BoG to sanction financial institutions violating foreign exchange regulations

The Bank of Ghana has warned that regulated financial institutions violating foreign exchange regulations risk being sanction, including losing foreign exchange remittance licenses.

In  a statement signed by its secretary, Sandra Thompson, the central bank said it has come to its notice that some Banks, Dedicated Electronic Money Issuers (mobile money operators), Enhanced Payment Service Providers (EPSPs) and Money Transfer Operators (MTOs) continue to violate the Foreign Exchange Act, 2006 and the Updated Guidelines for Inward Remittance Services by Payment Service Providers despite several cautions and reminders.

According to BoG, the violations being committed by the listed regulated institutions include;

1. Termination of inward remittances using unapproved channels
2. Engagement in Foreign Exchange Swaps in the context of Inward Remittance Business;
3. Termination of remittances on behalf of institutions without prior approval from the Bank of Ghana; and
4. Applications of unprescribed Forex Exchange rates.

“The [Central] Bank will sanction any violating institution and terminate the remittance partnerships of all MTOs whose operations are not in compliance with the approved guidelines,” the statement said.

It then ordered all regulated institutions to adhere to the following directive to avoid being sanctioned:

1. The funding of the Local Settlement Account should be strictly done in accordance with section 7.1 (c) of the Updated Guidelines for Inward Remittance Services by Payment Service Providers; which states that “A DEMI (MoMo operator) or EPSP shall ensure that their partner MTO(s) credit the nostro account of their settlement banks directly for all inward remittances. A DEMI or EPSP should indicate to the Bank of Ghana, their partner bank who will receive such remittance flow for onward credit into the local settlement account. All funds terminated shall be reconciled and matched within 72 hours.”
2. Ensure that all disbursements shall be from the Local Settlement Account as stated in section 7.2 (a) of the Updated Guidelines for Inward Remittance Services by Payment Service Providers; which states that “A DEMI (MoMo operator) or EPSP shall have a local designated account for remittance settlement domiciled with a universal bank(s) only”; and
3. DEMIs/EPSPs should ensure that pre-funding arrangement with the Settlement Bank shall be done in accordance with section 7.2 (b) of the Updated Guidelines for Inward Remittance Services by Payment Service Providers, which states that “A DEMI or EPSP shall have up to a maximum of three (3) settlement banks for purposes of inward remittances termination.” 

“In light of the above, and in line with the Bank of Ghana’s regulatory responsibility to ensure transparency, accountability, and integrity in the foreign exchange and remittance ecosystem, all Banks, DEMIs and EPSPs are hereby directed to submit weekly reports per MTO, detailing daily individual inward remittance transactions log, along with the corresponding daily sum of foreign exchange credited into respective Nostro accounts,” the statement said.

It warned that failure to submit accurate and timely reports constitutes a regulatory breach under Section 42 of the Payment Systems and Services Act (Act 987) and Section 93(3) (d) of Act 930 and will attract the appropriate administrative sanctions.

Section 42 of Act 987 mandates the Bank of Ghana to collect any information from DEMIs and EPSPs related to their assets, liabilities, income, expenditure and any other information related to their work; while Section 93(3)(d) of Act 930 (Banks and Special Deposit-Taking Institutions Act) also authorizes the Central Bank to sanction banks and other regulated bodies which fail to make accurate submissions.