Over 170 forex dealers arrested in Zimbabwe in a fraud-fuelled week

A significant crackdown on illegal foreign exchange dealers has taken place in a major African nation.

Police in Zimbabwe said that they had taken almost 200 currency dealers into custody in the space of the last seven days.

They were arrested on suspicion of breaking the Exchange Control (Amendment) Regulations, 2017. Arrests took place across the southern African country, which has a population of over 17 million.

According to police, the dealers were causing a “serious” risk to the country’s economy.

“The Zimbabwe Republic Police, having noted that activities by illegal foreign currency dealers were posing a serious security and economic threat to the country, embarked on a countrywide operation meant to enforce Statutory Instrument 122A of 2017, Exchange Control (Amendment) Regulations, 2017 (No.5), which criminalises the illegal trading in foreign currency”, said Paul Nyathi, who is a spokesperson for the National Police Assistant Commissioner.

“This operation is being done in conjunction with relevant stakeholders”, he added.

However, it is not the only allegation of forex fraud currently besetting the country.

According to local news reports released this week, the Reserve Bank of Zimbabwe has suspended four of its senior officials as a result of a financial scandal alleged to involve forex fraud.

One of the communications officials working for Finance Minister Mthuli Ncube had accused them on social media of being involved in illicit forex trading practices. However, it had remained unclear as to whether the four would face any action over the allegations.

However, the Bank yesterday released a statement saying that it would, in fact, take action against the four men.

“The Reserve Bank of Zimbabwe (the ‘Bank’) wishes to advise members of the public that following allegations of impropriety levelled against senior officials of the Bank…the Bank has found it necessary, for the sake of transparency and good corporate governance, that the allegations be followed through and investigated in line with the Bank’s Employment Code of Conduct”, it said in the statement.

“Consequently, on 22 October, the Bank suspended the quartet from employment for an indefinite period to pave way for the investigations.

“Once the investigations have been concluded, the public shall be advised of the outcome and the appropriate corrective action to be taken as dictated by the outcome of the investigations”, the statement concluded.

Unconfirmed rumours have accused the Reserve Bank of Zimbabwe of getting involved in “money changing”, a practice which allegedly involves the covert printing of cash in Zimbabwean dollars. Allegedly, this then gets converted into foreign currencies – which are then passed on to the country’s elites.

Zimbabwe’s currency has long since been a source of economic problems. In the late 2000s, for example, a hyperinflation level of 79,600,000,000% was recorded, and many citizens struggled to buy ordinary items.

This led to many Zimbabweans attempting to convert their local dollars into foreign currency as a way of preserving their value, a development which is only likely to have fuelled the demand for black market currency exchange services and entrenched them in the country’s culture.

About the author: Karen Miller

Karen is probably our staunchest champion of combating foreign exchange fraud, with interests in every related area. She is one of our most regular contributors and no scam is too big or too small for Karen’s attention. She works tirelessly in her personal and professional life to shine light on the individuals responsible for fraud, rather than just trying to avoid the schemes themselves. Karen is an avid follower of new government measures to combat fraud and has a comprehensive network of contacts within the field. Karen has a background in banking, corporate and finance law, having attended the Fordham University School of Law in New York. She still lives in New York and has worked for some of the biggest and most recognisable names in the sector, gaining a wealth of expertise and experience over the years. Karen admits to not having a huge amount of spare time, and much of the time she does have is spent reading and posting on sites dedicated to exposing scams of all kinds, not just forex fraud. Perhaps unsurprisingly, she spends what little downtime she has reading and watching crime thrillers and biographies with her French Bulldog Columbo.

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