Ghana’s FinTech boom: Foreign Exchange Act requires overhaul — Dr Atuahene

Ghana’s Foreign Exchange Act needs urgent revision to account for the growing influence of financial technology companies in the currency market, banking expert, Dr Richmond Atuahene has advised.

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of recent foreign exchange violations by traditional banks, Dr Atuahene said the current regulatory framework was outdated, having been drafted before the emergence of fintech companies as major players in Ghana’s financial sector.

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

The banking expert pointed to Bangladesh as a model example, where approximately 90% of foreign exchange comes from remittances.

He suggested that Ghana could achieve similar success by updating its regulations to ensure fintech companies properly surrender remittance inflows to banks.

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

We should revise the Foreign Exchange Act 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 foreign exchange violations, with the Consolidated Bank Ghana (CBG) becoming the latest culprit to face sanctions.

The central bank suspended CBG’s Foreign Exchange Trading Licence for one month, effective November 26, 2024. This follows similar actions taken against the Fidelity Bank and others earlier in the year.

The increasing number of violations by traditional banks, according to Dr Atuahene, underscored the urgent need for regulatory reform.

He warned that continued breaches 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’s licence 

BoG last week announced that it had suspended the Foreign Exchange Trading Licence of CBG, with effect November 26 2024, for one month.

This was in accordance with section 11 (2) of the Foreign Exchange Act, 2006 (Act 723).

The central bank, in the notice, explained that the CBG had breached a number of the foreign exchange market regulations, Updated Guidelines for Inward Remittance Services for Payment Service Providers dated November 2023 and the Anti-Money Laundering/Combating the Financing of Terrorism & The Proliferation of Weapons of Mass Destruction (AML/CFT&P) Guideline.

“The licence will be restored at the end of the one-month suspension period once the Bank of Ghana is satisfied that CBG has put in place effective controls to ensure strict adherence to the foreign exchange market regulations,” the notice indicated.

CBG response 

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

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

In a statement, the CBG assured customers that it was working closely with the BoG to address the issues and aims to have the licence restored by the end of the suspension period.

“We want to reassure our valued customers that this suspension does not impact CBG’s normal banking operations. Except for foreign exchange products and services, all our branches and digital platforms will continue providing customers with our full range of services. We fully expect to restore foreign exchange products after our engagement with the Bank of Ghana”, the statement added.

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