Single banking regulation across Africa critical to the continent’s economic integration: Rawbank managing director in DRC

By Bernard Yaw ASHIADEY & Ebenezer Chike Adjei NJOKU

Jean-Eric Matunga, Head of Specialized Finance at Rawbank, a leading financial institution in the Democratic Republic of Congo (DRC), has reiterated calls for continental synchronization of banking regulations to promote greater economic integration and compliance with global financial standards.

This recommendation was made at a recent 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), highlighting the fragmented regulatory landscape addressed. in the 55 different markets of Africa.

“We need a platform where we synchronize all these efforts so that it can serve the entire continent,” Mr Matunga said. He argued that the time has come for African countries to harmonize their laws and regulations, especially in light of initiatives such as the African Continental Free Trade Area (AfCFTA) and proposals for an African passport.

He spoke during the third panel on day 1 on the theme ‘A business perspective on UBO improvements and its impact on business’. The aim was to discuss the business implications of UBO improvements. The session explored improvements and their impact on commercial banking operations in terms of trade facilitation; and discussed the added value for companies.

Hannane Ferdjani, journalist and founder of Beyond The Noise Africa, moderated the session and other panelists included Linus Kumi, Head of Corporate Banking, GCB Bank Plc; El Hadji Malick Gueye, Director General, Wave Digital Finance; Gualter Goncalves, Compliance Director, Vista Bank Mozambique; and Pattison Boleigha, Managing Director of Pattison Consulting Limited.

The banker drew parallels with the European Union and suggested that Africa should “emulate the same framework” to facilitate intracontinental trade and financial transactions. He highlighted the practical implications of such integration, using examples of potential trade in oil and electrical components between Nigeria and the DRC.

Current differences in Know Your Customer (KYC) procedures and information sharing between banks in different African countries pose significant obstacles to such trading. “If we have to buy oil from Nigeria, the bank in the DRC and the bank in Nigeria have to be able to identify who is buying the oil and who is the man behind the company that is buying this oil,” the executive explained.

While some regional economic communities, such as the West African Economic and Monetary Union (WAEMU) and the Economic and Monetary Community of Central Africa (CEMAC), share regulators and similar regulations, the majority of African markets follow independent regulatory pathways. This fragmentation complicates efforts to establish financial standards and practices across the continent.

The push for regulatory synchronization comes as individual African countries struggle to comply with international financial standards. The Financial Action Task Force (FATF), an intergovernmental organization that sets global standards for combating money laundering and terrorist financing, has placed several African countries on its “grey list” of jurisdictions with strategic deficiencies in the area of the fight against money laundering and the fight against terrorism. financing regimes (AML/CFT).

The DRC is currently one of the countries on this gray list. “Both the government and the private sector, mainly private banks, are working end to end to remove the country from that list,” said the Rawbank director. He noted that compliance efforts are ongoing and described it as “a journey” rather than a one-time achievement.

The situation in the DRC is complicated by the relatively young age of the current banking system. After a series of bank failures in the 1990s that eroded public trust, the country’s banking sector has been rebuilt over the past two decades. “I can say that the banking system we have today is less than thirty years old,” Mr Matunga revealed.

Despite these challenges, the Rawbank representative expressed optimism about the future of African financial integration. He believes that discussions in forums like the one he attended plant seeds for future collaboration, saying, “We believe that this… this seed has fallen on very fertile ground and something should come from this.”

The call for greater synchronization of banking regulations across Africa comes at a time when the continent is trying to boost intra-African trade and economic cooperation. However, the path to such integration remains complex and requires careful navigation of national interests, regulatory differences and ongoing challenges in compliance with global financial standards.

As African countries continue to work towards stronger AML/CFT regimes and greater economic integration, the banking sector is likely to play a crucial role in facilitating or hindering progress.

The proposed regulatory synchronization could potentially streamline cross-border transactions, improve compliance with international standards and promote a more cohesive African financial ecosystem.

However, implementing such far-reaching regulatory changes would require significant political will and cooperation among African countries. It would also require substantial investments in infrastructure, technology and training to ensure consistent application of harmonized regulations across diverse economic and political landscapes.

The coming years could prove crucial in determining whether the vision of a more financially integrated Africa can be realized. As discussions continue, policymakers, financial institutions and regulators across the continent will need to weigh the potential benefits of integration against the challenges of implementing and preserving national economic sovereignty, Mr Matunga added.

The Afreximbank Compliance Forum

The Afreximbank Compliance Forum, which was organized in collaboration with the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), was sponsored by a number of banks including Vista Bank, GCB Bank, Wave, Rawbank, SUNU Group and providers of compliance systems such as Lexus Nexis, Elucidate, Finanstra and Llyod’s List Intelligence, Consortix and Vneuron.

The Forum focused on the Financial Action Task Force (FATF) requirements for identifying beneficial owners (UBOs) and their far-reaching implications for trade facilitation.

The FATF, an intergovernmental organization, sets international standards to prevent money laundering, terrorist financing and other threats to the integrity of the global financial system. One of its crucial mandates is to identify and verify UBOs to ensure transparency and accountability in financial transactions.

In addition, the Forum explored the transformative role of Artificial Intelligence (AI) in compliance processes, addressed strategies for African countries to implement the necessary reforms to be removed from the FATF gray list and showcased the latest compliance technologies.

>>>the coverage of the forum in Dakar, Senegal, was made possible through the kind cooperation of Ecobank Ghana, Fidelity Bank Ghana, Stanbic Bank and OmniBSIC Bank Ghana. We at the B&FT appreciate their support. Thank you