ACT ii

Supplement to the Sierra Leone Gazette Vol. CXLX, No. 51

PART V - CAPITAL AND RESERVES
dated 27th June, 2019 27. Capital adequacy.
28. Additional capital.
THE BANKING ACT, 2019 29. Capital adequacy on consolidated basis.
30. Statutory reserve fund.
ARRANGEMENT OF SECTIONS 31. Restrictions on declaration and payment of dividend.

Section. PART VI - LIQUIDITY

32. Maintenance of liquid assets.
PART 1–PRELIMINARY 33. Local asset.
1. Interpretation.
2. Application. PART VII - OWNERSHIP AND CONTROL
3. Companies Act, 2009. 34. Reporting of Group structures
4. Conflict or inconsistency. 35. Acquisition, sale, disposal, or merger.
5. Objective and functions of the Central Bank. 36. Acquisition of shares in small and medium scale industries or business.

PART II- LICENSING PART VIII - RESTRICTIONS ON LENDING

6. Eligibility to apply for a licence. 37. Limits on exposure to single person or group.
7. Application for licence. 38. Exposure limits on a consolidated basis.
8. Grant or refusal of licence. 39. Restrictions on transactions with an affiliate.
9. Revocation of licence. 40. Restriction on purchase or transfer of certain assets from affiliates and
10. Restriction of licence. insiders.
11. Restriction on use word 'bank' 41. Restrictions on inter-institutional placements.
12. Display of banking licence. 42. Restrictions on exposures to insiders and their related interests.
13. Powers regarding unauthorised banking business. 43. Limits on exposures to insiders on a consolidated basis.
14. Repayment of monies by unauthorised persons 44. Requirements for lending to insiders and their related interests.
15. Minimum paid up capital. 45. Restrictions on lending to employees.
16. Permissible activities. 46. Restriction on establishment of subsidiary company.
17. Opening, closing, relocation, appointment and dismissal. 47. Limits on investment in respect of subsidiary companies.
18. Representative office. 48. Restrictions on exposure and investment.
19. Approval required for appointments. 49. Regulation of credit exposures.
20. Qualification for appointment. 50. Asset classification, provisioning and write-offs.
21. Disclosure of interest. 51. Open foreign exchange positions.
PART III - CORPORATE GOVERNANCE 52. Power to impose prudential limits.
22. Corporate governance rules.
PART IX - SUPERVISION AND CONTROL
PART IV - REGISTRATION OF A FINANCIAL HOLDING COMPANY 53. Regulations, directives, and guidelines.
23. Financial holding companies not to function without licence registration. 54. Information and periodic returns.
24. Restrictions on activities of financial holding companies. 55. Power of investigation and examination.
25. Registration of financial holding company. 56. Access to records.
26. Withdrawal of registration by Central Bank. 57. Verification of information.
58. Examination report.
 iii iv

59. Resolvability assessments, ex-ante resolution plans and follow-up 90. Notice and registration of receivership.
60. Confidentiality. 91. Central Bank oversight of receiver.
61. Mutual cooperation in exchange of confidential information. 92. Powers of receiver.
62. Power to take action. 93. Effects of receivership
63. Appointment of advisor. 94. Taking control of bank in receivership.
64. Sanctions against errant chief executives, etc. 95. Inventory of assets and new financial position.
65. Prompt corrective action for adequately capitalised banks and financial 96. Repudiation of contracts.
holding companies. 97. Avoidance of pre- receivership transfers.
66. Prompt corrective action for undercapitalised banks and financial holding 98. Obligations of lessors of bank premises and utility providers.
companies. 99. Protection of payment, clearing, and settlement systems.
67. Prompt corrective action for significantly undercapitalised banks and 100. Determination of claims.
financial holding companies 101. Claims relating to eligible financial contracts.
102. Priorities in payment of claims.
PART X - RESOLUTION OF BANKS AND FINANCIAL HOLDING COMPANIES 103. Final report of receiver to Central Bank.
68. Resolution authority. 104. Relationship with other enactments.
69. Decision by Central Bank to place in resolution. 105. Miscellaneous receivership provisions.
70. Central Bank to manage and control affairs of banks or financial holding 106. Voluntary winding up.
companies in resolution.
71. Restructuring, including merger, transfer and sale. PART XIII - ACCOUNTS AND AUDIT
72. Mandatory restructuring of liabilities and shares. 107. Maintenance of accounting records.
73. Claims of affected persons. 108. Financial statements.
109. Display of financial statements.
PART XI - OFFICIAL ADMINISTRATION. 110. Guidelines on accounting standards
74. Official administrator. 111. External Auditor
75. Powers of official administrator. 112. Special audit.
76. Central Bank oversight of official administrator. 113. External auditor's report
77. Moratorium and effect of official administration on proceedings 114. Meeting with external auditor.
78. Third party rights or obligations. 115. Termination of external auditor's appointment.
79. Inventory and plan of action to bank.
80. Capital increase by existing shareholders. PART XIV - MISCELLANEOUS
81. Removal of directors and key management personnel 116. Review of decisions of Central Bank.
82. Misconduct by Shareholders, directors, etc. 117. Offences.
83. Expenses of the official administrator. 118. Maintenance.
84. Termination of official administration. 119. Publication of data by Central Bank.
85. "No creditor worse off" rule. 120. Immunity of Central Bank.
86. Costs of resolution. 121. Abandoned property.
87. Review of resolution decisions of Central Bank. 122. Minimum uniform business hours and bank holiday.
123. Civil proceedings.
PART XII - RECEIVERSHIP AND LIQUIDATION 124. Schedule of penalties.
88. Appointment of receiver. 125. Repeal and savings.
89. Qualification and compensation of receiver.
128 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019

SIGNED this 17th day of June, 2019.

Passed in Parliament this 31st day of May, in the year of our Lord two
HIS EXCELLENCY JULIUS MAADA BIO,
thousand and Ninteen. President.

PARAN UMAR TARAWALLY LS

Clerk of Parliament.

THIS PRINTED IMPRESSION has been carefully compared by me with the Bill
which has passed Parliament and found by me to be a true and correct printed copy No. 6 2019
of the said Bill.

Sierra Leone
PARAN UMAR TARAWALLY
Clerk of Parliament.
The Banking Act, 2019 Short title.

Being an Act to provide for the licensing of persons carrying

on banking business, the regulation and supervision of banking
activities, financial holding companies and subsidiaries, the
protection of depositors and to provide for other related matters

[ ] Date of com-
mencement.

ENACTED by the President and Members of Parliament in this

PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTING DEPARTMENT, SIERRA LEONE.
GAZETTE NO.51 OF 27TH JUNE, 2019.
present Parliament assembled.
2 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 3

PART I – PRELIMINARY "agent" means a person that is engaged by a bank or

a financial holding company to provide specific
Interpretation. 1. In this Act, unless the context otherwise requires - financial services on its behalf or a person that is
engaged by the Central Bank to provide specific
"administrative penalty" includes - services;

(a) fines, including interest, payable to the "applicant" means a body corporate;
Central Bank under this Act,
"associate" means a body corporate over which a bank
(b) the removal from office of any director, or financial holding company has the power to
officer or employee by the Central Bank; participate in its financial or operating decisions but
which does not control or jointly control its
(c) withdrawal of any privilege normally governance policy;
accorded to banks or financial holding
companies by the Central Bank; "bail-in" means write-down of the liabilities of a bank
or conversion into equity with-out the consent of
(d) withdrawal of a "fit and proper" person’s shareholders or creditors and specifically excludes
status previously accorded by the Central insured and secured claims;
Bank; or
"bank" means a body corporate licensed by the Central
(e) such other sanctions as the Central Bank Bank to carry on banking business in accordance
may by regulations, directives or guidelines with this Act;
prescribe;
"banking business'' or the business of banking
"advisor" means a person appointed by a written order includes-
from the Central Bank to advise the chief executive
of a bank or financial holding company; (a) accepting deposits from the public,
repayable on demand or otherwise, and
"affiliate" means- withdrawable by cheque, draft, order, or by
any other means;
(a) a body corporate of which the bank or
financial holding company is a subsidiary; (b) the financing whether in whole or in part or
by way of short, medium or long term loans
(b) a subsidiary of the bank or financial holding or advances; or
company; or
(c) any other financial activities prescribed by
(c) a body corporate which is controlled by the the Central Bank;
same entity which controls a bank or a
financial holding company.
4 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 5

"beneficial owner" means a person or body corporate "chief executive" means a person who is responsible,
that enjoys the benefit of ownership even though subject to the authority of the Board of directors of
the title of the property owned is in another name; a body corporate, for the conduct and management
of the day to day business of that body corporate;
"branch" means an office of a bank that is not
separately incorporated through which a bank may "close relative" means spouse, son, daughter, step son,
be permitted to engage in banking business; step daughter, brother, sister, father, mother, cousin,
nephew, niece, aunt, uncle, step sister, step brother,
"bridge bank" means temporary national bank grandparent or grandchild;
established to take ownership of part or all of an
institution to bridge the lapse between failure and "control" "controlling shares" or "shareholding" mean
final resolution; a relationship wherein a person or a group of persons
acting in concert, directly or indirectly-
"bridge institution" is an institution established by
the government or the Central Bank for a temporary (a) owns 50% or more of the voting shares of a
period for the purpose of resolving a bank in off- body corporate;
icial administration, or to an asset management
vehicle established by thegovernment for the (b) has power to appoint or remove the majority
purpose of acquiring, managing, and disposing of of the Board of directors of a body corporate;
problem assets of a bank as part of the resolution
of the bank; (c) has the ability to exert a significant influence
on the management or policies of the body
"capital base" means the sum of tier 1 capital and corporate; or
eligible amount of tier 2 capital, prescribed by the
Central Bank; (d) has the ability to direct the activities of the
body corporate as to affect the financial
"capital adequacy ratio" means the ratio expressed as returns on any investment made with such
a percentage of the adjusted capital base to the risk body corporate;
weighted financial exposure;
"Court" means a Court of competent jurisdiction;
"capitalised expenditure" includes preliminary
expenses, share selling commission, brokerage "credit exposure" means the amount at risk from a claim
losses incurred by the bank and any other item of or transaction of a bank, whether on or off-balance
expenditure not represented by tangible assets; sheet, and whether contingent or actual, including
extensions of credit facilities, credit openings, letters
"Central Bank" means the Bank of Sierra Leone; of credit, credit commitments, advances, guarantees,
acceptances, debt securities, as well as investments
by a bank;
6 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 7

"corporate group" means a company and the affiliates "examination" includes the carrying out of on-site,
or associates of that company; off- site, credit reporting and any other examination
as may be determined by the Central Bank
"deposit" means a sum of money paid on terms under including the Anti-MoneyLaundering Act, 2012 or
which it will be repaid, with or without interest or a any other law;
premium, and either on demand or at an agreed time
under the legal and contractual conditions applicable "executive officer" means-
and not referable to the provision of property or
services or the giving of security; (a) the chief executive officer, chief financial
officer, chief operating officer, chief risk officer,
"Deposit Protection Fund" means a deposit protection chief internal auditor, chief compliance
fund set up to provide for the accumulation of officer, and chief accounting officer of a bank;
financial contributions from banks and branch and
offices of foreign banks for eventual compensation
of deposits held in banks and branch offices of (b) any other person who participates or has
foreign banks and for their management; authority to participate in major policy making
or functions of the bank, whether or not such
"director" in relation to a bank, includes a person person has an official title or receives com-
carrying out or empowered to carry out pensation for such actions, and is desig-
substantially the same functions as those nated as an executive officer by the Central
carried out by a director of a company registered Bank;
under the Companies Act, 2009 or a director of a
cooperative society registered under the Cooperative "exempted persons' means persons to whom the
Societies Act, 1977; restrictions on the conduct of banking business and
deposit-taking does not apply including friendly
"direction" means a legally binding directive of the societies whose total deposits remain less than an
Central Bank issued to a specific bank, all banks, amount prescribed by the Central Bank;
financial holding company, or any particular group
thereof, in the implementation of this Act; "financial exposure" in relation to a bank or financial
holding company or with respect to a person means,
"emolument" means salaries and allowances other than the aggregate of the loans, advances, placements,
performance related earnings; and credit facilities including off-balance sheet
obligations given to that person, and the value of
"employee" means staff of a bank or financial holding the holdings by that bank or financial holding
company; company of shares and debentures and other debt
securities issued by that person;
8 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 9

"financial holding company" means a body corporate (d) the integrity and the qualifications and
or an entity that confirms and controls a bank; experience of the person are appropriate for
the position in the light of the business plan
"financial company" means a person, including a bank and activities of the entity which the person
that primarily engages in one or more of the serves, or is likely to serve, taking into account
permissible banking activities referred to in section the size, nature and complexity of the
16 and any other activities as prescribed by the institution; and
central bank;
(e) any other criteria that may be stipulated by
"financial group" means a bank, financial holding the Central Bank;
company, financial company and its subsidiaries,
affiliates and associates, as the case may be; "financial institution" means an institution subject to
regulation and supervision by the Central Bank under
"finance leasing" means a contract between two parties this Act or any other enactment;
whereby a lessor gives the lessee possession and
use of a specific asset (or portfolio of assets) in "financial services" means any service, including
consideration for payment of rentals over a given banking business, prescribed as such by the Central
period in which the lessor retains ownership or title Bank;
with the intention to transfer ownership of these
assets to the lessee upon termination of the finance "foreign bank" means a bank licensed in another
lease; country;

"fit and proper person" means a person who is suitable "foreign financial holding company" means a financial
to hold the particular position which that person holding company registered or authorised in another
holds or is to hold with regard to - country;

(a) the probity, competence and soundness of "foreign supervisory authority" means the relevant
judgment of the person for purposes of supervisory authority in the country where the
fulfilling the responsibilities of that position; foreign bank has its principal place of business;

(b) the diligence with which that person fulfils "home supervisory authority" means the supervisory
or is likely to fulfil those responsibilities; authority in the country in which the bank or financial
holding company is licensed or registered;
(c) whether the interest of depositors or potential
depositors of the entity are threatened, or
likely to be, in any way threatened by the
person holding that position;
10 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 11

"independent director" means a director who is free of "minimum paid-up capital" includes-
management and shareholders influence and whose
judgment will be exercised for the sole benefit of the (a) initial funds required to start-up a bank; and
bankorfinancial holding company and who has no
perceived or actual conflict of interest arising from (b) the operational start-up costs,as may be
relationshipswith thebank, financial holding prescribed by the Central Bank but excludes
company and with bank and financial holding expenses incurred in employing capital;
company-related parties whether present, past or
future and other relevant facts and circumstances; "money" means any regulated and generally accepted
medium of financial exchange, as prescribed by the
"insider" means a director, key management personnel, Central Bank, which can be used as a legal tender for
all other employees or significant shareholder of a the repayment of debt; a store of purchasing power,
bankor financial holding company; a standard of value and a unit of accounting measure;

"insolvent or insolvency" means a bank or financial "net-own funds" means the sum total of share capital
holding company that is unable to meet its that has been -
obligations as they fall due or the value of its liabilities
exceeds the value of its assets; (a) paid-up;

