By: Emmanuel Amoah
Linus Kumi, Head of Corporate Banking at GCB Bank, has praised the implementation of stricter Ultimate Beneficial Owner (UBO) identification requirements and the integration of national ID systems with financial data, calling these developments “a great opportunity” for the banking industry.
Kumi emphasized the importance of these new measures in preventing illicit financial activities during a panel discussion at the Compliance Forum in Dakar, Senegal, organized by the African Export-Import Bank (Afreximbank) in collaboration with the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). He stated, “It is a significant step in the right direction because it is crucial to know who you are lending to.”
The panel discussion, part of the forum’s first day, focused on the theme “A Business Perspective on UBO Improvements and its Impact on Business.” It examined how UBO improvements affect commercial banking, particularly in trade facilitation, and discussed the added value for businesses.
Moderated by Hannane Ferdjani, founder of Beyond The Noise Africa, the panel included experts such as Jean Eric Matunga from Rawbank, El Hadji Malick Gueye of Wave Digital Finance, Gualter Goncalves from Vista Bank Mozambique, and Pattison Boleigha of Pattison Consulting Limited.
The new requirements align with the Financial Action Task Force (FATF) recommendations and significantly tighten client due diligence (CDD) processes within Ghana’s financial sector. Kumi noted that the Bank of Ghana (BoG) has initiated these changes, stating, “For high rate entities, it is now 5 percent unwrapping,” meaning businesses must disclose ownership at a minimum threshold of 5 percent, down from the previous 10 percent. This change aims to prevent banks from inadvertently financing entities involved in illicit activities.
Kumi warned of the serious consequences of non-compliance, stating, “The penalties for non-compliance can outweigh any potential benefits by three to four times,” highlighting the increasing regulatory pressure on banks and the financial risks associated with inadequate compliance practices.
A key part of Ghana’s strategy for enhancing financial transparency is the integration of the Ghana Card, the national ID, with other data sources. Kumi expressed strong support for this initiative, saying, “We should be able to connect property data, financial data, and national ID. Once we synchronize them, Ghana will be able to lend without even seeing the person.” This integration promises to streamline Know Your Customer (KYC) processes and enhance lending practices.
He envisioned a future where accessing comprehensive information about clients would be seamless, allowing bank officials to quickly verify personal and professional details, akin to practices in Europe. However, he stressed the need for continuous updates to maintain the system’s effectiveness, suggesting that changes in ownership or residency should be regularly reflected in the integrated system.
Kumi also highlighted the potential impact of these transparency measures on international trade, particularly within Africa. He pointed out the current inefficiencies in intra-African trade, stating, “We trade more with China than we do with Nigeria or other African countries.” He urged a shift in perspective towards African trade, advocating for collaboration between nations to enhance mutual benefits.
While recognizing the challenges of implementing these changes, especially for large multinational corporations, Kumi remained optimistic about the willingness of smaller businesses to provide necessary information when incentivized. “Most SMEs, when they are incentivized, will provide the necessary information,” he noted.
However, these proposed changes also raise critical concerns regarding data privacy and security. The integration of financial and property data with the national ID system will necessitate robust protections to safeguard individuals’ personal information.
As Ghana advances these initiatives, it may set a precedent for other nations in the region. The success of this approach could influence financial regulations across Africa, particularly as countries strive to enhance intra-continental trade under the African Continental Free Trade Area (AfCFTA) agreement. Kumi concluded, “We are late, but we are not out.”
The Afreximbank Compliance Forum, organized in partnership with GIABA, featured sponsorship from banks including Vista Bank, GCB Bank, Wave, Rawbank, and compliance technology providers such as Lexis Nexis, Elucidate, Finastra, Lloyd’s List Intelligence, Consortix, and Vneuron.
The forum focused on the FATF’s requirements for identifying UBOs and their implications for trade facilitation. The FATF, an intergovernmental organization, sets international standards to combat money laundering, terrorist financing, and other threats to the global financial system’s integrity. One of its critical roles is to ensure transparency and accountability in financial transactions by identifying and verifying UBOs.
Additionally, the forum explored the transformative potential of Artificial Intelligence (AI) in compliance processes, addressed strategies for African countries to implement necessary reforms to exit the FATF’s grey list, and showcased the latest compliance technologies.
