The drama continues as the Financial Intelligence sent a letter to both Ecocash CEO Natalie Jabangwe and Cassava Smarttech CEO Eddie Chibi charging both with violating sections of the Money Laundering and Proceeds of Crime Act [Chapter 9:24]. Among the allegations brought against them in the letter are failure to comply with a directive, failure to comply with an obligation to customer identification, failure to maintain books and records, failure to avail books and records to the FIU, Failure to report suspicious transactions and disclosing to a third party that a report has been made against them. The Reserve Bank is taking the fight with Ecocash very seriously and is firing every weapon it has in its arsenal after earlier going after Ecocash agents among other mobile money agents and Steward Bank being issued a directive to freeze mobile money trust accounts after Ecocash sought a High Court application to prevent the FIU from forcing them to do so.

The allegations

Failure to comply with a directive

This relates to the directive issued on the 4th of May 2020 requiring Ecocash to freeze all merchant accounts with transaction limits over ZW$100000 and to commence a reregistration process of such agents. These are referred by Ecocash as bulk payers. Ecocash took this matter to the High Court and that according to FIU amounts to a refusal to follow a directive.

Failure to comply with an obligation to customer identification

This charge relates to a letter dated 1 May in which the FIU ordered the freezing of 123 mobile money agents, 97 of them being Ecocash agents with the remainder being One Money agents.

Contrary to the requirements of the directive, Ecocash and / or its management and directors, for no lawful reason. failed to comply with the requirement to provide the information referred to in 2.4 above, until after close of business on 15 May 2020, when Ecocash provided information falling far short of what was requested. In many respects, the information eventually provided was incomplete and contained glaring errors, by design or otherwise.” read the letter from the FIU Acting Director-General Oliver Chiperesa.

Failure to maintain books and records and Failure to avail books and records

These two charges are related to the non-presentation of customer data by Ecocash relating to the aforementioned letters dated 1st and 4th May. The FIU alleges that Ecocash failed to provide the data either through a lack of having or reluctance to share it both in contravention of the Money Laundering and Proceeds of Crime Act.

“Even after taking two weeks to run around and put together some information. Ecocash still could not provide names of a CEO / MD even of one agent, nor the list of directors, list of shareholders and ultimate beneficial owners as requested by the FIU and as required by law. Although Ecocash in the end provided purported business addresses for some of the agents, in most cases the addresses were incomplete or patently false / fictitious.

Ecocash’s failures in this regard points to the fact that it did not collect and maintain customer identification and identity verification information and other KYC data as required under sections 15 — 18 of the Act, only started running around after being served with the directive.

If Ecocash had collected and maintained the KYC information as required by law. when opening an account, which is not borne by the above facts, then it should explain why it failed to avail such information timely, when requested by the FIU.”

Failure to report suspicious transactions

The FIU further alleges that Ecocash, though they had knowledge of many suspicious transactions being carried out made no effort to report the transactions. This matter was also a bone of contention when Ecocash took the RBZ to the High Court sighting they had made reports which the FIU did not act upon. However, the letter cites a specific date range;

“During the period from 22 to 28 April 2020. Ecocash agents listed in the first column of Annex: I. bearing agent numbers shown in the third column. conducted transactions in amounts specified the fifth column.

The transactions were suspicious and ought to have been reported to the FIU promptly. and in any case within 72 hour.. as mandated in section 30(1) of the Act.

Failure to report the transactions as required. is not only a criminal offence. in terms of section 30(1) of the Acts but also amounts to an administrative infringement in terms AML/CFT Directive No. 2 of 2014, item 21.”

Disclosing to a third party that a report has been made against them

The FIU has left no stone unturned in its allegations as it pulled this one into the mix. According to the Act as quoted by the FIU “Section 31(2) of the Act prohibits a financial institution or any of its director. partner, officer. principal or employee, from disclosing to its customer or to a third party the fact that the financial institution has filed a suspicious transaction report to the FIU”.

When Ecocash too the RBZ and FIU to court they went at great lengths to show that they had complied with regulations and eve sent some cases to the FIU. The affidavit filed and signed by the CEO of Cassava Mr Chibi contained many details.

“In his affidavit and by way of attachments thereto, Chibi intentionally or recklessly gave details of a number of suspicious transactions that Ecocash alleged it had filed with the FIU. The affidavit and annexures were filed with the courts and also published in online publications and / or social media.”

The FIU has taken the fight seriously and this has left many to wonder if this still has anything to the with the foreign currency black market or there are other things at play here. Credit must be given to the RBZ and FIU for communicating clearly, something we have not often seen. After leading a hunt for a man who showed stacks of money on social media the matter ended with a confusing statement that went nowhere. The two CEOs have been allowed 7 days to respond to these allegations.