"key management personnel" includes the chief (b) free reserves but excludes revaluation
executive, deputy chief executive, chief operating reserves; and
officer, chief finance officer, board secretary, treasurer,
chief internal auditor, the chief risk officer, the head (c) the statutory reserve fund subject to netting
of compliance, the head of anti-money laundering out accumulated losses, goodwill and
functions, the head of internal control functions, chief unwritten-off capitalised expenditure
legal officer, chief technical officer, manager of a including pre-operating expenses and
significant business unit of a bank, or financial deferred tax;
holding company or any person with similar
responsibilities; "non-financial company" means a person that
primarily engages in commercial, industrial or ag-
"licence" means an authorisation granted by Central ricultural activities;
Bank to a body corporate for the purpose of carrying
out banking business; "non-interest banking" means the practice of banking
business in conformity with Islamic finance;
"management letter" means a formal letter from the
auditor addressed to a financial institution on the "non-performing asset" means a credit exposure or
weaknesses identified in the operations of that asset classified as non-performing by the Central
financial institution during the audit; Bank;
12 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 13

"non-preferential" means upon terms no more "receivership" means the process of revoking the
favourable than those which would be offered charter of a failing bank and appointing a receiver-
under prevailing conditions to all clients and
customers of a bank or financial holding com- (a) to continue with the closing function of a
pany; failed institution;

"official administrator" means a person appointed by (b) to liquidate the failed institution's remaining
the Central Bank to carry out official administration assets; and
of a bank or financial holding company as prescribed
under this Act; (c) to distribute any proceeds of the liquidation
to the Central Bank, to the failed institution's
"off balance sheet transactions" includes contingent customers who had uninsured deposit
assets, contingent liabilities in the form of letters of amounts, to general creditors, and to others
credit,guarantees, bids, bonds and indemnities; with approved claims;

"paid-up capital" includes minimum capital, additional "resolution" means the process of -
fully paid-upshares, and the capitalisation of income
surplus; (a) valuing a failing institution;

"person" includes an individual, a body corporate or (b) marketing the failing institution to healthy
association of body of persons whether or not institutions;
incorporated;
(c) soliciting and accepting bids for the sale of
"prescribe" means prescribed by regulations, rules, some or all of the institution's assets and
directives or guidelines issued by the Central Bank; assumption of deposits (including some
liabilities);
"place of business" means any branch, agency, office,
outlet, cash point, mobile office, or booth of a bank (d) determining which bid is least costly to the
that is open to the public; deposit insurance fund; and

"public interest" includes a right or advantage which (e) working with the assuming institution
ensures or is intended to ensure the general benefit through the closing process (or ensuring the
of the people of Sierra Leone; payment of insured deposits in the event
there is no acquirer);
"purchase and assumption" means an agreement in
which a part or -the whole of the assets of the fail-ed "related person" means a bank or financial holding
bank are purchased and all or some of the liabilities company's subsidiaries, affiliates and any party
are assumed by an acquiring bank; including-
14 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 15

(a) their subsidiaries, affiliates and special (a) the paid-up capital;
purpose entities that the bank or financial
(b) the voting rights; or
holding company exerts control over or that
exerts control over the bank or financial (c) which makes it possible to exercise a
holding company; significant influence over the management
of the bank or financial holding company in
(b) the bank or financial holding company's which a holding subsists;
controlling shareholders, Board Members,
senior management and key staff and their "significantly under-capitalised" means a capital
direct or related interests; and position that is less than 50% of the capital adequacy
ratio requirements prescribed by the Central Bank;
(c) their close relatives as well as corresponding
persons in affiliated companies; "statutory reserve fund" means the statutory reserve
fund required to be maintained by a bank or financial
"representative office" in relation to a bank holding company under subsection (1) of section
incorporated overseas means premises from which 30;
the banking business or other financial activity of
the overseas bank are promoted in any way; "subsidiary" means a body corporate over which
another body corporate has control;
"registration" means an authorisation granted by a
Central Bank to a financial holding company "Tier 1 Capital" means permanent shareholders' equity
pursuant to this Act; in the form of issued and fully paid-up shares plus
all disclosed reserves, perpetual non-cumulative
"regulation" means a legally binding directive adopted preference shares and retained earnings, less
by the Central Bank and applied to all banks in the goodwilland any other intangible assets, as may be
implementation of this Act; prescribed by the Central Bank;

"resident non-executive director" means non- "Tier 2 Capital" means general provisions which are
executive director residing in Sierra Leone; held against future and current unidentified losses
and are freely available to meet losses which
"significant shareholding" means a direct or indirect subsequently materialize, and includes subordinated
holding in a bank or financial holding company which debt, cumulative and redeemable preferred stock,
represents 5% or more of - revaluation reserves on fixed assets, and any other
form of capital, as prescribed by the Central Bank;

"under-capitalised" means any capital position below

the Minimum Capital Adequacy Ratio requirement;
and
16 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 17

"unsecured advances or credit facilities" means- (a) all matters relating to deposit-taking of banks
and financial holding companies; and
(a) loans or credit facilities made without
security, (b) the responsibility for promoting the safety
and soundness of the financial system and
(b) part of loans or credit facilities made in excess protecting the interests of depositors.
of the market value of the security pledged;
or (2) The Central Bank shall have all functions, powers and
duties imposed on it by this Act.
(c) loans or credit facilities which the Central
Bank deems that no market value exists for PART II- LICENSING
the security pledged.
6. A person shall not be eligible to apply for a licence to carry Eligibility to
Application. 2. This Act shall apply to - out the business of banking or otherwise solicit deposits from the apply for a
licence.
public in Sierra Leone unless he is a limited liability company -
(a) banks;
(a) incorporated under the laws of Sierra
(b) financial holding companies; and Leone;

(c) subsidiaries, branches and the overseas (b) registered under the laws of Sierra Leone
operations of banks and financial holding as a subsidiary of a foreign bank.
companies.
7. (1) A person who wishes to engage in the business of Application
Companies 3. (1) This Act shall be read together with the Companies banking or otherwise solicit deposits from the public in Sierra Leone for licence.
Act, 2009. Act, 2009 (Act No. 5 of 2009). shall apply to the Central bank to be licensed for that purpose.

(2) The Companies Act, 2009 shall not be derogated from (2) An application for a licence under subsection (1), shall
except expressly provided for in this Act. be made in writing to the Central Bank and shall be in the form that
the Central Bank may prescribe and shall be accompanied by-
Conflict or 4. Where there is conflict or inconsistency between this Act
inconsistency. and any other Act, this Act shall prevail. (a) evidence of payment of the prescribed non-
refundable application fee;
Objective and 5. (1) The Central Bank shall be the sole body responsible
functions of for the licensing, supervision, regulation and resolution of banks (b) a certified true copy of the applicant's -
the Central
Bank. including-
18 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 19

(i) certificate of incorporation in the case (g) the authorised capital, including the amounts
of companies incorporated under the that have been paid up;
laws of Sierra Leone or certificate of
registration in the case of companies (h) a list of proposed significant shareholders
registered under the laws of Sierra stating their names, addresses and respective
Leone as a subsidiary of a foreign bank; shares;

(ii) Memorandum and Articles of Ass- (i) an affidavit disclosing the name, nationality,
ociation; and place of residence, business and professional
history for the past 10 years, and audited
(ii) any other relevant document required financial statements for the past 3 years if
by the Central Bank; applicable for each person who would be a
director, executive officer or significant
(c) the names, address, occupation of persons shareholder of the proposed bank;
who would hold significant shares, directly
or indirectly, in the proposed bank and the (j) evidence of any conviction by a court of law
respective values of such shares, as well as for offenses punishable by imprisonment or
those of their corporate affiliates; involving fraud or dishonesty;

(d) a complete organisational structure of the (k) any personal bankruptcy filings, suspension
group including all direct and indirect of payments to or compounding with
affiliates and associates of the applicant and creditors;
the nature of their relationship to the group
where the applicant is or will be a member of (l) evidence of any disqualifications or
a corporate group; suspensions by a competent authority from
practicing a profession;
(e) particulars of the directors or persons
concerned with the management of the (m) evidence of any past or present involvement
proposed bank, including their background, in a managerial function of a body corporate
certified financial position, business interests or other undertaking that is or has been
and performance of the business u n d e r subject to insolvency proceedings;
their control or management;
(n) evidence of any removal from the position
(f) feasibility reports including business plan of director or executive officer at any bank or
and financial projections for the first 5 years, other financial company ordered by a
audited financial statements and a n n u a l competent authority;
reports for the past 2 years;
20 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 21

(o) the written approval of a relevant Central (d) the sources and legitimacy of the applicant's
Bank in a foreign country or territory minimum capital;
confirming that it exercises global con-
solidated supervision over the bank in the (e) the financial position and financial history
case of an applicant whose principal place of the applicant; and
of business is in another country; and
(f) whether the interest of potential depositors
(p) such other particulars as the Central Bank will be detrimentally affected by the manner
may require. of the applicant's corporate governance
arrangements including accounting, risk
(3) An application may be withdrawn by notice in writing management, internal control systems and
by the applicant at any time before its approval. records.

(4) An applicant shall provide the Central Bank with (6) A person who transacts banking business without a
particulars of any changes in the information provided to Central valid licence under this Act commits an offence and is liable on
Bank under this Section as soon as the applicant becomes aware of conviction to imprisonment for a term not exceeding 10 years or to a
such change. fine which is equivalent to twice the amount of deposits collected in
contravention of this Act or to both.
(5) In determining an application under subsection (1),
the Central Bank shall take into account, amongst other things, the (7) The Central Bank may instruct a person who
following - contravenes subsection (1) to immediately terminate any deposit-
taking activities and repay the funds so raised.
(a) whether the significant and controlling
shareholders, beneficial owners, directors and (8) Where the Central Bank has reasonable grounds to
key management personnel or proposed believe that a person has contravened subsection (1), it may, under a
directors and proposed key management warrant issued by a Magistrate, enter any premises and examine the
personnel of the applicant are fit and proper books, accounts and records of that person and take copies of or
persons; extracts from any documents or records examined.

(b) the extent to which the legal, operational, (9) A person who intentionally obstructs the Central Bank
managerial and ownership structure of an in the exercise of the powers conferred by subsection (7) or (8) commits
applicant and its financial group could hinder an offence and is liable on conviction to a fine.
effective supervision;
8. (1) The Central Bank may grant or refuse an application Grant or
(c) whether the applicant meets the prescribed for a licence under section 8 based on its assessment of - refusal of
licence.
minimum paid-up capital;
22 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 23

(a) the character and fitness of the directors and (i) it has consented to the establishment
executive officers or proposed directors and of a subsidiary in Sierra Leone by the
proposed executive officers of the applicant; foreign bank; and

(b) the identity, financial resources and (ii) it is satisfied with the prudential and
reputation of existing or proposed significant overall financial management of the
shareholders of the applicant; foreign bank;

(c) the adequacy of the applicant's capital (b) the Central Bank is satisfied as to the nature
structure in relation to the nature and scale and scope of the supervision exercised by
of the proposed banking business; the home Central Bank, including
consolidated global supervision.
(d) the financial position and financial history of
the applicant; (3) A licence granted under subsection (1) shall-

(e) the quality of the applicant's risk m a n a ge- (a) be in writing;

ment, internal controls and internal and
external audit systems; (b) be valid for such period as may be specified
by the Central Bank;
(f) the likely conduct of the affairs of the
applicant in relation to the interests of (c) not be transferable;
depositors,
(d) be subject to such terms and conditions as
(g) the extent to which the proposed corporate the Central Bank may specify, including
structure of the applicant and its affiliates restrictions regarding the nature and extent
may hinder the effective supervision and of activities in which the bank may be
regulation of the bank; and engaged; and

(h) the impact on the banking system more (e) such fee, including an additional fee for late
generally of the issuance of the licence. payment as may be prescribed by the Central
Bank.
(2) In addition to the criteria outlined in subsection (1),
where the applicant is a subsidiary of a foreign bank, the Central (4) The Central Bank shall communicate its preliminary
Bank may grant a licence under section 7 where - decision to grant or refuse an application for a licence under section
8 within 90 days and its final decision not later than 180 days from the
(a) the home Central Bank issues a statement to date of receipt of complete information.
the Central Bank indicating that -
24 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 25

(5) Where the Central Bank grants or refuses an (f) the licensee has failed to raise its capital to
application for a licence under subsection (1) it shall give notice in the levels necessary to rectify its significant
writing to the applicant- under-capitalisation or its financial position
continues to deteriorate before the end of
(a) of the grant; or the periods specified in paragraph (a) of
subsection (1) of Section 67;
(b) in the case of a refusal, the reasons for its
decision. (g) the licensee or person in the senior
management, in a situation where the crime
(6) Where a person is dissatisfied or aggrieved with a is committed with the acquiescence of the
decision of the Central Bank under paragraph (b) of subsection (5) licensee is convicted of money laundering
may petition the Central Bank in writing for a review within 10 days of and terrorist financing activities or any other
the decision. financial crime;

(7) The Central Bank shall publish a list of all persons (h) the licensee has failed to commence business
licensed under this Act, including its branches and subsidiaries. within 6 months from the date of the licence;

Revocation 9. (1) The Central Bank may revoke a licence granted under (i) the licensee has ceased to carry on
of licence. paragraph (a) of subsection (5) section 8 if it is satisfied that - business; or

(a) the licensee has failed to fulfill or comply with (j) any serious crime.
the terms and conditions stipulated in the
licence; (2) Where in the case of a subsidiary of a foreign bank, it
appears to the Central Bank that the home Central Bank has withdrawn
(b) the licensee has failed to comply with any its consent required to be issued under subparagraph (i) of paragraph
obligation imposed on it by this Act; (a) of subsection (2) of section 8, the Central Bank may-

(c) the licensee has provided false, misleading (a) restrict transactions between the bank and
or inaccurate information in connection with the financial holding company; or
an application for a licence;
(b) revoke the licence of the subsidiary foreign
(d) the interests of depositors or potential bank.
depositors are threatened, whether by the
manner in which the licensee is conducting (3) Where the Central Bank revokes a licence granted
or proposes to conduct its affairs or for any under section 8 the Central Bank shall-
other reason;

(e) the licensee has become insolvent;

26 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 27

(a) place the bank or financial holding company (f) such other conditions as it considers
in receivership. appropriate.

(b) immediately publish notice of the revocation (3) The duration of the restriction of a licence imposed
of the licence on its website or any other by the Central Bank under subsection (1) shall not exceed 2 years
media that may be deemed appropriate; from the date on which it was imposed.

