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GOVERNMENT has with immediate effect abolished mobile money wallet agents as they are no longer serving any legitimate purpose and further tightened regulations to tackle illegal foreign currency dealings among other financial malpractices that have been blamed for sabotaging the economy.
The mobile money agent system had become popular through facilitating cash-in and cash-out services, as well as creating job opportunities, but had recently become notorious for aiding illegal foreign currency deals and manipulation of the exchange rate. Despite the suspension and freezing of agent and bulk-payer wallets on June 27, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, said the monetary authority has noted with concern that mobile money operators continued to allow illegal foreign currency dealers to use multiple individual wallets as a means to by-pass the transaction limits and continue with their illicit transactions.
This has prompted the monetary authority to craft comprehensive interventions to close the gaps, which include directing all mobile money operators to immediately close all multiple wallets, and allow just one wallet per individual.
Announcing the new measures to address deficiencies in mobile banking in his 2020 Monetary Policy Statement yesterday, Dr Mangudya, said the new regulations were an outcome of a forensic audit carried out by the Bank to assess the integrity, compliance and efficacy of mobile money platforms and transactions in Zimbabwe.
He said the audit has revealed significant weaknesses in the systems of the mobile payment operators, namely Ecocash, OneMoney, Telecash and Mycash. “Agent wallets are no longer serving any legitimate purpose and were now being used primarily for illegal foreign exchange transactions. Agents’ mobile money wallets are,therefore, abolished, with immediate effect,” said Dr Mangudya.
He, however, clarified that agents currently holding value in suspended and frozen wallets shall be allowed to liquidate the funds to their bank accounts, upon the Financial Intelligence Unit (FIU) having satisfied itself of the legitimacy of the source of funds.
Dr Mangudya said mobile transactions by individuals will remain pegged at $5 000 per day but explained that person to person and person to merchant payments for goods and services, settlement of bills and purchase of airtime, will remain permissible.
While retailers and other service providers will be permitted to continue operating merchant wallets to allow the public to pay for goods and services, the RBZ boss said merchants would not be allowed to make payments from their wallets.
“E-value held in merchant wallets shall be liquidated to the merchant’s bank account. In this regard, mobile money operators shall have systems in place to ensure automatic liquidations from the merchant wallets to the merchant bank accounts,” he said.
“This measure shall ensure that mobile payment platforms are not used for store of value but shall be restricted for transacting purposes in furtherance of financial inclusion in the economy.”
Regarding bulk payment accounts, the Governor said mobile payment operators have also been turning a blind eye to the extent of actively encouraging the abuse of bulk payment wallets for illegal foreign currency transactions, thus earning lucrative transaction fees in the process.
“Going forward, bulk payment wallets will be approved by regulatory authorities for limited use, primarily for low value transactions and humanitarian funds disbursements to vulnerable members of society,” said Dr Mangudya.
“Any other bulk payment transactions, such as payment of salaries and wages, should be processed through normal banking channels.”
He said the Bank’s forensic audit revealed the critical weaknesses that cut across the entire mobile payment platforms. These included non-adherence to to KYC principles, characterised by, among other issues, creation of mobile money accounts using fictitious and unverified identification particulars.
The malpractices also included creation of money on the platforms (overdrafts and fraudulent/fictitious credits), which is not backed by balances in the mobile money trust accounts, system infrastructure inadequacies and weak anti money laundering controls and failure to comply with, including willful disregard for, regulatory directives.
The audit further unmasked connivance between mobile money operator employees and customers to delay or illegally by-pass account freeze orders as well as failure to deduct or remit statutory taxes and rampant abuse of agent, super-agent and bulk payment wallets for purposes of trading on the foreign exchange parallel market.
On the basis of the forensic audit report, Dr Mangudya said the Apex Bank, as the regulator and the Financial Intelligence Unit as the agency for enforcing anti-money laundering standards, will consider the audit findings and recommendations of the forensic report, in detail, and come up with comprehensive corrective measures for implementation by mobile payment operators so as to ensure compliance, integrity and efficacy of mobile money transactions.
Online Reporter