There is perception of money laundry, low interest in Ghana’s offshore banking – BoG

The Bank of Ghana (BoG) has explained why it decided to convert Barclays Bank’s offshore license into a regular one.

The central bank says the decision was taken because of perceptions of money laundry, low interest by Ghanaians in the service and lack of regulations.

“Very little interest has been shown in offshore banking in Ghana,” central bank governor , Mr Kwesi Amissah-Arthur, told the media in Accra.

He also said while the Act for offshore banking has been passed, the regulations are yet to be passed.

“At a time that Ghana was gaining a reputation for laundry, we did not want to confirm this misperception”, the governor said during a Monetary Policy Committee meeting on February 18, 2011.

Commenting on Barclays Bank, he said,“we did not impose this on Barclays” but instead both had agreed to convert the license.

He added that the withdrawal was not because Barclays has done anything wrong.

Meanwhile, Barclays Bank is planning to stop offshore banking in Ghana in the next six months, according to Bloomberg News.

Barclays was the only bank among the about 27 banks registered in Ghana that was given license for offshore banking.

Mr.  Benjamin Debrah, Managing Director of Barclays Bank Ghana was cited by Bloomberg News saying “The country currently does not have the legislative framework and tax reforms to allow the smooth operation of an international financial services centre”.

Barclays Bank was given the offshore banking license in September 2007 and had opened 200 accounts, according to Mr Debrah.

Early 2010, Ghana was warned by the Organisation for Economic Co-operation and Development (OECD) to be ware of the risks of becoming a tax haven with the establishment of offshore banking in the country.

The head of the OECD, Jeffrey Owens said, “The last thing Africa needs is a tax haven in the centre of the African continent.”

A report  by the Christian Aid Ghana which was launched in Accra in September 2009, suggested that the risk of illicit funds finding their way into the offshore financial centre is particularly acute given the extensive cocaine trade in the country and the massive flows from oil that are expected in the near future.

The report argues that if the Ghanaian government is committed to the International Financial Services Centre (IFSC) becoming fully operational, it should first produce and disseminate credible, well-researched evidence about the potential benefits and risks for Ghana. In addition, officials working in the central bank, Registrar General’s Department and tax agencies should be extremely well versed in the relevant laws and should work closely together to minimise the risks.

It however recommended that government should introduce special methods to monitor inflows of funds from regional oil producing states, potentially in conjunction with the Extractive Industries Transparency Initiative, because such funds are of notoriously questionable origin.

By Emmanuel K. Dogbevi & Ekow Quandzie

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