(c) immediately notify the Deposit Protection (4) Where the Central Bank restricts a licence under
Fund of the revocation of licence of a bank subsection (1), the Central Bank shall notify the licensee of the
or financial holding company. restriction in writing indicating that the licensee may, within 30
days, make representation in opposition to the restriction to the
Restriction 10. (1) The Central Bank may restrict, instead of revoking a Central Bank.
of licence. licence, where it is satisfied that notwithstanding the grounds on (5) Where a licensee fails to comply with the requirement
which its power to revoke a licence is exercisable but the undersubsection (2) or contravenes any provision under this section
circumstances are not such as to justify revocation. the Central Bank may revoke the licence or impose such other
administrative penalty as may be appropriate.
(2) The Central Bank may, in restricting a licence under
subsection (1), impose conditions- 11. (1) A person other than a bank licensed under this Act Restriction
on use of
shall not use or continue to use the word 'bank' or any of its word 'bank'.
(a) requiring the licensee to refrain from pursuing derivatives either in English, French or any other language in the
a particular course of action or to restrict the description or title under which the person is carrying on business.
scope of its business in a particular way;
(2) A person shall not be granted or continue to hold a
(b) limiting the acceptance of deposits, the licence under a name which so closely resembles the name of the
granting of credit, the making of investments, holder of an existing licence as is likely, in the opinion of the Central
or the opening of subsidiaries or branches Bank, to mislead the public.
by the licensee;
(3) This section shall not apply to -
(c) prohibit the licensee from soliciting for (a) financial holding companies which operate
deposits; as a bank; and
(d) prohibit the licensee from entering into any (b) any registered association of banks, financial
other transaction or class of transactions; holding companies, banks and financial
holding companies' employees formed for the
(e) require the removal or replacement of any protection and advancement of their mutual
director, manager or other officer of the interest or in furtherance or promotion of
licensee; education and training of personnel for
financial companies.
28 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 29

(4) A person who contravenes this section commits an (c) within the period of time imposed by the
offence and is liable on conviction to imprisonment for a term not Central Bank.
exceeding 10 years or to a fine which is equivalent to twice the amount
of deposits received in the contravention or to both fine and (2) A person who refuses or fails to comply with a
imprisonment. directive under subsection (1), shall be deemed to be unable to pay
its debts, or adjudged bankrupt and the Central Bank may appoint a
Display of 12. (1) A licensee shall display conspicuously at its head liquidator.
banking
office and branches or office of its agent, copies of its banking licence
licence.
or registration for the information of the public. 15. (1) The Central Bank shall prescribe the minimum paid- Minimum
paid up
up capital requirements for banks and financial holding companies. capital.
(2) Where a licensee fails to comply with the requirement
under subsection (1) the Central Bank may impose such administrative (2) A bank or financial holding company shall, pursuant
penalty as may be appropriate. to subsection (1), -

Powers 13. (1) The Central Bank may inspect or cause to be (a) maintain a minimum paid-up capital as
regarding inspected, the records of any person if it has reasonable grounds to prescribed by the Central Bank;
unauthorised
banking suspect that the person is carrying out the business of banking
business. without a valid banking licence issued under this Act. (b) submit to the Central Bank additional funds
to address the deficiency in the capital, where
(2) Upon carrying out the inspection if it is found that its minimum paid-up capital has been
there is evidence to prove that the business of banking was carried impaired by way of losses.
out partly or wholly without a licence, the inspecting officials may
seize the relevant records to facilitate prosecution. (3) A bank or financial holding company who fails to
comply with this section is liable to administrative penalty.
Repayment 14. (1) Where the Central Bank is satisfied that a person has
of monies by accepted deposits in contravention of section 13, the Central Bank 16. (1) A bank shall not carry on any other businesses except- Permissible
unauthorised activities.
persons. shall direct that person to repay all the deposits obtained and all
profits accruing to that person or assets acquired as a result of the (a) acceptance of deposits and other repayable
illegally obtained monies or deposits, including any interest or other funds from the public;
amounts which may be owed by that person in respect of those
deposits or monies- (b) lending;

(a) to the respective persons from whom deposits (c) financial leasing;
have been obtained;
(d) hire purchase
(b) in the manner and in accordance with the
instruction of the Central Bank; and (e) investment in financial securities excluding
capital instruments for their own account;
30 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 31

(f) money transmission services; (4) A bank which fails to comply with this section is liable
to an administrative penalty.
(g) issuing and administering means of payment
including debit cards, traveler's cheques and
banker's drafts 17. (1) A bank shall not open, close, relocate its head office Opening,
closing,
or branch unless on prior written approval of the Central Bank. relocation,
(h) guarantees and commitments - a ppointment
and dismissal.
(2) A bank shall not appoint, suspend or dismiss an agent
(i) trading on own account or for account
of customers in - which carries out banking business on its behalf without a no objection
(i) money market instruments; from the Central Bank.
(ii) foreign exchange;
(iii) transferable securities; (3 A bank licensed under this Act may with prior written
approval of the Central Bank carry on banking business outside Sierra
(j) participating in securities issues and
provision of services related to such Leone only through a separately capitalised subsidiary company or
activities; representative office.
(k) advice to undertakings on capital structure,
acquisition and merger of undertakings; (4) A bank or financial holding company who contravenes
(l) portfolio management and advice;
this section is liable to an administrative penalty.
(m) keeping and administering securities;
(n) credit reference services;
(0) safe custody services; 18. (1) A bank or financial holding company incorporated Representative
office.
(p) non-interest banking; outside Sierra Leone shall not set up a representative office in Sierra
(q) digital financial services; and Leone unless it has obtained the written approval of the Central
(r) such other services as may be prescribed by
Bank.
the Central Bank .

(2) The Central Bank may by notification restrict the (2) An application to setup a representative office under
permissible activities of banks in general, any class of banks or any subsection (1), shall be made to the Central Bank in such form as may
individual bank or remove the restriction so imposed as it may deem be prescribed and shall contain such information and supported by
necessary and appropriate.
such documents as the Central Bank may require, including permission
(3) A bank shall seek prior written approval of the Central from the home Central Bank.
Bank to introduce products that are derived from the permissible
activities specified under paragraphs (p) and (q) of subsection (1). (3) A representative office shall not transact banking
business in Sierra Leone.
32 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 33

(4) A person who contravenes this section is liable to an (a) is certified by a medical practitioner to be a
administrative Penalty. person of unsound mind;

Approval 19. (1) A bank or financial holding company shall not (b) has been declared insolvent for 7 years or
required for
appointments. appoint– has entered into agreement with another
(a) chief executive or deputy chief executive; person for payment of the debt of that person
and has suspended payment of the debt;
(b) executive director or deputy executive
director; (c) is convicted of an offence involving fraud or
dishonesty;
(c) Board member or key management personnel;
(d) has been a Director or key management
(d) agent who carries on banking business on personnel of any institution that has been
its behalf; or liquidated otherwise than for voluntary
reasons or has had its licence revoked;
(e) any other officer as the Central Bank may
determine, (e) is under the age of 18 years;

unless prior written approval of the Central Bank is obtained. (f) is a Director or board member of another bank
or financial holding company, unless that
(2) Where there is any change in the appointment of the person has obtained written approval of the
chief executive, deputy chief executive, executive director, Board Central Bank;
member, key management personnel, agent and any other officer
under subsection (1), the bank or financial holding company shall (g) is declared not to be a fit and proper person
promptly notify the Central Bank. by the Central Bank;

(3) A chief executive, deputy chief executive, executive (h) has been removed from office by the Central
director and any other officer that the Central Bank may determine, of Bank; or
a bank or financial holding company shall after the appointment reside
in Sierra Leone (i) has been banned by a professional
body to which the person belongs.

Qualification 20. (1) A person shall not be appointed chief executive, (2) A bank or financial holding company that becomes
for appoint-
deputy chief executive, executive director, Board member, key aware of circumstances that may disqualify a chief executive, deputy
ment. chief executive, executive director, director, Board member or key
management personnel, agent or other officer of a bank or financial
holding company if he - management personnel, agent or other officer concerned in the
management of that bank or financial holding company shall
immediately notify the Central Bank.
34 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 35

(3) Where a person is subject to disqualification under 21. (1) A person shall on appointment as chief executive, Disclosure of
this section he shall immediately cease to hold office or act as such deputy chief executive, executive director, Board member or key interest.
and the bank or financial holding company concerned shall management personnel, agent or other officer declare to the Board of
immediately terminate his appointment. Directors-

(4) A person who, at any time during the preceding 12 (a) any professional interests or the offices he
months, has served in a management position with the central bank holds as manager, director, trustee or by any
shall not serve as a director or executive officer of a bank or financial other designation; and
holding company, without obtaining the prior approval of the Central
Bank. (b) his investment or business interests or that
of his spouse or any close relative, in firms,
(5) A governor, deputy governor or director of the Central companies and institutions as a significant
Bank shall not serve as a director or executive officer of a bank or shareholder, director, partner, proprietor or
financial holding company, during the one-year period immediately guarantor.
following the date on which the person ceased to occupy the position
with the central bank. (2) A chief executive, deputy chief executive, executive
director, Board member, agent or officer shall declare to the bank or
(6) A person who has been a director or has been directly financial holding company any changes in his business interests or
or indirectly concerned in the management of a bank who has had its holding of offices as and when they occur.
licence revoked in accordance with this Act shall not serve as a
director of another bank or financial holding company without the (3) The bank or financial holding company shall
express approval of the Central Bank. immediately place before its Board of directors all declarations made
pursuant to subsection (2).
(7) Except with the consent of the Central Bank, no bank
or financial holding company incorporated in Sierra Leone shall have (4) A chief executive, deputy chief executive, executive
as a director a person who is a director of another bank. director, Board member, agent or key management personnel who
has any direct or indirect interest in a proposed credit or other facility
(8) A person who on the date of the coming into operation to be given to any person by that bank or financial holding company
of this Act is an executive officer or director of a bank or financial or in a transaction that is proposed to be entered into with any other
holding company shall not, within 30 days after the coming into person, shall as soon as practicable declare the nature and extent of
operation of this Act remain an executive officer or director of that his interest in the proposal to the bank's or financial holding
bank unless the person satisfies the conditions specified in section company's Board of directors.
20.

(9) A bank or financial holding company shall immediately (5) In deciding whether to grant a proposed credit facility
notify the Central Bank on becoming aware of circumstances that referred to in subsection (4) the bank or financial holding company
indicate that a director or executive officer may not satisfy the shall take into consideration a declaration made under subsection
requirements of subsections (1) to (7). (4).
36 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 37

(6) A chief executive, deputy chief executive, executive (2) The Central Bank shall review the corporate
director, Board member, agent or key management personnel shall governance structure and regulations of banks and financial
not attend or participate in a board meeting where a proposal for a holding companies including issues relating to -
credit or other facility in which he has direct or indirect interests is
being determined. (a) alteration of constitution;

(7) A proposal in which a chief executive, deputy chief (b) composition of the Board of directors;
executive, executive director, Board member, agent or key management
personnel has interests, directly or indirectly, shall be considered (c) duties of the Board of directors;
and decided upon by the bank's or financial holding company's Board
of directors and not by any delegated authority. (d) duties of the directors to report;

(8) A chief executive, deputy chief executive, executive (e) appointment of internal auditor; and
director, Board member or key management personnel who
contravenes this section shall be declared by the Central Bank not to (f) corporate secretary.
be a fit and proper person as defined by this Act.
(3) A bank or financial holding company shall, within 28
PART III - CORPORATE GOVERNANCE days of the date of approval by its shareholders or board of directors
Corporate
of any alteration to its memorandum of association or of any other
22. (1) The Central Bank may by statutory instrument make document representing its constitution, submit the particulars of the
governance
rules. rules regarding matters of corporate governance for banks and alteration to the Central Bank for approval.
financial holding companies that the Central Bank considers necessary
or appropriate to ensure sound operation including - (4) Approval for the alteration shall not be granted by
(a) the scope and nature of the duties of the Central Bank unless it is satisfied that the proposed alteration is
directors; not detrimental to the interests of the bank or financial holding
company's depositors.
(b) the requirements for audit committees and
other specific committees of a Board of (5) Notwithstanding anything contained in any legislation
Directors; relating to companies or in any other enactment, no application for
registration or confirmation of an alteration in the memorandum of
(c) the responsibilities of key management association or any other document representing the constitution of a
personnel; bank or financial holding company shall become effective without
the written approval of the Central Bank.
(d) risk management;

(e) internal audit; and

(f) internal controls and compliance.

38 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 39

(6) A bank or financial holding company which fails to (b) policies and processes are developed for risk-
comply with the requirements of this Section shall be liable to an taking that are consistent with the risk
Administrative Penalty. management strategy and the established risk
appetite;
(7) A bank or financial holding company shall be
governed by a board of directors that meets the following requirements (c) uncertainties attached to risk measurement
- are recognised;
(a) not less than five and not more than 9
members, majority of whom shall be resident (d) appropriate limits are established that are
in Sierra Leone; consistent with the bank or financial holding
company's risk appetite, risk profile and
(b) not less than 50% excluding the Chairman capital strength and that are understood by
should comprise non-executive directors; and regularly communicated to relevant staff;
and
(c) not more than 40% excluding the Chairman
should comprise executive directors; (e) key management personnel take steps
necessary to monitor and control all material
(d) not less than 10% should be independent risks consistent with approved strategies and
non- executive directors; and risk appetite.

(8) The board shall be chaired by a resident non- (12) The board of directors of a bank or financial holding
executive director. company shall set suitable risk appetite levels to define the level of
risk the bank or financial holding company is willing to assume.
(9) Directors shall be fit and proper persons as defined in
this Act. (13) The board of directors of a bank or financial
holding company shall be responsible for ensuring that the business
(10) The board of directors of a bank or financial holding of the bank or financial holding company is carried on in compliance
company shall be responsible for providing strategic direction. with all applicable laws and safe and sound practices.

(11) The board of directors of a bank or financial holding (14) The board of directors of a bank or financial holding
company shall be responsible for ensuring that - company may establish such committees necessary to implement its
duties.
(a) a sound risk management culture is
established throughout the bank or financial (15) The board of directors of a bank or financial holding
holding company and its subsidiaries; company shall not delegate its responsibility for the safe and sound
operation of the bank or financial holding company.
40 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 41

(16) The board of directors of a bank or financial (19) Notwithstanding sub section (18) the board of
holding company as a group or each director individually shall directors or each director who violates the provisions of paragraph
immediately report in writing to the Central Bank if they have reason (a) of subsection (16) shall be liable to an administrative penalty.
to believe that the bank or financial holding company -
(20) A bank or financial holding company shall have an
(a) may not be able to properly conduct its internal auditor, appointed by its board of directors who shall operate
business as a going concern; independently of the board of directors and report to an audit
committee.
(b) appears to be or is likely in the near future to
be unable to meet all, or any of its obliga- (21) The internal auditor shall be a certified chartered
tions; accountant or certified internal auditor.

(c) has suspended or is about to suspend any (22) The internal auditor shall be given access to
payment of any kind; management to discuss matters relevant to its functions and shall
have the right, upon request, to obtain from the bank or financial
(d) does not, or may not be able to meet its holding company any information or documentation which he shall
capital requirements as prescribed under require.
this Act;
(23) The internal auditor shall be responsible for -
(e) is engaged, exposed or involved in an event
which is likely to have a material adverse (a) monitoring the bank or financial holding
impact on the bank or financial holding company's systems for internal controls,
company; or applicable policies and procedures;

(f) violates or is about to violate a law or (b) reporting non-compliance with policies,
regulation. procedures or applicable laws or other
irregularities to an audit committee at least
(17) Any individual director who acts in accordance with quarterly, and more frequently when
this Section shall make his or her intention known to the board of necessary;
directors in writing prior to reporting to the Central Bank.
(c) assisting and cooperating with the external
(18) Where the board of directors or a director fails, omits auditor, referred to in subsection (1) of
or neglects to report to the Central Bank any matter required to be section 111, in the performance of its duties;
reported under this Section, the Central Bank may remove any or all and
such directors.
(d) performing such other duties as may be
assigned to the internal auditor by the board
of directors or an audit committee.
42 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 43

(24) A bank or financial holding company shall have a (e) a financial holding company to merge or
corporate secretary, appointed by its board of directors, who shall be consolidate with any other financial holding
accountable to the board of directors. company.

