By Bernard Yaw ASHIADEY & Ebenezer Chike Adjei NJOKU
Linus Kumi, Head of Corporate Banking at GCB Bank, has lauded stricter Ultimate Beneficial Owner (UBO) identification requirements and moves towards further integrating national ID systems with financial data, describing them as “a great opportunity” for the banking sector.
“For me, I think it is a significant step in the right direction because it is always good to know who you are lending to,” Mr. Kumi stated, emphasising the importance of these new measures in combating illicit financial activities he said during a panel session at a high-profile Compliance Forum in Dakar, Senegal, organised by the African Export-Import Bank (Afreximbank) in partnership with the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA).
Mr. Kumi was speaking during the third panel discussion of Day 1 under the theme ‘A Business Perspective on UBO Improvements and its Impact on Business’. The objective was to discuss the business implications of UBO improvements. The session examined improvements and their impact on commercial banking activities in terms of trade facilitation; and discussed the added value for companies.
Hannane Ferdjani, Journalist, Founder of Beyond The Noise Africa, moderated the session and other panellists were Jean Eric Matunga, Head of Specialized Finance, Rawbank; El Hadji Malick Gueye, Directeur Général, Wave Digital Finance; Gualter Goncalves, Compliance Director, Vista Bank Mozambique; and Pattison Boleigha, Managing Director, Pattison Consulting Limited.
The new requirements, which align with recommendations from the Financial Action Task Force (FATF), represent a significant tightening of client due diligence (CDD) processes in the nation’s financial sector.
Mr. Kumi highlighted that the Bank of Ghana (BoG) has already begun implementing these changes, stating, “Today, for high rate entities, it is 5 percent unwrapping. What does it mean? What it means is that you have to let us know who owns the business at least at 5 percent levels.” This marks a substantial shift from the previous 10 percent threshold, which is in line with international standards for financial transparency. The move is particularly aimed at preventing banks from unknowingly financing entities involved in illicit activities.
The compliance and corporate banking expert underscored the potential consequences of non-compliance, warning, “you would be surprised that the benefits you will ever make on this client’s life cycle, the penalty will be three times that or four times that.” This stark reminder highlights the increasing regulatory pressure on banks and the financial risks associated with poor compliance practices.
A key component of Ghana’s strategy to enhance financial transparency is the integration of the Ghana Card, the national ID, with other data sources. Mr. Kumi enthusiastically supported this approach, stating, “We should be able to plug in property data, plug in financial data and plug in national ID. Once we synchronize them, Ghana will be able to lend without even seeing the person.”
This integration could significantly streamline Know Your Customer (KYC) processes and improve lending practices. Mr. Kumi painted a vision of the future, saying, “I should be able to sit in my office, go into a system, and I should be able to pull everything about you and say, this is your age, you used to work here, you used to work here. Just like you have in Europe.”
However, he emphasized the need for continuous updates to maintain the system’s effectiveness. “What I would want to add to you is that it must be a continuous sort of information update on the Ghana card,” he stated, suggesting that changes in an individual’s business ownership or address should be reflected in the integrated system.
The enhanced transparency measures are expected to have a significant impact on international trade, particularly within Africa. Mr. Kumi pointed out current inefficiencies in intra-African trade, noting, “We trade more with China than we trade with Nigeria. More with China, more with Europe, more with America.”
He advocated for a more integrated approach to African trade, stating, “We should be able to start seeing Nigeria as a trading partner than just a football competition or a jollof competition. It is necessary. It is about time. What can you do best? Do that. What can I do best? Let me do that. And let us swap. Let the money and the value remain within the continent.”
While acknowledging the challenges in implementing these changes, particularly for large multinational corporations, Mr. Kumi remained optimistic. He noted that smaller businesses, when properly incentivized, are often willing to provide the necessary information. “Most SMEs, when they are incentivized, will provide the necessary information,” he stated.
The proposed changes, while promising significant benefits, also raise important questions about data privacy and security. The integration of various data sources, including financial and property data, with the national ID system will require robust safeguards to protect individuals’ personal information.
As Ghana moves forward with these initiatives, it could potentially set a precedent for other countries in the region. The success of this approach could influence financial regulations across the continent, particularly as African countries seek to increase intra-continental trade under the African Continental Free Trade Area (AfCFTA) agreement, Mr. Kumi stated, adding, “We are late, but we are not out.”
The Afreximbank Compliance Forum
The Afreximbank Compliance Forum, which was organised in partnership with the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) was sponsored by some banks including Vista Bank, GCB Bank, Wave, Rawbank, SUNU Group and compliance system providers such as Lexus Nexis, Elucidate, Finanstra and Llyod’s List Intelligence, Consortix, and Vneuron.
The Forum focused on the Financial Action Task Force’s (FATF) requirements for identifying Ultimate Beneficial Owners (UBOs) and their far-reaching implications for trade facilitation. The FATF, an intergovernmental organisation, sets international standards to prevent money laundering, terrorist financing, and other threats to the integrity of the global financial system. One of its critical mandates is to identify and verify UBOs to ensure transparency and accountability in financial transactions.
Additionally, the Forum explored the transformative role of Artificial Intelligence (AI) in compliance processes, address strategies for African countries to make the necessary reforms to be removed from the FATF’s grey list and showcase the latest compliance technologies.
>>>the coverage of the forum in Dakar, Senegal was made possible by the kind courtesy of Ecobank Ghana, Fidelity Bank Ghana, Stanbic Bank and OmniBSIC Bank Ghana. We at the B&FT appreciate their support. Thank you
