Bank of Ghana cautions banks on misclassifying foreign currency accounts

Dr. Kofi Wampah - Bank of Ghana Governor
Dr. Kofi Wampah – Bank of Ghana Governor

The Acting Governor of the Bank of Ghana (BoG), Dr Henry Kofi Wampah has cautioned banks on misclassifying foreign currency denominated accounts and has said the Bank will intensify monitoring of these activities and sanction any banks found to be culpable.

Addressing a gathering of the Chartered Institute of Bankers, he said the misclassification of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA) in contrast with the Foreign Exchange Act 2006, have resulted in an increase of transfers of foreign accounts without proper documentation, with implications for money laundering activities.

“For the purposes of clarity, the Bank of Ghana has issued two (2) Operational Guidelines: Notice No. BG/GOV/SEC/2007/3 and 4, defining these two accounts,” he said.

Ahead of the central bank’s plans to engage banks on shoring up capital levels using their earnings, the Acting Governor encouraged them to do so as a means of internal capital generation to strengthen their financial positions.

He noted that it was becoming the trend for banks to either defer or delay provisions in an attempt to present a better bottom line.

“Almost every examination finding ends with a call for additional provisions to be booked for loan delinquency,” he added.

In 2016, Dr Wampah said the BoG through its Financial Resilience Department, will intensify its assessments of the banking system’s resilience to risks, and take measures to reduce inflation and prevent volatility of the cedi.

He said together with fiscal consolidation in the 2016 budget, and active participation by the Bank in the foreign exchange market, the BoG “will continue to maintain a tight monetary policy stance until inflation expectations are well anchored”.

In addition, the Bank intends to facilitate the surrendering of portions of gold and cocoa export receipts directly into the foreign exchange market to improve liquidity and depth, coupled with measures to ensure that all export proceeds are repatriated into the banking system, in accordance with the Foreign Exchange Act.

The BoG will also start implementing the revised requirements and guidelines for Primary Dealership in which Primary Dealers will be expected to underwrite auctions, warehouse and retail debt securities on the secondary market at a spread, he said.

The Acting Governor disclosed some legislative measures as well, including the Specialized Deposit-taking Institutions Bill and the Deposit Protection Bill, currently under consideration in parliament, and upcoming amendments to the Bank of Ghana Act to clarify some ambiguities in the current act.

By Emmanuel Odonkor

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