Banks holding mobile money trust accounts are now only allowed to let their account holders pay into those trust accounts and have to enforce the know-your-customer standards of the banking system.
The Reserve Bank's Financial Intelligence Unit believes large money transfers by EcoCash agents are being used to fuel black market deals in foreign exchange and has already imposed limits on business the agents can transact. In a letter to Steward Bank, the RBZ has directed that bank to go further in controlling transfers into EcoCash mobile money trust accounts.
Both EcoCash and Steward Bank are subsidiaries of Cassava Smartech, which has already launched a legal challenge in the High Court over an RBZ directive to freeze lines of flagged agents which the RBZ considered were handling transactions far beyond what normal business requirements would demand.
Now the Financial Intelligence Unit has directed Steward Bank, which handles the mobile money trust accounts, to ensure that all holders of such accounts are also bank customers and to stop third parties, those who are not account holders with the bank, from transferring money into the trust accounts.
The trust accounts, which EcoCash has with several banks, hold the money registered in customer and agent mobile wallets to ensure that these funds are safe. In most EcoCash transactions, customers send money to each other within tight limits and there are no changes to the totals in the trust accounts. The RBZ is now gunning for the other cases where some individual is paying into the trust account.
Mobile money service providers are already having to re-license all agents.
In its directive to Steward Bank, the financial intelligence unit said: "We have noted rampant abuse of the mobile money platforms for purposes of illicit foreign currency dealings and money laundering. We have noted huge daily inflows into the MMT account, without any apparent underlying business rationale," reads the directive.
"We have directed mobile money service providers to undertake an agent re-licensing and KYC enhancement exercise to ensure that only bona-fide entities are allowed to continue transacting on the respective mobile money platforms. But pending completion of such a KYC enhancement and re-licensing banks now had to take a number of other steps. The bank shall not receive or process any payment into the MMT account from a third party, that is, a person or entity who is not an account-holder with the bank. A customer of the bank shall only be allowed to pay into the Ecocash MMT account, funds not exceeding Z$100 000 per month (in line with the agent or bulk payer monthly limits currently in force). Ecocash shall, from time-to-time, provide the bank with lists and details of its agents who would have undergone the re-licensing exercise, and who shall be allowed to transact at higher limits, as shall be approved by the RBZ. The bank shall exercise enhanced due diligence to satisfy itself as to the purpose of any payment into the MMT account and report any suspicious transactions."
FIU said that the restrictions do not apply to those EcoCash agents or bulk payers who are banking institutions, bureaux de change, listed companies, international organisations, microfinance institutions, and Government and quasi-government institutions. This week the central bank governor said the move to impose a blanket freeze on suspicious agent lines was critical to protect the economy.
"If we don't do what the Financial Intelligence Unit (FIU) are doing we are going to reach a bubble. What we are doing at FIU is to try and stop it, but mobile telecommunications players are just looking at their income, not the economic welfare of the country," he told the Parliamentary Portfolio Committee on Budget and Finance.
