Ghana’s Foreign Exchange Act needs to be urgently revised to take into account the growing influence of fintech companies in the foreign exchange market, banking expert Dr Richmond Atuahene has advised.

Speaking against the backdrop of recent foreign exchange rate violations by traditional banks, Dr Atuahene said the current regulatory framework was outdated, having been drafted before the emergence of fintech companies as major players in the Ghanaian financial sector.

“The rapid evolution of our financial landscape, particularly with fintechs becoming major partners of banks in the foreign exchange market, demands a fresh look at our regulations,” Dr Atuahene said.

The banking expert cited Bangladesh as a model example, where around 90% of foreign exchange comes from remittances.

He suggested that Ghana could achieve similar success by updating its regulations to ensure fintech companies properly return remittances to banks.

“Banks need these flows to support the economy, particularly for imports.

We should revise the foreign exchange law to make it more proactive and aligned with current market realities,” he added.

Regulatory reforms

His comments come as the Bank of Ghana (BoG) continues its crackdown on exchange rate violations, with Consolidated Bank Ghana (CBG) becoming the latest culprit to face sanctions.

The central bank suspended CBG’s foreign exchange trading license for one month, effective November 26, 2024. This follows similar measures taken against Fidelity Bank and others earlier in the year.

The growing number of violations committed by traditional banks, according to Dr. Atuahene, highlights the urgent need for regulatory reform.

He warned that continued violations of foreign exchange laws posed a systemic threat to Ghana’s financial sector and could potentially deprive the country of crucial foreign exchange reserves.

Suspension of CBG license

The BoG announced last week that it had suspended CBG’s foreign exchange trading license, with effect from November 26, 2024, for one month.

This was in accordance with section 11(2) of the Foreign Exchange Act, 2006 (Act No. 723).

The central bank, in the notice, explained that CBG had violated a number of foreign exchange market regulations, the updated guidelines for inbound remittance services for payment service providers dated November 2023 and the Anti-Money Laundering/Combating the Financing of Terrorism Act and the Directive on the Proliferation of Weapons of Mass Destruction (AML/CFT&P).

“The license will be reinstated at the end of the one-month suspension period once the Bank of Ghana is satisfied that CBG has effective controls in place to ensure strict compliance with foreign exchange market regulations,” it said. the opinion.

CBG response

Meanwhile, CBG assured its customers that the suspension of its foreign exchange license would not disrupt its core banking operations.

The bank confirmed that all branches and digital platforms remain fully operational, calling on customers to remain calm.

In a statement, CBG assured its customers that it was working closely with the BoG to resolve the issues and aimed to reinstate the license by the end of the suspension period.

“We would like to reassure our valued customers that this suspension has no impact on CBG’s normal banking operations. With the exception of foreign exchange products and services, all of our branches and digital platforms will continue to offer our customers our full range of services. We fully expect to reinstate foreign exchange products following our engagement with the Bank of Ghana,” the statement added.

The bank therefore apologized to customers for any inconvenience caused by the suspension, adding that it is committed to maintaining the highest standards of operational compliance.