HARARE – CBZ Holdings Limited, Zimbabwe’s biggest banking group with a $2,4 billion asset base, is anxiously awaiting the conclusion of an extensive American investigation into sanctions busting transactions transmitted for a client that was under the US sanctions list a few years ago.
The diversified financial services group said on Monday its flagship banking unity, CBZ Bank would be complying with Office of Foreign Assets Control (OFAC) investigators, as they dig deeper into its accounts to determine the extent of the breaches.
However, the Zimbabwe Stock Exchange listed group knows that a decision against it will hit its pockets hard, especially after President Donald Trump’s administration recently slapped Standard Chartered Bank Plc (Stanchart) with a US$18 million fine for similar transactions made by its Zimbabwean unity.
Stanchart has accepted the outcome, which relates to dealings with parties on the US sanctions list under the Zimbabwe Democracy and Economic Recovery Act.
On Monday, CBZ Holdings said it had treated the matter as a contingent in its financial results for the year ended December 31, 2018.
Finance director, Colin Chimutsa told an analyst briefing that coming up with an estimate of the quantum of the fine would be difficult until a determination was made.
However, the fine extended to Stanchart could give CBZ an indication of the bill that will confront it if it is found guilty.
“CBZ Bank Limited is cooperating in the ongoing investigations by the Office of Foreign Assets Control regarding historical transactions involving a party that was subject to OFAC economic sanctions,” the group said in a note relating to the issue.
“Based on the facts currently known, it is not practicable at this time for CBZ Bank Limited to determine the terms on which the ongoing investigations will be resolved, or the timing of such resolution, or for CBZ Bank Limited to estimate reliably, the amounts or range of possible amounts of any fines and/or penalties, which could be imposed,” it noted.
OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons mass destruction and other threats, according to a statement of the International Monetary Fund website.
Relating to the Stanchart case, OFAC said in February; “Separately, between May 2009 and July 2013, SCB (Standard Chartered Bank) Zimbabwe processed transactions to or through the United States involving Zimbabwe-related Specially Designated Nationals (SDNs) or entities owned 50 percent or more, individually or in the aggregate, by one or more Zimbabwe-related SDNs. These transactions constituted apparent violations of the Zimbabwe Sanctions Regulations (ZSR), 31 C.F.R. Part 541. SCB will remit $18,016,283 to OFAC to settle civil liability relating to the apparent violations of the ZSR”.
Under the sanctions that have been blamed by Zimbabwean President, Emmerson Mnangagwa for destroying the economy, the US restricts the movement of money owned by Zimbabwean state firms and individuals on its sanctions list.
