One of Zimbabwe’s largest banks, CBZ Bank, is free to develop its international business after the U.S. Treasury cleared it of a $385 million penalty and only issued it with a warning.
The penalty had been imposed on the CBZ in 2017 by the Treasury’s Office of Foreign Assets Control (OFAC) for processing transactions on behalf of ZB Bank, a local lender which was under American sanctions.
ZB Bank was placed in a list of firms under sanctions in 2008 and later removed in 2016.
The OFAC had previously said it had determined that, for a number of years up to and including 2014, CBZ appeared to have engaged in non-transparent payment practises and processed thousands of transactions to or through the United States in apparent violation of the sanctions.
However, in a letter dated August 24, the OFAC issued a letter saying CBZ will not face any penalties or sanctions.
“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,” the OFAC said.
“We urge CBZ to use greater caution to ensure that it does not process transactions in violation of the sanctions programmes administered by OFAC.”
The OFAC added that the letter did not mean that it will not take any future action against the CBZ if new or additional information regarding its conduct came to light.
“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.”
The $385 million penalty was considered to be catastrophic for the CBZ given the economic and currency challenges that have engulfed Zimbabwe over the past year.
According to the current official exchange rate, the penalty was estimated to be nearly twice the value of the bank’s assets and also its market capitalisation.
The penalty had also brought about with it several challenges to the bank including problems in accessing lines of credit and undertaking regional and global transactions, and limitations in serving its customers.
“This removes a cloud over CBZ, the country and gives comfort to international partners,” the bank’s chairman Marc Holtzman said.
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