Zimbabwe Central bank to freeze bank accounts over illegal forex deals

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People walk past the Reserve Bank of Zimbabwe building in Harare, Zimbabwe, February 25, 2019. REUTERS/Philimon Bulawayo
People walk past the Reserve Bank of Zimbabwe building in Harare, Zimbabwe, February 25, 2019. REUTERS/Philimon Bulawayo

Zimbabwe’s central bank has ordered banks to freeze bank accounts for two years for 30 people it has accused of supporting and facilitating illegal foreign currency trading, according to the news agency on Tuesday.

The southern African nation has endured severe foreign currency shortages for years and has only re-introduced its own domestic currency in 2019, bringing a ten-year period of dollarisation to halt

However, the local currency has been losing value, and now sells on the black market at premiums of up to 100 percent of its official rate of 86 Zimbabwe dollars to the United States dollar.

Governor John Mangudya published a list of individuals who were using social media platforms and mobile telecoms services to prevent illegal forex trading and money laundering, according to him.

Many people can only buy money on the black market due to Zimbabwe’s foreign currency shortages. Some WhatsApp groups advertise their services, which the government claims is a crime, to the public, according to authorities.

Mangudya stated that the central bank’s Financial Intelligence Unit (FIU) had instructed banks “to identify and freeze any accounts held by these individuals and, further, to prevent them from accessing financial services for a period of two years, with immediate effect,” according to Mangy.

According to Mangudya, the telecoms regulator would also stop the listed people from operating mobile phone networks.

Analysts claim the official exchange rate, which is calculated from a weekly forex auction, is artificial, and that businesses were setting prices using black market rates.

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