warning it would be forced to direct financial institutions to terminate financial services to companies as it cracks whip on companies violating forex auction rules.
The development comes at a time when various companies continue to abuse foreign currency they access from the forex auction system.
In a letter dated February 22 2022, FIU directed all banks to freeze transactions in respect of accounts for GERIBRIAN T/A as Transervet, Powerspeed trading as Electrosales, Halstead Brothers and Enbee saying it had noted unusual activities on the business entities.
The directive to the banks said: “As we carry out further investigations on the possible money laundering relating to the fund, you are directed to freeze the account with immediate effect and you shall not process any withdrawals or transfers from accounts unless with the specific approval of the unit.”
“You should, however, allow deposits or other flows into the account.”
Banks should immediately report to the Unit any deposit or other inflow into the account as well as attempted withdrawal or transfer from the account.
FIU director general Oliver Chiperesa told Business Times that the unit will toughen its stance to instill market discipline.
“We have the power to freeze for 90 days and if we conclude earlier we may unfreeze before that duration.
“In most cases, companies pay fines to shorten the freezing period but if it violates Statutory Instrument 127 again, we will tell the banks to withdraw their financial services to the company for good,” he said. “The penalties are big and they are incorporated in the SI127 through the Finance Act.”
Added Chiperesa: “The penalties stretch to ZWL$500 000 per violation but sometimes the violations could be bigger and attract bigger penalties,”
On a letter, Chiperesa said :”I can neither deny nor confirm that the circulating companies really violated SI127 and are having their accounts frozen but then we write to the banks to freeze the accounts of those in violation of the law. There are some violations that are done by companies and we are identifying their accounts and freeze them until they pay their penalties if they are found guilty.” {not understanding this paragraph]
FIU says the freezing of accounts is working very well to instill discipline in the market, especially those companies that are outliers in terms of charging exchange rates that they cannot justify.
Under FIU rules, the Unit will start by discussing with companies that it has identified as those who may be violating Statutory Instrument 127 of 2021 and if the company chose to ignore FIU calls then it will move to freeze the accounts.
The quartet becomes the latest to get the wrath of the FIU after the unit recently descended on a Chinese restaurant. The Shangri-La was ordered to pay US$30000 or equivalent in local currency for exchange rate breaches.
