Zimbabwe mobile money platform EcoCash is facing additional regulatory hurdles after the country’s Central Bank charged its directors for failing to disconnect agent lines it suspects are fuelling parallel market currency dealings.

The Southern African country is home to three mobile money services that include state-run One Money and Telecash, although EcoCash, operated by Econet Wireless spin-off Cassava Smartech, is the most popular.

Agent lines are used for key cash-in, cash-out, prepaid electricity sales and airtime sale transactions used to boost financial inclusivity in the country.

ITWeb Africa recently reported that the Reserve Bank of Zimbabwe (RBZ) believes some of these lines are being abused by parallel market foreign currency dealers to spike rates associated with the Zim dollar.

RBZ’ Financial Intelligence Unit (FIU) has now charged EcoCash directors for failing to comply with the directive to disconnect agent lines. It also instructed Steward Bank - owned by Econet - to restrict transactions related to mobile money payments.

According to the FIU on 4 May 2020 it directed EcoCash to freeze the accounts of all agents with transaction limits above ZW$100,000 per month and to commence a re-licensing and KYC enhancement exercise in respect of the suspended agents.

“EcoCash defied the directive by failing, refusing or neglecting to suspend and freeze the accounts of the high-threshold. 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 (required) information,” the FIU has stated.

The Central Bank has also accused the platform of fuelling the street exchange rate for the Zimdollar which has continued to lose value against the US Dollar while the official fixed rate has remained at 1:25.

The street rate opened the week above 1:60 and it has also emerged that some currency traders are now also utilising One Money platform, offering slightly higher rates compared to EcoCash, mainly as a result of the restrictions in moving funds on the platform.

Steward Bank holds and manages the Mobile Money Trust account for EcoCash and it has now been directed to stop receiving or processing “any payment into the MMT account from a third party”.

In correspondence to Steward Bank dated 21 May 2020, the FIU said that the Bank is to impose a ZW$100,000 (about US$1 666) per month limit for account holders transacting into and out of EcoCash.

Authorities have argued that there are no authentic business operations supporting some of the high transactions by some of the agents.

In a separate communication to EcoCash dated 19 May 2020, the FIU also advised its intention to penalise EcoCash as a company, its CEO Natalie Jabangwe as well as director Eddie Chibi.

They were charged under the Money Laundering and Proceeds of Crime Act “for failure to comply with obligations imposed on financial institutions and their officers, employees, directors” and agents.

It further notes that it has discovered that there are suspicious mobile money transactions under EcoCash that “ought to have been reported to the FIU promptly, and in any case within 72 hours” as required by regulations.

The EcoCash directors have a week to respond to the charges.

coCash has already dragged the RBZ to court, challenging the Central Bank's directive to freeze agent lines and the case is still pending after John Mangudya, governor of the reserve bank, insisted that the service was running a Ponzi scheme