‘Non-compliance led to loss of correspondent banking deals’

RESERVE Bank of Zimbabwe (RBZ) deputy governor Jesimen Chipika has revealed that most local banks lost their correspondent banking relationships due to non-compliance with a framework to combat money laundering and terrorist financing.

The RBZ last year revealed that Zimbabwe lost over 100 correspondent banking relationships which left most of the local banks excluded from the international banking system.

Zimbabwe’s high-risk profile, which was associated with deficiencies in anti-money laundering/combating the financing of terrorism (AML/CFT) measures, resulted in the country being placed on the grey list by the France-headquartered Financial Action Task Force (FATF).

“The listing of Zimbabwe as a noncompliant country came as a curse and a blessing to us,” Chipika said, at the second meeting of the heads of Financial Intelligence Units of Eastern, Southern, Central Africa and Yemen yesterday.

“The listing of Zimbabwe on the grey list of the non-compliance jurisdiction turned out to be a curse for the country because it saw many of our banks losing several correspondent bank relationships as well as facing serious challenges in trying to establish new ones.”

A FATF team was in Zimbabwe last year to evaluate the government’s attempt to improve its AML/CFT measures. It gave Zimbabwe a clean bill of health, resulting in the country’s removal from the grey list.

Chipika said countries on the grey list will struggle financially.

Local banks are using two correspondent banking relationships.

These are the Afreximbank Trade Payment Services, otherwise known as AfPAY and a correspondent banking platform under the South Africa-headquartered First National Bank.

“While the costs on the economy are hard to quantify, these costs are undoubtedly significant. On the other hand, we also saw the silver lining of this painful process and seized it as an opportunity to accelerate our AML/CFT reforms,” Chipika added.

“Now the country’s AML/ CFT regime is now stronger than it was before the grey listing. In terms of technical compliance, Zimbabwe is now proudly among the best rated countries in the region, and we are on course to become compliant on the 40 compliance recommendations before the year 2024.”

According to the FATF, the 40 recommendations provide a complete set of countermeasures against money laundering covering the criminal justice system and law enforcement, the financial system and its regulation, and international cooperation.

The purpose of the AML/CTF regime is to assist businesses to identify these risks while providing their services. In doing so, the AML/CTF regime sets out a range of measures to protect regulated entities that are at the front line in preventing serious financial crimes.

Chipika said RBZ was working on strengthening its technical compliance, enhancing the capacity of the Financial Intelligence Unit, and strengthening risk-based AML/CFT supervision for local financial institutions.

“The Reserve Bank of Zimbabwe has a significant role to play in ensuring AML/CFT compliance. It is also responsible for licensing and supervising AML/CFT purposes like banks, microfinancing institutions, bureau de changes, money transfers agencies and money transfer agencies,” she said.-newsday