(25) The corporate secretary shall be an executive officer (3) Notwithstanding subsection (2) the Central Bank may
suitably qualified. exempt a bank or financial holding company from the application of
subsection (2) where such bank or financial holding company is
(26) The corporate secretary shall be responsible for subject to supervision and regulation that is satisfactory to the
advising and guiding the board of directors on matters of ethics and Central Bank, including supervision on a consolidated basis, in its
good corporate governance. home jurisdiction or another jurisdiction in which it has substantial
operations.
PART IV -REGISTRATION OF A FINANCIAL HOLDING COMPANY
(4) An exemption under subsection (3) may be made
Financial 23. (1) A person shall not function as a financial holding subject to such terms and conditions as the Central Bank considers
holding
companies
company except granted a licence under section 8 and registered as appropriate.
not to a Financial Holding Company under section 25.
function to function (5) The Central Bank may by statutory instrument make
without
licence or
regulations, rules and issue guidelines for the regulation and
registration. (2) Where the Central Bank does not grant an application supervision of financial holding companies.
for mlicence to a financial holding company under section 8 or register
a financial holding company under section 25, it shall be unlawful for 24. (1) A financial holding company shall not - Restrictions
on activities
of financial
(a) a person to operate as a financial holding (a) carry out any business other than holding
company; financial services; companies.

(b) a bank to become a subsidiary of a financial (b) directly or indirectly control any member
holding company; of a financial group whether through
establishment, acquisition or otherwise.
(c) a company to acquire direct or indirect
ownership or control of any voting shares of (2) A financial holding company may invest in banks and
any bank where, after such acquisition, such any other financial institutions as may be determined by the Central
company will directly or indirectly own or Bank.
control more than 5% of the voting shares of
such bank; (3) The Central Bank may by statutory instrument
prescribe rules relating to the maximum -
(d) a company, including a financial holding
company, to acquire all or substantially all of
the assets of a bank; or
44 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 45

(a) percentage of shares of a class or the (c) the names, address, occupation, business
maximum value of ownership interests that and professional history, certified financial
may be acquired or held; positions, and corporate affiliations of
persons who will hold or ultimately benefit
(b) aggregate value of the shares and ownership from significant shares, directly or indirectly
interest of the activities permissible for in the proposed financial holding company
financial holding companies. and the respective values of the shares;

(4) The Central Bank may exempt a financial holding (d) the organisational and managerial structures,
company from the restrictions under subsection (1) if that financial including a complete diagram of the group of
holding company is companies controlled by the proposed
financial holding company, identifying all
(a) a foreign bank; direct and indirect affiliates and associates
and the nature of their relationship to the
(b) a foreign financial institution; or financial holding company;

(c) a foreign financial holding company, where (e) the particulars of the significant or controlling
the Central Bank is satisfied that the shareholders, beneficial owners, directors and
permitted activities of the foreign bank, key management personnel of the proposed
foreign financial institution or foreign financial holding company, including their
financial holding company are adequately qualifications and experience, business and
regulated and supervised and do not present professional history, certified financial
unacceptable risks to any bank in Sierra position, business interests and performance
Leone. of the business under their control or
management;
Registration 25. (1) An application for the registration of a financial
of financial
holding
holding company shall be made in writing in such form, accompanied (f) the feasibility reports, including a business
company. by such non-refundable fee as may be prescribed by the Central plan and financial projections for the first 5
Bank and supported by the following - years and areas of intended activities;

(a) a certified true copy of the applicant's (g) the audited financial statements for the past
Certificate of Incorporation, Memorandum 3 years or for such lesser period as the entity
and Articles of Association and board has been in existence;
resolution in respect of its application;
(h) the measures and structures that the
(b) the capital resources, including original company intends to adopt to ensure that its
sources and capital structure of the proposed business is conducted in accordance with
financial holding company; sound corporate governance principles;
46 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 47

(i) for each Director, key management personnel supervision under this Act or would be likely
or significant shareholder of the proposed to prejudicethe interests of depositors and
financial holding company, an affidavit other customers of the bank.
disclosing convictions, if any, for offences
by a court of competent jurisdiction, personal (3) An application for registration under subsection (1)
bankruptcy filings, disqualifications from shall not be approved by the Central Bank, unless it is satisfied that
practicing a profession, or past or present the -
involvement in a managerial function of a (a) significant or controlling shareholders,
body corporate or other undertaking subject beneficial owners, directors and key
to insolvency proceedings, if any; management personnel are fit and proper
persons;
(j) particulars of any change in the information
provided to Central Bank under this Act as (b) proposed significant shareholders are
soon as the applicant becomes aware of such suitable and the ownership and managerial
change; structure of the proposed financial holding
company will not hinder effective su-
(k) the sources and legitimacy of the applicant's pervision, including supervision on a
minimum capital; and consolidated basis;

(l) any other information or documentation that (c) capital of the applicant is adequate and the
the Central Bank may require. original sources of capital are acceptable and
do not include borrowed funds;
(2) The Central Bank, in determining whether to register
an applicant as a financial holding company under subsection (1), (d) applicant's arrangements for corporate
shall - governance, including, but not limited to,
accounting risk management, and internal
(a) take into account the information referred to control systems and records, are adequate;
in subsection (1), and in particular whether
the person or persons controlling the (e) feasibility report is based on sound analysis
proposed financial holding company are such under reasonable assumptions; and
as to prejudice the interests of depositors
and other customers of the bank; and (f) applicant is a body corporate that controls a
bank.
(b) determine whether the legal, operational and
managerial structure of the applicant and the (4) The Central Bank may attach conditions to the
ownership of shares by the person or registration of a financial holding company and may at any time vary,
persons controlling the proposed financial remove or add further conditions to the registration as the Central
holding company, will hinder effective Bank considers necessary for the purposes of this Act.
48 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 49

(5) Where the Central Bank proposes to vary or add (d) the Central Bank determines that the
further conditions under subsection (4), the Central Bank shall give registration was granted based on false or
notice of its intention to the financial holding company and the inaccurate information;
financial holding company may within 30 days make representation
to the Central Bank. (e) the Central Bank determines that the financial
holding company is or is likely to be insolvent;
(6) The Central Bank shall decide on an application for or
registration as a financial holding company within 6 months after
receipt of the completed information and documents under subsection (f) the parent company of the financial holding
(2). company loses its authorisation to carry out
banking business in its home jurisdiction or
(7) Where the Central Bank rejects an application under proceedings for bankruptcy, insolvency or
subsection (1) he may provide reasons in writing to the applicant. an arrangement with creditors is initiated.

(8) Where a person is dissatisfied or aggrieved with a (2) Where the Central Bank intends to withdraw the
decision of the Central Bank in respect of this Section the person registration of a financial holding company, the Central Bank shall
may petition the Central Bank in writing within 10 days of receipt of give notice of its intention to the financial holding company and
the decision for a review. the financial holding company may within 30 days make
representation in its defence to the Central Bank.
(9) The Central Bank shall publish a list of all registered
financial holding companies and their subsidiaries. (3) Where the registration of a financial holding company
is withdrawn it shall -
(10) Registration under this Act shall be subject to such
other terms and conditions as the Central Bank may by statutory (a) require divestiture of any bank controlled by
instrument prescribe. that financial holding company in Sierra Leone
and restrict transactions between any bank
Withdrawal 26. (1) The Central Bank may withdraw the registration in the country and the financial holding
of registrat- of a financial holding company where- company, its affiliates and associates;
ion by the
Central
Bank. (a) the financial holding company has failed to (b) place the financial holding company in official
comply with any obligation imposed on it by administration or receivership;
or under this Act;
(c) notify the Deposit Protection Fund of the
(b) the financial holding company fails to comply withdrawal of registration of a financial
with the conditions of its registration; holding company; and

(c) the financial holding company ceases to meet

the requirements for registration as a
financial holding company;
50 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 51

(d) publish details of such withdrawal on its (a) the nature, scale and risk of the bank or
website or any other media as the Central financial holding company's operations
Bank deems appropriate. and other available financial resources;
and
PART V - CAPITAL AND RESERVES
Capital 27. (1) A bank or financial holding company shall maintain (b) the amount and nature of net-own funds of
adequacy.
capital adequacy ratio as prescribed by the Central Bank both on a a bank required to protect the interests of
solo basis and a consolidated basis. depositors and potential depositors.

(2) The Central Bank may prescribe a higher capital (8) The Central Bank may by statutory instrument
adequacy ratio with respect to - prescribe other prudential measures that it considers necessary or
appropriate.
(a) a particular bank, if it is satisfied that the bank
has insufficient capital to shield itself against (9) A bank who fails to observe the capital adequacy
risks arising from the business activities of ratio prescribed by the Central Bank may be prohibited from-
that bank; or
(a) advertising for or accepting new deposits;
(b) all banks, for a period that the Central Bank
may determine, if it is satisfied that the (b) granting credit and making investment; or
conditions in the financial system so warrants.
(c) paying dividend to shareholders.
(3) A financial holding company shall ensure that there
is adequate distribution of capital within different entities of its group (10) A financial holding company who fails to observe
according to allocation of risks. the capital adequacy ratio prescribed by the Central Bank may be
prohibited from paying dividend to shareholders.
(4) The capital adequacy ratio shall be measured as a
ratio of the capital base of a bank or financial holding company to its (11) The Central Bank may require a bank or financial
risk-weighted asset exposure. holding company to draw up, within a specified time, a capital
restoration plan acceptable to the Central Bank.
(5) The Central Bank may define the eligible capital,
categories of risk assets, appropriate adjustments and additions to (12) A bank or financial holding company who
risk weights for the purpose of calculating the ratio. contravenes this section is liable to an action under sections 66
and 67.
(6) The Central Bank may also prescribe capital buffers
with respect to a particular bank or financial holding company.

(7) In determining the percentage for the minimum capital

adequacy ratio, the Central Bank shall in each case have regard to-
52 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 53

Additional 28. (1) The Central Bank may require a bank to maintain (4) A bank or financial holding company which fails to
capital
additional capital as it considers appropriate in respect of risks which maintain a statutory reserve fund is liable to an administrative penalty.
have not been adequately transferred or mitigated through
transactions entered into by a bank or financial holding company. 31. (1) Subject to subsection (2) of section 30, a bank shall Restrictions
on declaration
not declare or pay an interim or final dividend on its shares until it and payment
Capital 29. The Central Bank shall require a bank or financial holding has- of dividend.
adequacy on
consolidated company to calculate and maintain the minimum capital adequacy (a) completely written-off all its capitalised
basis. ratio on a consolidated basis. expenditure;

Statutory 30. (1) A bank or financial holding company shall maintain in (b) made the required provisions for non-
reserve
fund.
a statutory reserve fund of such amount as may be prescribed by the performing loans and other deterioration in
Central Bank. asset value; and

(2) A statutory reserve fund to be maintained by a bank (c) satisfied the minimum capital adequacy ratio
under subsection (1) shall comprise the following amounts which requirements and any other capital ratios
shall be transferred out of its net profits for each year before it declares specified by the Central Bank.
any interim or final dividend and after it has made provision for any
taxes - (2) Where the payment of any interim or final dividend
would result in withdrawal of any part of the general reserves due to
(a) where the amount of the statutory reserve inadequacy of the profit for the year or where the statutory report of
fund of the bank is less than 50% of its paid- the auditors on the annual accounts of the bank is not satisfactory,
up capital, an amount which shall not be less the bank shall obtain prior written approval of the Central Bank before
than 50% of its net profit for the year; it declares any dividend on its shares.

(b) where the amount of the statutory reserve (3) A bank shall not pay a dividend and bonus on its
fund of the bank is 50% or more, but less shares without the prior approval of the Central Bank.
than 100% of its paid-up capital, an amount
which shall not be less than 25% of its net (4) Where a bank declares or pays any interim or final
profit for the year; and dividend in contravention of this section, every director of the Board
of the bank is liable to an administrative penalty.
(c) where the amount of the statutory reserve
fund of the bank is equal to 100% or more of (5) A director of the bank shall not be liable to pay the
its paid up capital, an amount equal to 12.5% penalty if he proves that the contravention was committed without
of its net profit for the year. his consent or connivance or that he exercised all due diligence to
prevent the contravention having regard to all the circumstances.
(3) A bank or financial holding company shall not
appropriate a sum from the balance in its statutory reserve fund
except with prior approval of the Central Bank.
54 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 55

PART VI - LIQUIDITY (9) The Central Bank may under subsection (8) levy on
Maintenance 32. (1) A bank or financial holding company shall at any such the non-compliant bank or financial holding company or its directors
of liquid time and in respect of any such period as the Central Bank may or chief executive, or all or any of them, an administrative penalty for
assets.
require to submit to the Central Bank a report on its liquid assets and each day during which the deficiency continues.
the Central Bank shall prescribe one or more liquidity requirements
for banks and financial holding companies in the form of regulations, (10) The Central Bank may prescribe provisions on
rules, directives or guidelines. maintenance of liquid assets for financial holding companies

(2) A bank shall maintain at all times the amount of liquid 33. At the close of business on each day, the assets of every Local
assets that may be determined by the Central Bank. bank in Sierra Leone shall not be less in value than an amount asset.
representing such percentage of its liabilities payable at or through
(3) The minimum liquidity requirements shall be its branch or branches in Sierra Leone as may be determined by the
expressed as a ratio of a bank's liquid assets to its deposit liabilities. Central Bank from time to time.

(4) The Central Bank may prescribe a higher liquidity ratio PART VII - OWNERSHIP AND CONTROL
with respect to a particular bank, if it is satisfied that the business
activities of that bank, including the operation of subsidiaries, so 34. (1) A bank or financial holding company that is a member Reporting of
Group
require. of a financial group shall provide to the Central Bank, biannually or at structures
such other times as the Central Bank may prescribe, a complete
(5) A bank who fails to hold liquid assets in accordance description of its organisational structure including-
with directives or guidelines issued under this Act is liable to an
administrative penalty. (a) direct and indirect affiliates;

(6) The Central Bank may during a period of liquidity (b) the nature of its relationship with the other
deficiency direct that a bank or financial holding company shall members of the financial group; and
discontinue or limit in a manner specified in the directive, the granting
of credit, making of investments or capital expenditure and not to (c) any other information the Central Bank may
distribute dividends to its shareholders. require.

(7) The Central Bank may require a bank or financial (2) A bank or financial holding company shall report to
holding company to furnish within a specified date such information the Central Bank, any changes to the organisational structure of
and in such form as it may deem necessary to ensure compliance with the financial group of which it is a member, within such time as may
the requirements of this section. be prescribed by the Central Bank.

