Proposed Law to Tighten the Screws on Banks

The government is gearing up to tighten the screws on the banking sector by ensuring that it is foolproof against money-laundering and terrorism financing with the Bank of Botswana as sole authority with the mandate to supervise banks. This is according to the Banking Bill which Minister of Finance, Peggy Serame, is scheduled to table in the next sitting of Parliament. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="1" ] Minister Serame explained that the objective of the bill is to repeal and re-enact the Banking Act (Cap.46:04) in order to align the law with international best practice as well the country’s regulatory and supervisory standards to the challenging nature of both domestic and international financial systems. She said the strengthening of the legal framework will be to provide for a sound legal footing for development of an inclusive, innovative and growing banking sector, establish a more robust legal foundation for financial safety nets, including adapting international best practice and standards for problem bank resolution entirely within banking laws. The proposed Act is also aimed at ensuring that the licensing and regulation of banks is undertaken in recognition of the emergence of diversified banking groups that has made it necessary to remove any legal obstacles that may impede the conduct of national and cross-border consolidated supervision. It is expected that the new Banking Act will ensure compliance with Basel Core Principles for effective banking supervision, in that way addressing any limitations to the effective discharge of the Bank of Botswana’s (BoB) banking supervision mandate. In addition, the Bill is aimed at accommodating and supporting “innovation in the banking system by the licensing authority to include the licensing of deposit taking institutions.” Consistent with international standards as embodied in the Basel Core Principles for effective supervision, the Bill will also give the central bank operational autonomy and ensure that BoB is the sole authority with the mandate to license and supervise banks. The new law will “expand the mandate of the central bank such that the appeals will be adjudicated by (a) tribunal as opposed to the Minister”. The Bill will ensure that the Banking Act is “aligned to the financial the Financial Intelligence Act with regards to financial statement alignment of record retention period from five years to 20 years”. It will permit the “sharing of confidential banking information with specified relevant institutions for supervisory purposes and credit reference bureax and further for the central bank to exchange information with other domestic supervisors and foreign supervisory authorities for compliance with international obligations with regards to AML (anti-money laundering/counter financing of terrorism).” The overhauling of the current Banking Act will ensure that “no person, other than a bank licensed under this Act, shall, without prior approval of the central bank, use in any language, the word ‘bank’ or any translation of its derivatives, as part of the name, description or title under which he conducts his activities”. The poropsed law states that a bank or a deposit-taking institution shall at all times display, in a conspicuous place of its principal place of business and in any other office, branch or site, including mobile site, a certified copy of the licence granted by BoB. The central Bank may, by notice in writing, inform a bank or a deposit-taking institution that it intends to impose, amend, add, vary or cancel any condition attaching to the licence of the bank of deposit-taking institution. The Bank of Botswana may revoke the licence of a bank or a deposit-taking institution where the bank or deposit taking institution appears to be carrying on business in a manner which is contrary or detrimental to the interests of its depositors or the public or is found to engage in money laundering and/or financing of terrorism. The proposed law states that a bank or a deposit-taking institution shall not carry on banking business or deposit-taking activities in any office or branch or site, including a mobile site other than its principal place of business, without the prior written approval of the central bank. [/ihc-hide-content]

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Proposed Law to Tighten the Screws on Banks

The new law strengthens the legal framework to provide for a sound legal footing for development of an inclusive, innovative and growing banking sector

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Proposed Law to Tighten the Screws on Banks

The new law strengthens the legal framework to provide for a sound legal footing for development of an inclusive, innovative and growing banking sector

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