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Stanchart in sanctions trap . . . moves to stop US Dollar cross border …

Stanchart in sanctions trap . . . moves to stop US Dollar cross border …

Stanchart in Sanctions Trap . . . Moves to Stop US Dollar Cross Border ...

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Published: 25 August 2015

ZIMBABWE – Standard Chartered Bank Zimbabwe will with effect from August 31 2015 cease to process all United States Dollar cross border transactions after the bank’s vendor in New York, US, changed its service terms in a move that is believed to be part of the sanctions that are currently hitting Zimbabwe.

The country is specified by the US Office of Foreign Assets Control.

Sources say the move will effectively close accounts linked to high risk and politically exposed clients. According to an internal memo seen by The Herald Business, with effect from this month end, StanChart will no longer process US dollar cross border payments including but not limited to outward telegraphic transfers, letters of credit and cheque transactions.

This, however, will not impact on customers’ ability to transact in any other major currencies including the British pound, South African rand and the Euro.

The Herald Business is reliably informed that in order to effect the changes, the bank, which was the first bank to open its doors in the country pre-independence, has classified account holders into different categories with those with political links now falling under high risk and likely to be affected by the move.

The move will also affect account holders who have offshore loans committed at the bank. According to a Frequently Asked Questions sheet which the bank circulated with the memo, the bank says it would not be able to facilitate the future settlement of any loans.

“We regret to advise that we will not be able to facilitate the future settlement of this loan. In this regard, the notice we have given you is meant to allow you to make the necessary amendments to the loan arrangements so that you are not in default of both the loans and the Exchange Control requirements.”

The bank, however, adds that the RBZ Exchange Control approval remains valid and is transferable to another bank.

StanChart head of corporate affairs Lillian Hapanyengwi confirmed the new plan last Friday in emailed responses saying this was a result of internal policy and as part of compliance with international regulatory environment.

“The Standard Chartered Group is committed to achieving the highest standards of compliance and controls and is implementing enhancements in our controls in Zimbabwe to ensure that we can support our clients and customers as they transact internationally.

“A small number of Standard Chartered Zimbabwe customers may from September experience difficulties in making US dollar cross border payments as a result of restrictions imposed by our US Correspondent, Standard Chartered Bank’s New York branch, with whom we will work to minimise customer impact.

“Clearly we are concerned about customer impact and have sought to minimise this. We are communicating actively with impacted clients and will work with them to minimise the disruption to their business wherever possible.

“These restrictions are not intended to be permanent but will continue until we have improved our client due diligence and AML processes in Standard Chartered Zimbabwe to meet global standards. Once properly implemented, the enhancements being made by Standard Chartered Bank Zimbabwe will support a return to normal.

“The restrictions do not affect our customers’ ability to transact domestically in Zimbabwe in US dollars, nor to make cross-border payments in other currencies. Customers will also continue to be able to use their International VISA debit card outside of Zimbabwe.”

It is alleged that communication to account holders has been done verbally and no official communication was done in writing.

The move will also affect those who use international visa cards, those with stop orders on foreign accounts. Sources say the move is part of a broader plan of divesting out of Zimbabwe. The bank denies that the restrictions are about sanctions but about improving the control environment.

The bank said the Reserve Bank of Zimbabwe had been advised and is aware of the move.