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Dr John Mangudya

Senior Business Reporter    
THE Reserve Bank of Zimbabwe (RBZ) has moved to tackle externalisation of funds by licensing approved foreign exchange agents to transfer limited amounts of cash by individuals out of the country.RBZ deputy governor Kupukile Mlambo told Chronicle Business in a recent interview in Bulawayo the move was meant to curb externalisation of funds.

“As from the 1st of April, we’re licensing foreign exchange bureaus to transfer limited amounts of cash from individuals. As a dollarised economy, we don’t print money ourselves (monetary authorities), so when you send money outside you’re actually exporting liquidity. We can’t allow full fledged externalisation of cash,” he said.

“The whole idea is to make it easy for money to move across borders because when money can’t get out, it doesn’t come in, so we need to allow certain limited amounts by individuals to be able to go out.”

Presently, through free funds accounts, individuals can transfer cash up to a maximum of $5,000 out of the country.

A few years ago, the central bank suspended cash transfers by foreign exchange transfer agents due to foreign currency trading irregularities such as money laundering.

“Right now you can’t transfer money through foreign exchange transfer agencies such as Western Union and MoneyGram and starting April, we’ve relaxed that requirement.

“We’re working out the amounts that individuals can transfer. When money can’t get out, it doesn’t come in, so we need to allow certain amounts to be able to come out.

“If we stop money from coming out at all, it’ll not come in; this way, we’re encouraging more people to bring in money because they know that when they bring it in, they can also take it out,” said Mlambo.

In his 2015 monetary policy statement presentation, RBZ governor John Mangudya said the central bank was seriously concerned about the abuse of individual or personal accounts to externalise business earnings under the pretext of “free funds” for family upkeep, medical bills among others to circumvent or avoid taxes.

“This practice of promoting illicit financial flows is counterproductive and should be stopped.  The Reserve Bank has no appetite to put impediments on the conduct of free funds accounts but we can’t also remain naive at the wanton abuse of the liberalised facility by a few nationalities,” he said.

“Accordingly, the Reserve Bank would like to remind the banking public to adhere to good principles in conducting transactions in their free funds accounts and for banks to continuously exercise and/or conduct Customer Due Diligence (CDD) or to adhere to the Know Your Customer (KYC) principles at all times.”