BoG targets sanitising forex bureaux with new directives …Traders could face penalties, revocation over non-compliance

The Bank of Ghana has issued a number of directives on forex trading as part of broad measures to provide the bank with very reliable information on forex trade in order to tackle some of the perennial weaknesses exhibited by the local currency against the dollar.

The cedi last year depreciated by 4.7 percent against the dollar and has a year-to-date depreciation of about 8 percent as at October 31.

While Steve Opata, Director, Financial Markets Department at the Bank of Ghana maintains that this year’s performance of the cedi can largely be blamed on the strengthening of the dollar against major trading currencies, he told the B&FT that speculation due to lack of information also played a role in the currency’s downward trend.

According to Mr. Opata, the central bank’s directives issued to licensed forex bureau and the public are market conduct rules based on the Foreign Exchange Act, 2006 (Act 723) that would provide clarity to the forex market to quell the lack of information which typically brews speculation and uncertainty.

Per the directives, the sale and purchases of all forex must be captured electronically and receipted accordingly by licensed forex bureaux.

According to the notice, all customers must provide valid identification or other valid personal ID such as Voter’s ID, Passport or Driver’s Licence when engaging in forex transactions with any forex bureau.

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According to Mr. Opata, the essence of these directives is to bring transparency to the market – to demonstrate how the market should behave just as it is does in most markets; “to promote ethical behavior which is how the playing field should be like – not necessarily forex controls. We are talking about dos and don’ts and penalties for non-compliance.”

The BoG directive also requires of al licensed forex bureax to submit monthly returns electronically to the central bank within five working days after the end of the month.

Also, the forex traders are required to complete and submit a licence renewal questionnaire two (2) months before the expiration of the current licence.

“The questionnaire must be submitted together with the following attachments:

  1. Copy of Tax Clearance Certificate
  2. Copy of Insurance Certificate
  3. Extract of Audited Accounts
  4. Bank Statements
  5. Proof of filing of Annual Returns at the Registrar General’s Department,” the central bank said.

As part of measures to protect consumer data, the central bank directed that all forex bureaux must comply with the provisions of the Data Protection Act, 2012 (Act 843) and must register with the Data Protection Commission of the Ministry of Communication as a key requirement for annual licence renewal.

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“Any person found transacting business with an unlicensed Forex Bureau or illegal forex dealers shall be dealt with in accordance with the Laws of Ghana. Failure to comply with this Notice shall attract penalties, including pecuniary sanctions, suspension and revocation of licence in accordance with the Foreign Exchange Act 2006, (Act 723),” the central bank warned.

Mr. Opata stated that before the announcement of these directives the central bank engaged key stakeholders including the banks, forex traders among other players to ensure everyone is on the same page.

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