(8) A bank or financial holding company who fails to 35. (1) A person shall not directly or indirectly, alone or in Acquisition,
sale, disposal,
furnish the information required under this section is liable to an concert with one or more persons- or merger.
administrative penalty for each day during which the default
continues.
56 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 57

(a) acquire significant shares in a bank or (4) The Central Bank shall, in determining whether or not
financial holding company; to grant an application for approval of a bank or financial holding
company to enter into an arrangement or agreement under subsection
(b) hold or increase ownership interest in a bank (2), consider -
or financial holding company in excess of 5%
(a) whether the transaction is in compliance with
or such amount as may be prescribed by the
this Act;
Central Bank;
(b) whether the transaction is in the public
(c) sell or dispose of any shares in a bank or interest;
financial holding company to any other
(c) the impact of the transaction on financial and
person; or
managerial resources and the future prospect
of the bank or financial holding company;
(d) enter into an agreement or arrangement which
and
will result in a change in the control of a bank
or financial holding company, (d) the impact of the transaction on the
functioning and stability of the overall
without the prior written approval of the Central Bank. financial system and the conduct of effective
(2) A bank or financial holding company shall not enter supervision.
into any arrangement or agreement that would result in - (5) The Central Bank shall notify the applicant under
subsection (3) in writing of its decision to grant or refuse the
(a) the merger or restructuring of the bank or application within 60 days after receipt of the application and where
financial holding company; additional information is required by the Central Bank, the time for
notification of decision to the application may be extended by 21
(b) a change in controlling interest of a bank or days.
financial holding company;` .
(6) Where the Central Bank is satisfied that a person is in
contravention of subsection (2), it may annul the transfer, sale, merger
(c) the sale or disposal by merger of its business
or reconstruction of the bank or financial holding company.
of banking or any proposal for recon-
struction; (7) In addition to powers under subsection (5) the Central
Bank may suspend voting rights, prevent the distribution of
(d) the establishment or acquisition of a dividends or terminate the exercise of pre-emptive rights.
subsidiary or of any other mode of 36. (1) A bank or financial holding company shall not acquire Acquisition
operation in or outside Sierra Leone, without or hold part of the share capital of any small or medium scale industry of shares in
prior written approval from the Central Bank. small and
or agricultural enterprise without the prior written approval of the medium scale
Central Bank. industries or
(3) A bank or financial holding company shall, for the other
purposes of obtaining an approval under subsection (2), submit a business.
written application to the Central Bank.
58 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 59

(2) Without prejudice to subsection (1), a bank or financial PART VIII - RESTRICTIONS ON LENDING
holding company may hold or acquire share capital of any small or 37. (1) A bank or financial holding company shall not - Limits on
medium scale industry or other business, subject to the approval exposure to
of the Central Bank and to the following conditions- (a) undertake one or more secured credit single person
exposures to or in respect of a single person or group.

(a) the shareholding by the bank or financial or group of connected persons; or

holding company is in small or medium scale
industry or agricultural enterprise; (b) carry out any other transaction in respect of
any one person or group of connected
(b) the shareholding by the bank or financial persons, or any one sector of the economy,
holding company in any small or medium
scale industry or agricultural enterprise shall which constitutes in the aggregate a liability to the bank amounting
not be more than 10% of the bank's or fin- to more than 25% of its net own funds or a lower percentage that the
ancial holding company's net own funds and central Bank may prescribe.
shall not exceed 40% of the paid-up share
capital of the company, the shares of which (2) A bank or financial holding company shall not
are acquired or held; or undertake an unsecured credit exposure which in the aggregate
constitutes more than 10% of its net own funds.
(c) the aggregate value of the equity
participation of the bank or financial holding (3) For the purpose of this section, 2 or more persons
company in all non-financial institutions constitute a group of connected persons where -
does not, at any time exceed 20% of its net
own funds provided that a bank may hold (a) a direct or indirect control relationship exists
shares acquired in the course of the among them; and
satisfaction of any debt owed to it.
(b) as a result of the structure of their relationship
(3) A bank or financial holding company shall within 21 the other person is ultimately responsible for
days of the acquisition of any shareholding pursuant to this section or benefits from the credit exposure
give full particulars thereof to the Central Bank. outstanding.
(4) The Central Bank-
(4) A bank or financial holding company who fails to
(a) may provide guidance for banks in
comply with the provisions of this section is liable to an administrative
determining whether a connection exists
penalty for each day during which the default continues.
among a group of persons; and

(b) shall, where it is uncertain that a connection

exists, determine if a connection exists on an
individual basis based on the facts and
circumstances of a group of persons.
60 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 61

(5) The total of a bank's or financial holding company's (10) A bank or financial holding company whose
credit exposures shall not exceed the percentage level of net own capital adequacy ratio is less than the ratio prescribed by the Central
funds prescribed by the Central Bank having regard to the risk and Bank shall not receive any loan from any bank or financial holding
vulnerability of the financial system. company except with the approval of the Central Bank.

(6) In the case of transactions between banks, the (11) A bank or financial holding company shall within
aggregate of credit exposures and other financial guarantees or 5 working days-
indemnities to any single bank shall not, except with the written
approval of the Central Bank, exceed 30% of the net own funds of the (a) report to the Central Bank where -
bank undertaking such credit exposures or 30% of the net own funds
of the bank to or in respect of which such facilities are extended, (i) the grant of a credit exposure to a single
whichever of the two amounts is lesser. person or group of connected persons
in the aggregate exceeds 10% of the
(7) A credit exposure under subsection (1) shall not be net own funds of the bank or financial
considered as secured unless it is adequately secured by collateral holding company; or
having a market value that exceeds the outstanding amount of the
credit exposure throughout its term. (ii) a credit exposure exceeds the limit set
by this section; and
(8) In computing credit exposure to a single borrower or
group of connected persons, the following assets which may be held (b) provide a written plan for remedying the
as collateral shall be deducted- violation within a timeframe prescribed by the
Central Bank.
(a) cash deposit;
(12) The aggregate borrowing of a bank or financial
(b) lien on term deposit with the bank or financial holding company, local and foreign shall not exceed the percentage
holding company; of that bank's or financial holding company's net owned funds as
may be determined by the Central Bank from time to time.
(c) market value of treasury bills, government
securities, bank securities; and (13) Where a bank contravenes any of the provisions of
this section, the bank and every director of its board is liable to an
(d) any other security as approved by the Central administrative penalty.
Bank.
(14) A director or chief executive of a bank shall not
(9) Credits extended to the subsidiaries of the recipient be liable to the penalty in subsection (13) if he proves that the
bank shall be taken into account in the calculation of the exposure contravention was committed without his consent, connivance or
limit. that he exercised all due diligence to prevent the commission of the
contravention having regard to all the circumstances.
62 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 63

Exposure 38. The Central Bank shall apply the credit exposure limits (2) A transaction carried out in contravention of this
limits on a
consolidated under section 37 to a single person or group on a consolidated basis section is void and a director or key management personnel of the
basis. to a - bank or financial holding company who contravenes this section is
(a) bank and the subsidiaries of a bank; and personally liable to an administrative penalty.

(b) financial holding company and the 41. (1) A bank or financial holding company whose capital Restrictions
subsidiariesof a financial holding company. adequacy ratio is less than that prescribed by the Central Bank shall on inter-
institutional
not take any placement or receive any deposit from any bank or placements.
Restrictions 39. (1) A bank or financial holding company shall not grant financial holding company except with the express written approval
on transact-
ions with an
or permit to be outstanding a credit exposure in respect of an affiliate of the Central Bank.
affiliate. of that bank or financial holding company except on terms which are
non-preferential in all respect including credit worthiness, term, (2) Placements between banks which are members of a
interest rate and the value of the collateral. financial group shall be subject to restrictions on transactions with
an affiliate under section 40.
(2) A bank or financial holding company shall not take a
credit exposure in respect of an affiliate if the aggregate of the credit (3) A bank or financial holding company which
exposures to the affiliates of the bank or financial holding company contravenes this section is liable to an administrative penalty.
exceeds 25% of the net own funds.
42. (1) A bank or financial holding company shall not - Restrictions
(3) Without prejudice to subsections (1) and (2), the on exposures
to insiders
Central Bank may by order set a specific limit on credit exposure to an (a) grant or permit to be outstanding a credit and their
affiliate on an individual basis having regard to the circumstances of exposure to insiders and their related related
the bank or financial holding company. interests except on terms which are non- interests.
preferential in all respects including credit
(4) A bank or financial holding company which worthiness, interest rate and the value of the
contravenes this section is liable to an administrative penalty. collateral;

(5) A director or key management personnel of the bank (b) take a credit exposure in respect of insider
or financial holding company who contravenes this section is and their related interests if the aggregate of
personally liable to an administrative penalty. all credit exposures to the insider and its
related interests would exceed 10% of the net
Restriction on 40. (1) A bank or financial holding company shall not purchase own funds of the bank or financial holding
purchase or or transfer a non-performing or low quality asset from any of its company; and
transfer of
certain assets affiliates and associates director, key management personnel,
from affiliates shareholders or from any of their related persons or group of related (c) take credit exposures in respect of insiders
and insiders. persons or their related interests without the written approval of and their related interests if the aggregate of
the Central Bank. all such credit exposures would exceed 20%
of the net own funds of the bank or financial
holding company.
64 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 65

(2) An unsecured credit exposure to insiders and its same terms and procedures normally required
related interests shall not exceed 5% of the net own funds of the bank by the bank or financial holding company for
or financial holding company. other persons to whom credit facilities are
given;
(3) Subject to subsection (7) of section 37 a credit
exposure shall not be considered as secured unless it is adequately (b) theterms and conditions of thecredit facility
secured by collateral having a market value of at least 120% of the are not less favourable to the bank or
outstanding amount of the credit exposure throughout its term. financial holding company than those
normally offered to other persons not related
(4) The Board of directors of the bank or financial holding to the bank or financial holding company;
company shall be the only authority to approve or sanction any and
credit exposures of the bank or financial holding company to any (c) the advance of the credit facility is in the
insider or their related interests. interest of the bank or financial holding
company.
(5) When calculating capital adequacy, credit exposures
that are in excess of the limits of this section shall be deducted from (2) The credit facility shall be approved by all other
capital. directors of the Board of thebank or financial holding company at a
(6) A bank or financial holding company who contravenes duly constituted meeting of the board where not less than three
this section is liable to an administrative penalty. quarters of all the directors of the Board of the bank or financial
holding company are present and the approval shall be recorded in
Limits on 43. The limits on credit exposures to insiders and their related theminutes of that meeting.
exposures to interest under section 42 shall be applied on a consolidated basis to-
insiders on a
consolidated
(a) bank and its subsidiaries ; and (3) The management of a bank or financial holding
basis. company shall report to the Board of directors and to the Central
(b) financial holding company and its Bank each credit facility to an insider or their related interests and
subsidiaries. each credit facility shall be classified according to the directive on
asset classification.
44. (1) In considering an application for credit facility to an
Requirements insider under section 42 a bank or financial holding company shall (4) A bank or fi nanci al holdi ng company who
for lending to contravenes this section is liable to an administrative penalty.
insiders and satisfy itself that-
their related
interests.
45. (1) A lending on preferential terms to employees of a bank Restrictions
(a) the person to whom the credit facility is given or financial holding company shall be part of a formally approved on lending to
has credit worthiness which is not less than employment package or employee benefits plan. employees.
that normally required by the bank or financial
holding company for other persons to whom (2) A bank or financial holding company shall not grant
credit facilities are given and any collateral to any of its employees any unsecured advances or credit facilities,
which is provided has been evaluated on the the aggregate amount of which exceeds 2 years' total emoluments of
the officer or employee.
66 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 67

(3) The aggregate amount of all loans on preferential (b) 35% of the bank or financial holding
terms, both secured and unsecured, by a bank or financial holding company's net-own funds where the bank or
company to employees shall not exceed 20% of the bank or financial financial holding company has more than one
holding company's net own funds. subsidiary company.
(4) A bank or financial holding company who grants
(4) In a determination on an application by a bank to
advances or credit facilities in contravention of this section is liable
invest or increase its equity interests in a financial company, the
to an administrative penalty.
Central Bank shall consider whether -
(5) When calculating capital adequacy, any credit
exposures that are in violation of this section shall be deducted from (a) the investment would expose the bank or its
capital. depositors to undue risk;
Restriction on 46. (1) A bank or financial holding company shall not
establishment (b) the investment would hinder effective
of subsidiary establish a subsidiary company without the prior written approval of
supervision of the bank on a consolidated
company. the Central Bank.
basis; and
(2) A bank or financial holding company who contravenes
(c) the bank has adequate financial and
subsection (1) is liable to an administrative penalty shall divest the
managerial resources and internal controls
subsidiary within such period as may be specified by the Central
to monitor and control any risk arising
Bank, failure of which the licence of the bank may be revoked or the
from the investment.
registration of the financial holding company withdrawn.
Limits on (5) A bank or financial holding company who contravenes
investment
47. (1) The equity capital invested by a bank or financial
this section is liable to an administrative penalty.
in respect holding company in its subsidiary shall not exceed 15% of the net
of subsidiary own funds of the bank or financial holding company.
companies. 48. (1) A bank or financial holding company shall not grant Restrictions
any advances, loans or credit facilities including guarantees against on exposure
(2) Where a bank or financial holding company has more and invest-
- ment.
than one subsidiary company, the aggregate of equity capital invested
in all the subsidiary companies by the bank or financial holding
(a) the security of its own shares;
company shall not exceed 25% of its net own funds.
(b) the shares of its holding company;
(3) The aggregate amount of credit exposures including
the credit facilities which a bank or financial holding company may
(c) the shares of any of its subsidiaries or the
take in respect of its subsidiaries, shall not exceed-
shares of any of the subsidiaries or its
financial holding company; or
(a) 25% of the bank or financial holding
company's net-own funds where the bank or
(d) the shares of the subsidiaries of its financial
financial holding company has only one
holding company.
subsidiary company, or
68 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 69

(2) A bank or financial holding company shall not issue (10) In the application of the limitation of subsection (5), if
shares that are paid for by funds borrowed from that bank. the Central Bank determines that the interests of a group, constituting
more than one individual, partnership, private company, or other
(3) A transaction carried out in contravention of association of persons corporate or unincorporated, are so interrelated
subsections (1) and (2) shall be void. that they should be considered as a unit, the total indebtedness of
that group shall be combined and deemed to be in respect of a single
(4) A Director of a bank or financial holding company person.
who contravenes subsections (1) and (2) is liable to an administrative (11) A bank or financial holding company shall not be
penalty. deemed to have contravened subsection (1) solely by reason of the
fact that the combined indebtedness exceeds that limitation at the
(5) Subject to subsection (7), a bank may acquire or hold time of the determination, but the bank or financial holding company
part of the share capital of any financial company, the aggregate shall dispose of the indebtedness of the group in the amount in excess
value of which shall not exceed a percentage to be determined by of the limitation within such a specific time as prescribed by the Central
the Central Bank, of the net own funds of that bank or financial Bank.
holding company. (12) A bank or financial holding company which before the
commencement of this Act entered into any transactions incompatible
(6) A bank or financial holding company shall only with subsection (1) shall as soon as the commencement of this Act,
purchase, acquire or lease real estate for the purpose of furthering submit a statement to the Central Bank and shall, within one year from
its own business or providing amenities for staff the value of which that date, finally liquidate all such transactions.
shall not at any time exceed twenty-five (25%) of the net own funds.
49. The Central Bank may make regulations, rules and issue Regulation
(7) Subsection (5) shall not apply in respect of a share- directives and guidelines for the regulation of credit exposures. of credit
holding in any corporation set up for the purpose of insuring bank exposures.
or financial holding company deposits or of promoting the
development of a money market or securities market or of 50. (1) The Central Bank shall make rules and issue guidelines Asset
development of financial companies. on non-performing assets, provisioning and loan write-offs. classification,
provisioning
and write-
(8) Notwithstanding subsection (5), a bank or financial (2) A bank or financial holding company shall maintain offs.
holding company shall not be excluded from the purchase and sale and implement a proper policy of non-accrual of interest on non-
of shares or stock upon the order and for the account of a customer. performing loans and provisioning for bad debts and other exposures.
(9) Notwithstanding subsection (6), a bank or financial (3) An asset or financial exposure of a bank or financial
holding company may secure a debt on any transferable real or holding company shall not be written off or waived fully or partially,
other property and in default of repayment may acquire such property without the authorisation of the board of directors and the prior written
for resale by the bank or financial holding company within a specific approval of the Central Bank.
timeline as prescribed by the Central Bank.
(4) A bank or financial holding company which fails to
comply with this section is liable to an administrative penalty.
70 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 71

Open foreign 51. (1) The Central Bank may require a bank or financial
exchange
(d) such information that a bank or financial
positions.
holding company to periodically report their open foreign exchange holding company is complying with this Act;
position on a currency by-currency basis or overall open position, and
in such form and supported by such documents as may be prescribed
by the Central Bank. (e) any other information or returns as the
Central Bank may consider necessary.
(2) A bank or financial holding company shall maintain
the maximum limits on its open position in foreign currencies, precious (2) The Central Bank may enquire and request for
metals and precious stones as may be prescribed by the Central Bank. clarification of any information submitted under subsection (1).

