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Think piece: Banking in Zimbabwe post OFAC sanctions removal




Upon issuance of the Executive Order of March 4 terminating the national emergency upon which the sanctions were based and revoking the Executive Orders that authorized the Zimbabwe sanctions (EO 13288 (2003), EO 13391 (2005) and EO 13469 (2008)), the Department of Treasury’s Office of Foreign Assets Control (OFAC) updated the Specially Designated Nationals and Blocked Persons List (SDN List) to remove all the SDNs previously designated under the Zimbabwe program, including deceased former president Robert Mugabe (100+ removals in total).


The question by a lot of interested persons is what does it mean for the Zimbabwean banking sector now that the US Business Sanctions have been removed.


Like with anything a return to normalisation will take time. Zimbabwe's financial system has been isolated from the greater world for 23 years.


There needs to be a shake off of the dust from the system, the machines cleaned, oiled, greased and then a careful engine start. It will stutter, cough and be adjusted until a well running machine can be left to its own devices, being a financial system that works normally with transactions in relatively real time.


Some thoughts:


As a Master of Laws in International Business Law, a Master of Sciences in Banking and Finance and with one of my legal practice sectors being in Corporate and International Banking, I share some thoughts. This in no way is legal advice and readers should consult with their relevant bankers and financial providers for full information and protocols. This piece is merely a discussion piece and neither is it tax or business advice.


Due to the ban being lifted overseas payments from Zimbabwe will now permissible. That does not automatically mean they will not be scrutinised as instead they now require due diligence to be done by companies receiving or sending in funds and no longer have to go through clearance checks by the US government. As a result some will be fast and some slow depending on the persons or companies transacting.


It will however be a slow roll out as banks in Zimbabwe need to reintegrate into systems like SWIFT, sign new agreements with partnering banks overseas and also get the infrastructure in their backend to handle these movements of currencies in a seamless way.


There is also need for issuer agreements to be signed with Visa and or MasterCard for example, and further negotiations as to percentage costs for transacting that make sense for the issuer and allow banks in Zimbabwe to operate profitably while still competing amongst themselves for lower fees to attract and retain customers.


This also will take time but eventually things will return to 'normal' depending on each banks zeal to add necessary infrastructure and legal agreements. The Central Bank of Zimbabwe through what one would think would be a consultative and training process would also help streamline this process within the parameters of the relevant finance, banking and exchange control acts.


Feel free to contact me:


Taka Rashid Gambe

Partner

Gambe Law Group Zimbabwe

Linkedin: LinkedIn

Whatsapp: +447482307574 

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