Mobile money agents’ ‘illicit’ deals exposed

Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) through its Financial Intelligence Unit (FIU) has established that most mobile money agent accounts were being abused and used as a conduit for illegal transactions that distort the foreign currency market.

This comes as EcoCash, the country’s leading mobile payment platform, has already dragged the Apex Bank to the High Court over the recent suspension of some of its mobile money agents from conducting financial transactions. The Cassava Smartech’s subsidiary wants its affected agents to be fully restored to functionality. While direct payments and bill payments have not been affected, the suspension of a large number of agents has hit transactions involving cash-in and out.

The recent RBZ directive suspended and froze EcoCash accounts and NetOne One Money accounts of agents with a monthly transactional threshold of $100 000 after transactions totalling $75 million were recorded.

In a public notice yesterday the FIU said this was not an absolute ban but it wanted affected mobile money service providers to re-register, update and strengthen their “Know Your Customer” requirements for agents that transact large volumes, in line with the Anti Money Laundering and Combating Financing of Terrorism laws.

“FIU analysis shows that the majority of agent accounts are no longer being used for the purpose for which they were originally intended, such as cash-in, cash-out, sending money, airtime vending and facilitating payment of utility bills by clients,” said the unit.

“The FIU further established that the KYC information, which EcoCash has in respect of most of the agents is inadequate, inaccurate and out of date hence the need for a wholesale update to ensure that only bona fide entities are allowed to continue using the platform.”

It said EcoCash, for instance, like other financial service providers, was expected to know its customers well enough and satisfy itself at all times (through ongoing transaction monitoring) that they are all conducting legitimate business transactions.

The FIU said this was an obligation, which mobile payment service providers, unlike banks, have generally failed to implement.

“Since the issuance of our directive on May 4, the FIU’s expectation is that by now EcoCash should have commenced facilitation of the re-registration of the bona fide customers, among those affected. Instead EcoCash continues to refer its clients to the FIU,” it said.

“The FIU, therefore, wishes to advise affected customers to direct all queries to EcoCash.”

The FIU has said its interventions are prompted by the need to weed out illicit foreign currency dealers who are now the main drivers of high value or higher volume transactions on the EcoCash platform, in the process destabilising and distorting the foreign currency market.

In its chamber application filed at the High Court earlier, EcoCash, represented by Mtetwa and Nyambirai law firm, wanted an interdict prohibiting the enforcement of the RBZ’s directive. The chief executive officer of EcoCash’s parent, Cassava Smartech, Mr Eddie Chibi, argued in his affadavit that EcoCash has 11 million subscribers and benefits people from all parts of the country.

As such the RBZ action had the effect of limiting EcoCash customers from accessing its services through its agents as most of them have been suspended.

It was also Mr Chibi’s contention that the directive issued at a time of lockdown, will result in members of the public having to travel to transact services that they can easily access through the EcoCash platform. A majority of financial transactions in Zimbabwe are conducted on mobile platforms with EcoCash accounting for about 95 percent of the mobile volumes with the remainder handled by NetOne’s OneMoney.

Recently, the RBZ suspended some bureaux de change and micro finance institutions over suspected illegal forex activities causing exponential depreciation of the domestic currency.

This is widely believed to be the driving force behind a sustained rise in prices, which has seen inflation galloping to new record levels.

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