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Ghana鈥檚 financial watchdog has raised the alarm over persistent compliance failures in the remittance market and stated that firms failing to address violations will face sanctions.
In a published on July 29, the central bank said it had observed repeated violations of foreign exchange and remittance rules, despite previous cautions.
It said this constituted continued non-compliance with both the Foreign Exchange Act, 2006 (Act 723) and its Updated Guidelines for Inward Remittance Services.
Its warning was addressed to a range of relevant organisations, including banks, dedicated electronic money issuers (DEMIs), enhanced payment service providers (EPSPs), and money transfer operators (MTOs).
Violations that the bank identified included terminating inward remittances through unapproved channels, engaging in foreign exchange swaps in the context of remittance business, terminating remittances on behalf of institutions without prior approval and applying unapproved foreign exchange rates.
The Bank of Ghana said it will impose sanctions on offending institutions and revoke partnerships with MTOs that fail to comply with the established guidelines.
Closer oversight
The notice reiterates that funding of local settlement accounts must strictly follow the section remittance guidelines.
It emphasises that all disbursements must be made from local settlement accounts in accordance with section 7.2(a), and any pre-funding arrangements between DEMIs or EPSPs and settlement banks must follow section 7.2(b).
As part of strengthened oversight, the regulator has mandated that all relevant institutions submit weekly reports for each MTO.
These reports must include a daily log of individual inward remittance transactions and the total daily foreign exchange credits into the relevant Nostro accounts.
A Nostro account is a bank account that a domestic bank holds with a foreign correspondent bank, denominated in the currency of the foreign bank.
Failure to submit accurate and timely reports will be considered a regulatory breach, the Bank of Ghana warned, adding that offending firms will face administrative sanctions.
A demand for change
The latest intervention seemingly stems from the failure of in-scope firms to follow guidelines the central bank issued in February 2021 for inward remittance services provided by payment service providers (PSPs).
In particular, the guidelines focused on partnerships between banks and other PSPs.
The latest notice demonstrates that the central bank takes this non-compliance seriously and expects providers to remedy any ongoing violations.
PSPs operating in Ghana must cease any non-compliant activities flagged by the central bank and ensure full compliance with the legal framework.
They will have to focus in particular on how local settlement accounts are funded and used, and how pre-funding arrangements are structured.
PSPs also need to prepare for the compliance requirement to implement stricter reporting oversight.
This includes submitting weekly reports for each MTO, detailing daily inward remittance transactions and the corresponding foreign exchange credited to Nostro accounts.
Given the central bank鈥檚 warning of sanctions, firms that wish to avoid such measures will need to review their activity and make the necessary changes.
