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WAMZ to establish framework to regulate financial institutions

By Kofi AHOVI

The central banks in the West African Monetary Zone (WAMZ) have signed an agreement for the establishment of a general framework for mutual assistance and the exchange of information in areas of licensing, supervision and regulation of financial institutions within the zone.

This is to enforce and secure compliance with national laws, regulations or rules relating to supervisory and regulatory functions and duties of the national central banks.

Under the framework, the national central banks are required to exchange information on the state and development of the financial sector and the requirements of central bank laws and any amendment.

The central banks are also required to exchange information on the activities of cross-border establishments and their parent financial institutions, with respect to issuing licences to conduct operations and events which are likely to threaten the interest of depositors and creditors, as well as the stability of the financial system.

With respect to licensing, a parent financial institution that plans to operate a cross-border establishment must first request permission from its central bank before that of the country it intends to operate.

On supervision, the framework would allow a central bank in-charge of a parent financial institution to have a supervisory role over a subsidiary of the financial institution on a consolidated basis.

Additionally, the framework would request any central bank that plans to inspect a subsidiary of a financial institution in a member state to give notice of at least 15 working days before embarking on such a visit.

The various central banks are also expected to cooperate in anti-money laundering and countering the financing of terrorism, taking into account the relevant international standards. Countries under the WAMZ are the Gambia, Ghana, Guinea, Nigeria and Sierra Leone.

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