CBZ Bank has escaped the US$385 million fine it was facing under the United States’ Zimbabwe sanctions regime after the Office of Foreign Assets Control (OFAC) decided only to warn the bank.
In 2017, CBZ Bank was slapped with a US$385 million fine by OFAC for thousands of financial transactions done on behalf of ZB Bank, then under economic sanctions imposed by the US.
The US has maintained its theory that the sanctions are “targeted’” but the reality of the situation is that the sanctions are broad-based and are squeezing the heart of Zimbabwe’s economy — the financial services sector.
In the latest development, CBZ bank has been warned against violations of the United States of America’s S541.201 of the Zimbabwe Sanctions regulations.
The US issued its warning through a letter dated 24 August 2020 by Rachel Dondarski Chief Regulated Industries Oversite and Evaluation Office of Foreign Assets Control to CBZ Bank’s Chief Executive Officer Peter Zimunya.
“This his letter service as notice that the Department of the Treasury Office of Foreign Assets Control (OFAC) has completed its review of the following matters.
“From December 16, 2014 to December 14, 2017, OFAC made a series of requests for information and documentation and CBZ provided numerous responses and documents.
“From the Information gathered, OFAC has determined that for a number of years up to and including 2014, CBZ appears to have engaged in non transparent payment practises and processed thousands of transactions to or through the United States in apparent violation of S541.201 of the Zimbabwe Sanctions Regulations, 31 CFR part 541 (ZSR),” reads part of the letter.
OFAC accused CBZ bank of facilitating ZB Bank’s payments without declaring the origins thereby shielding ZB bank from scrutiny since the financial institution is under economic sanctions.
“Specifically, CBZ provided indirect access to the US financial system for ZB Bank and Bank located in Harare, Zimbabwe that OFAC added to its List of Specially Designated Nationals and Blocked Persons (the ;SDN List’) on July 25, 2008.
“CBZ operated an account in which ZB’s customers could send or receive US Dollar (USD) denominated payments that transited through the United States without referencing of mentioning ZB Bank’s name or involvement in the transactions.
“As a result, the payment instructions presented to US financial institutions for processing listed the originating or beneficiary bank as CBZ bank rather than ZB Bank, thereby preventing US financial institutions from being able to intedict/or research the payment to ensure they were complaint with US economic sanction laws,” reads part of the cautionary statement.
OFAC feels by processing these transactions, CBZ bank violated S201 of the Zimbabwe Sanctions Regulations , 31 CFR part 541.
“After considering all relevant information in its possession as the General Factor Affecting Administrative Action set forth in the Economic Sanctions Enforcement Guidelines, OFAC has made a determination to issue this cautionary letter in response to these apparent violations.
“We urge CBZ to use greater caution to ensure that it does not process transactions in violation of the sanctions programmes administered by OFAC.
“This cautionary letter represents a final enforcement response to the above referenced apparent violations.
“However, it does not preclude OFAC from taking future enforcement action should new or additional information warrant renewed attention.
“This letter does not constitute a final urgency determination as to whether a violation has occurred. CBZ OFAC compliance history will be factored into any matter that comes to our attention in the future, including an apparent violations,” reads the letter.
The US sanctions on Zimbabwe are guided by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy, and the Zimbabwe Democracy and Economic Recovery Act (ZIDERA), an Act passed by the United States Congress which imposed economic sanctions on the country.