Yesterday the Reserve Bank of Zimbabwe sent out a notice informing the wider public that they had suspended the licences of two more exchanges whom they accused of fuelling the foreign currency black market. The Bank said it had with immediate effect, suspended the operating licences of Shons Finance Services and Kwik Forex, pending further investigations and regulatory action.
The two institutions carried out several off-book foreign currency purchases and sales which they did not declare in periodic regulatory returns.
Cash-Twenty Four has since admitted the charge of failing to record and declare foreign currency transactions and has since paid the imposed administrative fine of ZW$2 500 000 (two million five hundred thousand dollars). The case against Crediconnect is still pending determination.
Further, the Bank has identified two more bureaux de change, namely, Shons Finance Services (Pvt) Limited (Shons Finance Services) and Superdeal Enterprises (Pvt) Ltd trading as Kwik Forex (Kwik Forex), which have not been declaring or have been under-declaring their foreign exchange transactions, in breach of the law. The Bank has also identified three unlicensed entities, namely Stallion Financial Services (Pvt) Limited (Stallion), Forbes Financial Services (Pvt) Limited (Forbes) and Juso Global (Pvt) Limited (Juso Global), which have been trading in foreign currency.
The Bank, has with immediate effect, suspended the operating licences of Shons Finance Services and Kwik Forex, pending further investigations and regulatory action. The Bank has referred the unlicenced entities (Stallion, Forbes and Juso Global) to the FIU for further investigation and appropriate action in terms of the law. Meanwhile, the Financial Intelligence Unit has frozen all the accounts of all the above-mentioned entities.
The Bank continues to monitor financial services players with a view to dealing effectively with market indiscipline.
Will this work?
The first recent suspension mentioned in the press brief above was on the 10th of April. By then the rate was still climbing but the rise had lost steam and for the past week, it seems the rate had found its new equilibrium. The trend has continued into this week. Even with reduced cross border activity, it seems a lot of people are interested in the US dollar as a safe haven and thus demand has remained high.