Power to 52. The Central Bank may impose or vary prudential limits on (3) The Central Bank may require persons and
impose a bank or financial holding company as it may consider necessary.
prudential institutions including significant shareholders, service providers,
limits. customers and any other person to supply in such form as the Central
PART IX - SUPERVISION AND CONTROL Bank may from time to time direct, information relating to matters
affecting a bank, financial holding company or the financial system
Regulations, 53. (1) The Central Bank shall make regulations, rules and as a whole.
directives,
and
issue directives and guidelines applicable to banks and financial
guidelines. holding companies. (4) A bank or financial holding company shall report to
the Central Bank, immediately it becomes aware, of any material
(2) Without prejudice to subsection (1), regulations, rules information or development concerning -
directives and guidelines issued by the Central Bank shall include
regulations, rules directives and guidelines relating to prudential (a) changes in the activities, structure and
regulations, accounting standards, corporate governance standards, overall condition of the bank or financial
licensing requirements and non-interest banking. holding company particularly where there is
an existing or likely failure to meet its
Informa tion 54. (1) For the purposes of regulating banks or financial
and periodic responsibilities under this Act;
returns holding companies under section 55, the Central Bank may require a
bank or financial holding company to submit, at such intervals and (b) the suitability of a major shareholder or a
in such form as the Central Bank may specify, information and periodic party that has a controlling interest or any
returns on one or more of the following - development that may affect compliance of
directors and key management personnel
(a) assets and liabilities and financial position with this Act.
on an individual basis and where applicable,
on a consolidated basis; (5) The Central Bank may require a bank or financial
holding company to take corrective measures within a specified time
(b) information required for statistical purposes;
to address any deficiency contained in the report submitted to it by
(c) a bank's or financial holding company's a bank or financial holding company under this section.
offices and branches;
72 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 73

(6) A bank or financial holding company which fails to (b) have a right to call upon any director, key
comply with any of the requirements under this section including - management personnel or any other
employee of the bank or financial holding
(a) non submission; company to provide him with such
information and explanation as he may
(b) incomplete submission; consider necessary and it shall be the duty
of director, key management personnel or
(c) delayed submission; other employee to comply.

(d) inaccurate submission; or (4) A person who fails to comply with this section or
obstructs an authorised official from performing his duty, commits an
(e) submission of false information, data, offence and is liable upon conviction to a fine or to a term of
statements or returns, imprisonment of 2 years or both the fine and imprisonment.

shall be liable to an administrative penalty, for each day during which 56. (1) A person authorised by the Central Bank to carry out Access to
the non-compliance continues. an investigation and examination under subsection (1) of section 55, records.
may, request for copies of any record, file or document relevant to his
(7) This Section shall also apply to all branches, agents investigation.
or offices of a bank or financial holding company.
(2) A person who requests for copies of records, files or
Power of 55. (1) Notwithstanding the power to request a bank or financial documents under subsection (1) shall take reasonable care to protect
Investigation
holding company to submit information and periodic returns under the files, documents and records in his custody or possession.
and examin-
ation. section 54, the Central Bank may carry out investigation and
examination or scrutiny into any specific matter relating to the 57. (1) The Central Bank may authorise qualified auditors or Verification
operations of a bank or financial holding company. other officials to verify the accuracy of any file, document or record of informa-
requested from a bank or financial holding company under section tion
(2) The Central Bank may carry out an investigation and 55.
examination under subsection (1), at such intervals as it considers
appropriate taking into account its evaluation of the risks posed by (2) A bank or financial holding company shall provide
the institution. access and facilities to an auditor or other official authorised or to
carry out verification under subsection (1).
(3) A person authorised by the Central Bank to carry out
an investigation under subsection (1) shall - 58. (1) Where an examination has been conducted by the Exa mination
Central Bank under section 55, the Central Bank shall furnish a copy report
(a) have right of access to a bank or financial of its report to the bank or financial holding company and give the
holding company's books and records bank or financial holding company an opportunity to submit its
including documents, minutes books, comments on the report and to take any remedial action as the Central
customer files, personnel files, cash and Bank may specify.
securities records and electronic information
files and it shall be the duty of the bank or (2) A bank or financial holding company shall not
financial holding company to cooperate and disclose an investigation report under subsection (1) or any portion
assist the person authorised to carry out this of it to an unauthorised person, including anyone not officially
function; connected with the bank as an officer, director, employee, attorney,
auditor, independent auditor or parent holding company, without the
written consent of the Central Bank.
74 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 75

Resolvability 59. (1) The Central Bank may after examining a bank or (5) A statement and other information furnished by a bank
assessments, financial holding company's comments under section 58 undertake or financial holding company under this section may be used by the
ex-a nte resolvability assessments and draw up ex-ante resolution plans that Central Bank for the purposes of-
resolution
plans and should require the bank or financial holding company to take remedial
follow-up action as the Central Bank may specify, including submitting a (a) issuing establishment and operating
action. recovery plan in line with the criteria set by prudential guidelines permissions;
issued by the Central Bank under this Act.
(b) supervision of activities of a bank or financial
(2) Where a bank or financial holding company fails to holding company;
take remedial action as specified by the Central Bank under
subsection (1), every Director of the Board of the bank or financial (c) monitoring compliance of this Act; or
holding company is liable to an administrative penalty.
(d) reviewing administrative decisions of the
(3) A Director shall not be liable to an administrative board of directors of a bank or financial
penalty under subsection (2) if he proves that the contravention was holding company.
committed without his consent or connivance or that he exercised all
due diligence to prevent the contravention having regard to all the 61 (1) Notwithstanding section 60 the Central Bank may, on Mutual Coop-
circumstances. obtaining assurances of confidentiality - eration in
exchange of
Confidentiality. 60. (1) All statements and other information furnished by a (a) give to or receive from another Central Bank, confidential
information.
bank or financial holding company including its officers and agents financial regulator, supervisor, resolution
past and present, to the Central Bank under this Act shall be deemed authority, deposit insurance scheme or other
secret and confidential. authority in Sierra Leone or of a foreign
country with functions corresponding to its
(2) All statements and other information furnished by functions under this Act, information deemed
other supervisory authorities or institutions, its officers and agents secret and confidential under section 60.
past and present, to the Central Bank, under this Act shall be deemed
secret and confidential. (b) enter into cooperative arrangement or
memorandum of understanding with other
(3) All statements and other information furnished by supervisory and resolution authorities, other
key management personnel and employees of a bank or financial financial sector regulators and stakeholders
holding company's parent company, subsidiaries, affiliates and in Sierra Leone or of a foreign country for the
associates past and present to the Central Bank, under this Act shall exchange of information deemed secret and
be deemed secret and confidential. confidential under section 60.

(4) The confidentiality requirement under this section 62. (1) The Central Bank may, based on its findings of an Power to
shall not apply where the Central Bank is - investigation and examination conducted under section 55 or take action.
information otherwise at its disposal, take action where it determines
(a) satisfied that it is in the national interest, for that a bank or financial holding company, a director, executive officer
the Central Bank to use any information in its or significant shareholder of a bank or financial holding company -
possession to compile and publish statistical
data, and anything relevant thereto; or (a) has failed to adhere to any prudential
requirements prescribed under this Act;
(b) required by statutory duty or a court order to
furnish any such statement or information.
76 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 77

(b) no longer possesses sufficient capital to meet (n) has failed to comply with any provision of
its obligations towards its depositors and this Act or of regulations, directives or rules
creditors; issued under this Act;

(c) has failed to maintain the prescribed minimum (2) The Central Bank may, where it determines that any
capital adequacy ratio under section 27; one or more of the situations in section (1) exist -

(d) has violated any condition or restriction (a) issue a written warning to a bank or financial
attached to a licence issued or registration holding company, its chief executive,
granted under this Act; directors or key management personnel;

(e) has been conducting its business in a manner (b) require a bank or financial holding company
considered by the Central Bank to be unsafe, to cease an unsafe or unsound practise;
unsound or detrimental to the interest of its
depositors and creditors; (c) conclude a written agreement with a bank or
financial holding company providing for a
(f) has compromised the interest of its program of remedial action;
depositors and creditors due to excessive
risk-taking or poor risk management; (d) impose administrative penalties on a bank or
financial holding company, its directors, key
(g) has failed to comply with the provisions management personnel and employees for
pertaining to liquidity under section 32; each day that an unsafe or unsound
condition continues;
(h) has assets that are not likely to meet its
obligations in terms of maturity; (e) require the restructuring of the ownership of
the bank or financial holding company;
(i) is unable to reliably perform its activities, due
to impaired balance between revenues and (f) require the restructuring of the range of
expenses; activities that a consolidated group may be
engage in;
(j) has assets that have deteriorated in such an
extent as to weaken its financial structure; (g) prohibit a bank or financial holding company
from further lending or taking further credit
(k) has not established its internal audit, internal exposures, including investments, or capital
control and risk management systems or expenditure;
cannot operate these systems efficiently;
(h) require the bank or financial holding
(l) is not being adequately supervised by other company, or any of its subsidiaries, to
supervisors relative to the risks attached to suspend for a specified period of time, alter,
its activities; reduce, or terminate any activity that has
caused material losses to the bank or financial
(m) has hindered effective supervision on a holding company;
consolidated basis; or
(i) restrict or prohibit transactions with affiliates;
78 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 79

(j) require a bank or financial holding company (4) The Central Bank shall notify a bank or financial
to divest itself of or liquidate any subsidiary; holding company immediately it initiates measures under this section
against that bank or financial holding company.
(k) restrict payment of bonuses or compensation
to any director or key management personnel; (5) The Central Bank shall notify the Deposit Protection
Fund immediately it initiates measures under this section against a
(l) prohibit a bank or financial holding company bank.
from paying dividend on its equity capital or
rights, issue or bonus shares to shareholders 63. (1) The Central Bank may where it considers it necessary, Appointment
or to any person claiming under their appoint by written order issued to a bank or financial holding company of advisor.
authority; a competent person as advisor to the Chief Executive at the expense
of the bank or financial holding company, to improve its affairs.
(m) suspend or remove from office the chief
executive of a bank or financial holding (2) A written order appointing the advisor under
company or restrict the chief executive's subsection (1) shall set out detailed terms of reference and timelines
powers; for the discharge of the advisor’s duties.
(n) suspend or remove any or all of the directors,
key management personnel of bank or (3) The Central Bank may, before issuing an order under
financial holding company or restrict their subsection (1) give a hearing to the bank or financial holding company
powers; unless it considers that the consequent delay in action would not be
in the interest of the bank or financial holding company.
(o) appoint an advisor;
(4) A bank or financial holding company which has been
(p) prohibit a bank or financial holding company issued an order under subsection (1) shall comply with the order and
from receiving fresh deposits or renewing extend full cooperation to the appointed advisor in discharging his
the existing deposits; responsibilities.

(q) revoke the licence of a bank and appoint a (5) An advisor appointed under subsection (1) shall be
receiver; entitled to attend the meetings of the board of directors of a bank or
financial holding company, its committees, participate in their
(r) withdraw the registration of a financial deliberations and get his views recorded in the minutes of the
holding company; meetings, but he shall not have any right to vote on any resolution.

(s) require a bank or financial holding company (6) An advisor appointed under subsection (1), shall hold
to take such remedial action as the Central office for such period as may be specified by the Central Bank and
Bank may specify; or his tenure may be extended or curtailed at the discretion of the Central
Bank.
(t) require a bank or financial holding company
to take such further action as the Central Bank (7) An advisor appointed under subsection (1) shall
considers necessary. furnish the Central Bank with a status report on the concerned bank
or financial holding company as frequently as may be determined by
(3) The powers of the Central Bank to take action under the Central Bank.
this section shall be in addition to any other specific actions or
administrative penalties that may be imposed by the Central Bank 64. (1) Where the Central Bank has determined that a Chief Sanctions
under this Act. Executive Director, key management personnel, other employee or against errant
chief execu-
shareholder of a bank or financial holding company has - tives, etc.
80 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 81

(a) violated this Act, regulations, rules or (2) Where the Central Bank determines that a Chief
directives made under the Act; Executive, Director, key management personnel or employee of a bank
or financial holding company-
(b) violated any condition or restriction attached
to a licence issued or registration granted by (a) has wilfully or repeatedly violated an order
the Central Bank; made by the Central Bank under section 62;

(c) engaged in an unsafe or unsound banking (b) has engaged in an unsafe or unsound practice
practice. that has resulted in material loss to the bank
or financial holding company or financial gain
the Central Bank may take one or more of the following actions - to that person; or

(i) issue an order to that person to take (c) has conducted its affairs in a manner
such remedial action as the Central Bank detrimental to the interest of its depositors
may specify within a stated period of and creditors, the Central Bank may, in
time; addition to its power to take action under
section 62, take any one or more of the
(ii) impose an administrative penalty on following actions-
that person for each day that the
violation continues provided that any (i) direct the dismissal of that person from
fines shall be of similar amount for the bank or financial holding company;
entities with comparable total assets for
the same type of violation; (ii) prohibit that person from serving in or
engaging in the banking business for a
(iii) require that person to reimburse the stated period;
bank or financial holding company for
losses caused by such violations; (iii) impose administrative penalties on that
person for each day that the violation
(iv) prohibit that person from direct or continues; and
indirect exercise of voting rights
attached to shares of the bank or (iv) require that person to dispose of all or
financial holding company; any part of his direct or indirect interest
in the bank or financial holding company
(v) suspend or remove that person from or cease to hold a significant interest in
office or restrict the powers of that the bank or financial holding company.
person;
65. (1) Where a bank or financial holding company which Prompt corr-
(vi) prohibit the payment of dividends to maintains a capital adequacy ratio in compliance with the capital ective action
that person; or requirements under Part V has incurred or is likely to incur material for adequat-
losses within any financial year, the Central Bank may take the ely capitali-
sed banks and
(vii) suspend or remove any or all of the following actions- financial
directors on the board of the bank or holding com-
financial holding company. panies.
82 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 83

(a) prohibit the bank or financial holding (d) prohibit the bank or financial holding
company from declaring and distributing any company from awarding any bonuses or
dividends which are, in the opinion of the increments in the salary, emoluments and
Central Bank, likely to cause it not to comply other benefits to any director or key
with the capital requirements prescribed in management personnel.
Part V; and
(2) In addition to the action that may be taken under
(b) undertake more frequent inspection of that subsection (1), the Central Bank may require the Directors or key
bank or financial holding company. management personnel of the bank or financial holding company to
provide written explanation detailing the cause of the losses and the
(2) In addition to the action that may be taken under measures to be taken by the bank or financial holding company to
subsection (1), the Central Bank may require the directors or key rectify the problem and avert future losses.
management personnel of a bank or financial holding company to
provide written explanation detailing the cause of losses incurred or (3) Where a bank or financial holding company has been
is likely to be incurred by the bank or financial holding company and ordered by the Central Bank to submit a capital restoration plan and
the measures to be taken to rectify the problem and avert future to inject more capital and it fails to comply and implement this order
losses. the Central Bank shall do one or more of the following -

(3) The Deposit Protection Fund shall be notified (a) prohibit the bank or financial holding
immediately the Central Bank initiates action under this section. company from opening new branches;
Prompt corr- 66. (1) Where a bank or financial holding company is (b) restrict the bank or financial holding company
ective action undercapitalized, the Central Bank shall take the following actions - from engaging in new business;
for underca-
pitalised
banks and (a) order the bank or financial holding company (c) impose restrictions on growth of assets or
financial to submit to the Central Bank within 45 days liabiities of the bank or financial holding
holding com- an acceptable capital restoration plan and to company; or
panies. restore the bank or financial holding company
to capital adequacy within 180 days of making (d) restrict the rate of interest on all interest
the order; earning deposits payable by the bank or
financial holding company to the rates that
(b) prohibit the bank or financial holding the Central Bank shall determine.
company from declaring and distributing any
dividends which are, in the opinion of the (4) In addition to the action that may be taken under
Central Bank, likely to cause it not to comply subsection (3) the Central Bank may-
with the capital requirements in Part V;
(a) direct the removal of officers of the bank or
(c) undertake more frequent inspection of that financial holding company responsible for
bank or financial holding company; and noncompliance; and

(b) require the bank or financial holding

company to take any other action that the
Central Bank may deem necessary to rectify
the capital inadequacy.
84 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 85

(5) The Deposit Protection Fund shall be notified (a) governance;

immediately the Central Bank initiates action under this section.
(b) cash availability;
Prompt corr- 67. (1) Where a bank or financial holding company is
ective action significantly undercapitalised, the Central Bank shall take the (c) bank operations and expansion.
for signific-
antaly under- following actions-
capitalised (4) Where at any time-
banks and (a) enter into an agreement with the Board of
financial directors of the bank or financial holding (a) before the end of the period specified in
holding com- company to rectify the significant under- paragraph (a) of subsection (1), the financial
panies. capitalisation within 90 days and to restore position of a bank or financial holding
capital adequacy within 180 days or within a company continues to deteriorate; or
shorter period that the Central Bank shall
require; (b) after the period specified in paragraph (a) of
subsection (1) a bank or financial holding
(b) prohibit the bank or financial holding company has failed to raise its capital to the
company from declaring and distributing any levels necessary to rectify its significant
dividends which are, in the opinion of the undercapitalisation, the Central Bank may
Central Bank, likely to cause it not to comply appoint an Official Administrator or revoke
with the capital requirements in Part V; the licence of the bank or withdraw the
registration of the financial holding company.
(c) undertake more frequent inspection of that
bank or financial holding company; (5) This section shall not preclude the Central Bank from
taking action under any other provision of this Act prior to the
(d) prohibit the bank or financial holding expiration of the respective time period under paragraph (a) of
company from awarding any bonuses or subsection (1).
increments in the salary, emoluments and
other benefits to all directors and key (6) The Deposit Protection Fund shall be notified
management personnel; and immediately the Central Bank initiates action under this Section.

(e) prohibit the bank, or financial holding PART X - RESOLUTION OF BANKS AND FINANCIAL
company from engaging in new off balance HOLDING COMPANIES
sheet transactions.
68. (1) The Central Bank shall be the resolution authority for Resolution
(2) In addition to the actions that may be taken in banks licensed or registered under this Act. authority.
subsection (1), the Central Bank may require the directors or key
management personnel of the bank or financial holding company to (2) The Central Bank shall, exercise its powers and
provide a written explanation detailing the causes of those losses perform its functions in relation to a bank in resolution, have regard
and the measures to be taken by the bank or financial holding to and seek to promote the stability of the financial system, protect
company to rectify the problem and avert future losses. depositors, maintain the continuity of systemically important financial
services, while minimising or avoiding reliance on public funds for
(3) The Central Bank may take such action that may have any losses.
a positive impact on -
86 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 87

(3) The Central Bank shall, in exercising its powers and (e) a bank or financial holding company is in an
performing its functions in relation to a financial holding company in unsafe or unsound condition to transact
resolution, have regard to and seek to minimise any adverse impact business and the directors or key
on the interests of shareholders and creditors of other members in management personnel of a bank or financial
the group of companies of which the financial holding company in holding company are unable to promptly
resolution forms part. improve its condition;
Decision by 69. (1) Where in the opinion of the Central Bank, a bank or (f) a bank or financial holding company has
Central Bank financial holding company is failing or likely to fail, the Central Bank failed, in any manner, to cooperate with the
to place in
resolution.
may make an order in writing placing a bank or financial holding Central Bank or its examiners to perform its
company in resolution and notify the bank or financial holding supervisory responsibilities, including
company accordingly. concealment or failure to submit for
inspection any of the bank's or financial
(2) An order made by the Central Bank under subsection holding company's books, papers or records;
(1) shall be published in the Gazette.
(g) the directors, key management personnel,
(3) In making a decision to place a bank or financial employees, or significant shareholders of a
holding company in resolution under subsection (1) the Central Bank bank or financial holding company has failed
shall consider whether - to comply with an order of the Central Bank
under sections 62, 64 or 65.
(a) the bank or financial holding company has
violated this Act or any regulation, rule, 70. (1) The Central Bank shall have the power and authority Central Bank
directive or guideline issued under this Act, to manage and control the affairs of a bank or financial holding to manage
or has engaged in any unsafe and unsound company and to exercise any of the powers of the governing body and control
affairs of
practices, in such a manner as to weaken the and the shareholders of the bank or financial holding company or banks or
condition of the bank or financial holding any of the powers and functions set out in sections 74 and 75 for an financial
company and seriously jeopardise official administrator appointed by the Central Bank holding
depositors'interests or dissipate the bank's companies in
or financial holding company's assets; (2) Notwithstanding the generality of subsection (1) the resolution
Central Bank shall -
(b) prompt corrective action for an
undercapitalised bank or financial holding (a) facilitate a bail-in as a means to achieve
company under sections 66 and 67 has failed; continuity of essential functions within the
terms and conditions as prescribed in the
(c) a bank or financial holding company has prudential guidelines issued by the Central
become insolvent or that it may reasonably Bank.
be expected to become insolvent within the
next 60 days; (b) appoint an official administrator under section
74;
(d) there is reasonable cause to believe that the
directors, key management personnel, or (c) establish a separate asset management
significant shareholders of a bank or financial vehicle for a bank or financial holding
holding company has engaged or is engaging company;
in illegal activities in such a manner as to
jeopardise depositors' interests;
88 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 89

the amount necessary and carry out the

(d) prohibit a bank or financial holding company sale of shares by the bank or financial
from offering shares to existing shareholders, holding company and purchase of such
where the Central Bank is of the opinion that- shares by new investors.

(i) it is necessary to maintain the financial 71. (1) The Central Bank may carry out the restructuring of a Restructuring,
stability of a bank or financial holding bank, including the merger, transfer and sale of a bank's assets and including
company, or liabilities, without the approval of its creditors or shareholders. merger,
transfer and
sale.
(ii) the existing shareholders are no longer (2) The Central Bank shall transfer the assets and
suitable to maintain a significant capital liabilities to a bridge institution, asset management vehicle or any
position in a bank or financial holding other institution appointed by the Central Bank for a temporary period,
company; or for the purpose of acquiring, managing or disposing of assets and
liabilities of a bank undergoing restructuring under subsection (1) as
(iii) there has been a failure to comply timely part of the resolution of that bank.
with a remedial measure under this Act
requiring an increase in the bank's or (3) The Central Bank may by statutory instrument, make
financial holding company's capital. regulations setting out the requirements for licensing bridge
institutions, asset management vehicles or other institutions, their
(e) carry out recapitalisation by new governance structure, sale, disposal, dissolution or termination.
shareholders and the official administrator
shall - (4) A bridge institution, asset management vehicle or
other institution appointed by the Central Bank under subsection (1)
(i) if not already carried out in accordance shall, subject to the direction of the Central Bank approve the
with Section 69, determine the extent of restructuring of the assets and liabilities of a bank through
losses and prepare the bank's or arrangements with the creditors, including a reduction, modification,
financial holding company's financial rescheduling and novation of their claims.
statements covering the amount of such
losses through the bank's or financial (5) The Central Bank may, subject to this section and to
holding company's profits, reserves credit exposure limits under section 35 approve or decline a merger of
and, if necessary, capital; a bank with another bank or the sale of a bank's assets to another
bank.
(ii) if necessary to reflect losses, reduce the
par value of outstanding shares, (6) A bridge institution, asset management vehicle or
notwithstanding any other law to the other institution to which the assets and liabilities of a bank
contrary; undergoing restructuring is transferred has the same rights and shall
be subject to the same obligations as those that the bank may have
(iii) determine the amount and type of had or to which it or by which it may have been bound immediately
funding needed to bring the bank or before the transfer.
financial holding company into
compliance with all capital requirements; 72. (1) An official administrator appointed under section 74 Mandatory
may, in accordance with the inventory of the bank's assets and restructuring
(iv) cause the bank or financial holding liabilities prepared and delivered to the Central Bank by the official of liabilities
and shares.
company to issue additional shares in administrator under subsection (2) of section 79 and with the approval
90 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 91

of the Central Bank, restructure the liabilities and shares of a bank or (b) by notice to a party to an agreement under
financial holding company without the approval of creditors or which an amount is or may become payable
shareholders. by a bank or financial holding company under
an agreement, reduce, up to zero, the amount
(2) The Central Bank may approve mandatory that is or may become payable to such party;
restructuring under subsection (1), including a bail-in resolution or
approach, if the Central Bank is satisfied that the restructuring, either
alone or combined with recapitalisation, will restore the bank to (c) convert any unsecured liabilities of a bank or
viability. financial holding company in a way that
results in the liability being substituted with
(3) In approving mandatory restructuring, the Central a shareholding in the bank or financial
Bank shall also consider the extent to which the restructuring will holding company or in a bridge institution.
maximise the value of a bank, minimize losses to creditors and other
stakeholders, preserve its going-concern value for the benefit of 73. (1) An action under this section shall not by itself give Claims of
creditors and other stakeholders and avoid or mitigate any severe rise to any right by a party to, or a person who holds an interest in affected
disruption in the stability of the financial system. any agreement. persons.

(4) The restructuring of liabilities shall follow the order (2) In taking an action under this Part in relation to an
of priorities that would be applicable in liquidation, except that the institution in resolution, the Central Bank shall treat claims of creditors
Central Bank may exempt classes of senior unsecured debt if it or shareholders of the institution that would have the same ranking
determines them to be systemic or of strategic importance that would in liquidation under section 102, unless it determines that it is
justify differential treatment from other unsecured senior debt. necessary to treat them differently to effect the orderly resolution of
the designated institution thereby containing the potential negative
(5) Mandatory restructuring shall not apply to secured impact of such restructuring on financial stability or to maximize the
debt. value of claims for the benefit of all the institution's depositors and
creditors as a whole.
(6) As part of the restructuring of liabilities, debt may be
restructured directly or converted to equity. PART XI - OFFICIAL ADMINISTRATION

(7) New shareholders by virtue of debt equity conversion 74. (1) The Central Bank may by notice in writing appoint a Official
shall be subject to fit and proper assessments as prescribed in this person to be the official administrator of a bank in resolution with administrator.
Act. specified powers and functions.

(8) The securities and company law shall not apply in (2) A notice in writing appointing a person to be the
transactions relating to conversion of debt to equity. official administrator under subsection (1) shall -

(9) Where the Central Bank is of the opinion that it is (a) specify the grounds upon which it is adopted
necessary to restructure a bank's or financial holding company's and such decision shall be promptly notified
liabilities and shares for the orderly resolution of the bank or financial to the bank subject to official administration;
holding company under this Act, the Central Bank may by written
order- (b) be effective at the time specified in the
decision or, if no time is specified, at the time
(a) cancel some or all of the shares of the bank notice is given under sub section (1);
or financial holding company;
92 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 93

(c) have legal force and effect of an enforceable shareholders or directors or key management personnel to carry out
court order requiring law enforcement any activity required under this Act.
authorities to provide assistance.
(2) Any action or decision taken by or on behalf of a
(3) A bank may remain in official administration for a period bank under official administration shall be null and void, unless taken
not exceeding 6 months and the period may be extended by the by or under the authority of the official administrator.
Central Bank only once, for a period not exceeding 6 months.
(3) An official administrator shall have full and exclusive
(4) The Central Bank may remove the official powers to manage and operate a bank under official administration in
administrator before the end of the period specified in paragraph (a) accordance with regulations, directives and guidelines of the Central
of subsection (2) and appoint a replacement. Bank.

(5) The Central Bank shall ensure that the bank remains (4) An official administrator may take any action as
under the control of an official administrator appointed under necessary or appropriate to carry on the business of a bank under
subsection (1), during official administration, official administration, to preserve and safeguard its assets or to
implement a plan of action with respect to the bank that has been
(6) An official administrator appointed under subsection approved by the Central Bank.
(1), shall have an obligation to report to the Central Bank and not to
the board of directors. (5) An official administrator shall have the power to set
out principles for valuation of assets and liabilities in accordance
(7) The official administrator shall have no financial with guidelines of the Central Bank
interests or relationship nor engage in any transaction with the bank
or specialised deposit-taking institution in official administration. (6) An official administrator may request any information
from the existing or previous directors, senior managers or
(8) Where an official administrator engages in any shareholders of a bank in official administration, its subsidiaries,
transaction involving the bank or specialised deposit-taking affiliates or any third parties who hold information that may be
institution in official administration contrary to subsection (7), the necessary to carry out his functions
Central Bank shall set aside the transaction, terminate the appointment
of the official administrator with immediate effect, and appoint a new (7) An official administrator may employ, at the expense
official administrator. of a bank under official administration, independent attorneys,
accountants and consultants to assist the official administrator, on
(9) The Central Bank shall notify the Deposit Protection such terms as the Central Bank shall approve.
Fund in advance of the commencement, suspension or cessation of
official administration of a bank. (8) An official administrator shall, upon appointment,
immediately suspend the payment of any dividends or other form of
(10) Where applicable the Central Bank shall immediately capital distribution to shareholders as well as any payment to directors
notify the supervisor of a financial holding company of the other than for salaries or services provided to the bank.
commencement, suspension or cessation of official administration of
a bank. (9) An official administrator shall have unrestricted
access to, and control over, the properties, offices, assets and the
Powers of 75. (1) As of the effective time of the appointment all powers, books of account and other records of the bank subject to official
official functions and responsibilities of the bank's shareholders, directors administration.
administrator.
and key management personnel shall be vested in the official
administrator unless the official administrator requests the
94 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 95

(10) An official administrator may secure the properties, on all forms of lending and capital expenditure, except payments to
offices, assets, books and records of a bank and may take all necessary central clearing counterparties and to payment, settlement and
or appropriate steps aimed at such purpose. clearing systems

(11) An official administrator may, if necessary request (4) Where a person is dissatisfied or aggrieved with a
law enforcement officials to assist him, if necessary, use force, to decision of the Central Bank the person may petition the Central
gain access to any premises of the bank and to gain control over and Bank in writing for a review within 10 days of the decision.
to secure properties, offices, assets, books and records.
78. (1) No right or obligation of a third party under any Third party
(12) Directors, key management personnel and employees contract to which the bank in official administration is a party may be rights or
of the bank shall cooperate fully with and assist the official terminated, accelerated or modified solely because of the appointment obligations.
administrator and shall make available to the official administrator all of the official administrator or any action taken by the official
records and documentation pertaining to the bank in official administrator.
administration and any additional information or report requested by
the official administrator. (2) Notwithstanding subsection (1) no performance of
payment and delivery obligations under a recognised clearing,
(13) A person who fails to comply with subsection (12) or settlement, or payment system right or obligation of a third party
otherwise obstructs an official administrator in the performance of under any contract to which the bank in official administration is a
his functions under this Act shall be liable on summary conviction to party may be terminated, accelerated, or modified solely because of
a fine or to serve a term of imprisonment not exceeding 2 years or the appointment of the official administrator or any action taken by
both. the official administrator.
Central Bank 76. (1) The official administrator shall act in accordance with 79. (1) Not later than 30 days after his appointment the official Inventory
oversight of and plan of
official admi-
instructions and guidance given by the Central Bank at any time in administrator shall prepare and deliver to the Central Bank an
the course of an official administration and shall be accountable only inventory report of the assets and liabilities of a bank in official action to
nistrator. resolve bank.
to the Central Bank for the performance of duties and the exercise of administration.
powers as official administrator.
(2) An inventory report under subsection (1), shall -
(2) An official administrator may delegate any of his
powers or duties to other persons, in accordance with the instructions (a) itemize the assets and liabilities of a bank in
issued by the Central Bank. official administration according to their risk
profiles and classify the non-performing
Moratorium 77. (1) The Central Bank may impose a moratorium loans;
and effect of suspending some or all payments by a bank in official administration
official adm- including restrictions on all forms of lending and capital expenditure (b) propose a plan of corrective actions including
inistration on
proceedings. except payments to central clearing counterparties and to payment recommendations for capital increase or any
settlement and clearing systems. other course of action designed to minimize
disruption to depositors and preserve the
(2) No legal action may be commenced against the bank stability of the financial system.
in official administration without prior written approval of the Central
Bank. (3) Not later than 90 days after his appointment, the
official administrator shall prepare and deliver to the Central Bank a
(3) The Central Bank may impose a stay on all legal report on the financial condition and future prospects of a bank in
actions against a bank in official administration, including restrictions official administration.
96 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 97

(4) A report on the financial condition and future 82. (1) Where an official administrator has reasonable cause Misconduct
prospects of a bank in official administration under subsection (3), to believe that significant shareholders, directors, key management by Share-
shall include an assessment of the amount of assets likely to be personal, attorneys, accountants or other professionals have engaged holders,
directors, ect.
realised in a liquidation of the bank. or are engaging in illegal or fraudulent activities punishable by
imprisonment, it shall immediately recommend to the Central Bank
(5) An official administrator shall promptly provide any that civil action be instituted against such person seeking damages
additional report or information requested by the Central Bank. and restitution.

Capital 80. (1) On the basis of the report under subsection (3) of (2) The Central Bank shall report any criminal findings to
increase by section 79 the official administrator may - the relevant authorities for criminal prosecution against such persons.
existing
shareholders. (a) with the approval of the Central Bank, increase 83. (1) The official administrator shall receive such Expenses of
the capital of a bank in official administration, remuneration as shall be determined by the Central Bank. the official
through the issuance of new shares; administrator.
(2) All costs and expenses incurred on account of the
(b) determine the extent of losses of a bank in official administration shall be borne by and charged to the bank in
official administration and prepare the official administration.
financial statements covering the amount of
such losses through the bank's profits, 84. (1) An official administration shall terminate at the expiry Termination
reserves and, if necessary, capital; and of the terms specified in the notice appointing the official administrator of official
or any extension of the term of such appointment. administration.
(c) notify existing shareholders of the amount
of additional capital needed to bring the (2) An official administration shall be terminated prior to
bank's capital into compliance with all capital the expiration of the term in the notice of appointment of the official
requirements and allow such shareholders to administrator if the Central Bank determines that-
subscribe and purchase additional shares by
submitting bindingcommitments equal to the (a) official administration is no longer necessary
full amount of additional capital needed within because grounds for appointment of the
5 working days of such notification. official administrator have been remedied; or

(2) Existing shareholders of a bank in official (b) the bank in official administration cannot be
administration shall have no pre-emptive or other rights to purchase rehabilitated.
additional shares issued except as provided under paragraph (c) of
subsection (1). (3) Where an Official Administration is terminated the
Central Bank shall appoint a receiver to liquidate the bank.
Removal of 81. (1) An official administrator may, with the approval of
directors and
key mana-
the Central Bank, remove any or all directors and key management (4) Within 14 working days of the termination of the
gement pers- personnel and appoint their replacement. appointment of a receiver under subsection (3), the official
onnel. administrator shall prepare and submit to the Central Bank a final
(2) Replacements under subsection (1) may only be report and accounting of the official administration.
approved by the Central Bank if they are determined to be fit and
proper persons as defined by this Act. (5) An official administrator shall not acquire significant
shares or accept appointment as a director, key management
personnel or any other office or position in the bank in official
98 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 99

administration for a minimum period of 2 years after the end of resolution measure may file a claim in the High Court within 14 days
official administration. of the final decision of the Central Bank.

“No creditor 85. (1) The Central Bank or its agents shall not take any (2) In any proceedings under subsection (1), the High
worse off” resolution action in relation to a bank or financial holding company Court shall-
rule. that would result in a creditor or shareholder of that bank or financial
holding company receiving less than the creditor or shareholder (a) take the public interest into consideration
would have received if the bank or financial holding company had and shall have regard to the critical
been wound up. importance of-

(2) Failure to comply with subsection (1) shall not (i) maintaining financial stability;
invalidate the action taken, but shall entitle the affected creditor or
shareholder to monetary compensation representing the difference (ii) permitting the Central Bank to discharge
between the value the affected creditor or shareholder actually its functions in an expeditious and
received in resolution and what they would have received if the efficient manner.
institution had been wound up.
(b) focus its enquiry as to whether the defendant
(3) As soon as practicable after a bank or financial holding acted in bad faith or in violation of any of
company ceases to be in resolution, the Central Bank shall obtain a this Act and the plaintiff in each case shall
valuation of the assets and liabilities that were dealt with in resolution have the burden of establishing this
action, to determine whether a creditor or shareholder of the bank or standard.
financial holding company received in respect of resolution action,
less than it would have received if the bank or financial holding (3) Any action under this Act by the Central Bank or its
company had been wound up and if so, determine the amount of the officials, the official administrator or receiver that is the subject of
shortfall. any court proceedings shall be allowed to continue unrestricted
notwithstanding the challenge or appeal before the court.
(4) Any shortfall determined under subsection (3) shall
be paid to the affected creditor or shareholder from recoveries from (4) Where the Court finds that the defendant has acted
the resolution action or from a resolution fund. in bad faith or in violation of this Act, the court shall be restricted to
monetary compensation to the plaintiff and will be considered as full
(5) A valuation under this section shall be carried out by redress for the plaintiff in respect of the actions complained of.
a valuation expert that meets such requirements as the Central Bank
may by statutory instrument prescribe. PART XII - RECEIVERSHIP AND LIQUIDATION
Costs of 86. The Central Bank may recover from a bank or financial 88. (1) Where the licence of a bank is revoked pursuant to Appiontment
resolution. of receiver.
holding company in official resolution, including after the bank or section 9 the Central Bank shall appoint a receiver who shall take
financial holding company ceases to be in resolution, the amounts possession and control of the assets and liabilities of that bank.
that the Central Bank or its designated agent reasonably and
properly incurs in exercising its powers and performing its functions (2) Where a receiver is to be appointed to take
in relation to the resolution of the bank or financial holding company. possession and control of the assets and liabilities of a bank under
Review of
subsection (1), the Central Bank shall notify the Deposit Protection
resolution 87. (1) A person aggrieved with a decision of the Central Fund in advance of its decision.
decisions of Bank in respect of the revocation of a licence or any decision relating
Central Bank. to the appointment of an official administrator, receiver or other
100 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 101

Qualification 89. (1) A receiver may be a person or an official of the Central (3) The receiver shall publish the notice referred to in
and compen- Bank who meets the qualifications prescribed by the Central Bank. subsection (2) for 4 consecutive weeks in at least one daily newspaper
sation of of national circulation and submit copies of the publication to the
receiver.
(2) The Central Bank may dismiss a receiver and appoint Central Bank within 2 days of such publication.
a replacement.
91. (1) The receiver shall act in accordance with regulations, Central Bank
(3) The receiver shall receive such remuneration as shall instructions and guidelines issued by the Central Bank at any time in oversight of
be determined by the Central Bank. the course of the liquidation and shall be accountable only to the receiver
Central Bank for the performance of duties and the exercise of powers
(4) All costs and expenses incurred by the receiver and as receiver.
experts engaged by him shall be paid from the assets of the bank in
receivership. (2) The receiver shall report each month to the Central
Bank on the progress of the receivership in such form as may be
(5) Payments to the receiver may be made on a current prescribed by the Central Bank and provide any other information
basis if in the judgment of the receiver there are sufficient liquid upon request of the Central Bank.
assets.
92. (1) Upon appointment the receiver shall become the sole Powers of
(6) Any monies owing to the receiver at the end of the legal representative of the bank and shall succeed all the rights and receiver.
term of receivership shall be paid from the proceeds from the sales of powers of the shareholders, directors and key management personnel
the bank's assets in accordance with the priority set out under section of the bank in receivership.
102.
(2) Notwithstanding subsection (1) shareholders,
Notice and 90. (1) The appointment of a receiver by the Central Bank directors and key management personnel may be instructed by the
registration under subsection (1) of section 88 shall be effective as of the date of receiver to exercise specified functions for the bank in receivership.
of receiver- the appointment unless otherwise expressed by the Central Bank.
ship.
(3) The rights and powers of the receiver shall include-
(2) The receiver shall immediately post in each place of
business of the bank in receivership, a notice specifying that - (a) holding title to the books, records, and assets
of the bank in receivership;
(a) the effective date and time of possession of
the bank in receivership by the receiver; (b) managing, operating and representing the
bank in receivership;
(b) authorisation of persons to engage in
financial transactions of the bank in (c) marshalling assets and claims of the bank in
receivership have been withdrawn; receivership;

(c) persons who previously had authorisation (d) transferring or disposing of assets of the
to give instructions on behalf of the bank bank in receivership;
in receivership with respect to payment or
transfer of the bank's assets or assets (e) subject to the approval of the Central
managed by the bank are no longer so Bank, suspending or limiting the payment of
authorised; and debts of the bank in receivership;

(d) the licence of the bank in receivership has (f) hiring specialists, experts or professional
been revoked. consultants;
102 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 103

(g) administering the accounts of the bank in continue viable or necessary operations
receivership; through a bridge institution.

(h) collecting the debts due to the bank in (7) Deposit liabilities may be acquired by a bank or bridge
receivership and recovering goods owed to institution established by the Central Bank for a temporary period of
it by third parties; not more than 2 years for the purpose of resolving the bank in
receivership.
(i) taking action to collect from directors and
officers of the bank in receivership, lawyers, (8) The Central Bank may extend the temporary period of
auditors and any other third parties including existence of a bank or bridge institution under subsection (1), but
holding companies who may have any such extension shall not exceed 3 years followed by a further
contributed to the failure of the bank; extension of one year.

(j) initiating or defending legal proceeding and (9) A receiver may request any information from the
executing relevant instruments in the name existing or previous directors, senior managers, shareholders,
of the bank in receivership; and employees and its subsidiaries and affiliates or any third parties of a
bank in receivership who hold information that may be necessary to
(k) taking any other action necessary for the carry out their functions.
efficient liquidation of the bank in
receivership and to obtain the maximum (10) The Central Bank shall approve or decline a merger of
amount from the sale of its assets. a bank in receivership with another bank, or sale of substantially all
the assets of a bank in receivership to any one bank, based upon the
(4) A receiver shall not take any deposits. criteria in section 35.

(5) Within 90 days from the date of appointment, the (11) Notwithstanding anything contained in this Act, a
receiver may make payments to other creditors of such amounts as receiver shall not make any payments to an insured depositor unless
in his opinion may appropriately be used for that purpose; provided, and until the Deposit Protection Fund has completed pay-outs and
however, that creditors who are similarly situated shall be treated in any re-claims to insured depositors as the case may be.
the same manner.
(12) Where the Deposit Protection Fund makes payment
(6) The receiver may, upon the prior written approval of to an insured depositor which falls short of the deposits made by the
the Central Bank and according to its guidelines - insured depositor the receiver may make payment in relation to the
shortfall.
(a) sell the assets or arrange for the assumption
of liabilities of a bank in receivership on fair 93. (1) Where a receiver has taken possession of a bank in Effects of
terms; receivership - receivership.

(b) dispose of assets and liabilities of the bank (a) any term, statutory, contractual or otherwise
in receivership, including deposit liabilities on the expiration of which a claim or right of
through a purchase and assumption the bank would expire or be extinguished,
transaction; or shall be suspended;

(c) organise a restructuring of the assets and (b) the calculation of interests and penalties or
liabilities of the bank in receivership or obligations against the bank shall be
104 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 105

suspended and no other charge or liability shall accrue on the (c) issuing new photo identification passes for
obligations of the bank; entrance of authorised employees and
controlling the access of others to the
(c) all legal proceedings against the bank are premises of a bank in receivership;
stayed and the exercise of any right on the
assets of the bank shall be suspended; (d) cancelling authorisations of persons to
engage the financial responsibility of a bank
(d) no right of a third party can be exerted over in receivership and issuing new
assets during the liquidation and no creditor authorisations, as appropriate, and notifying
may attach, sell or take possession of any third parties;
assets of the bank as a means of enforcing
his claim or initiate or continue any legal (e) informing correspondent banks, financial
proceeding to recover the debt or perfect holding companies, registrars and
security interests. transferagents of securities and e x t er n a l
asset managers of the assets of a bank in
Taking 94. (1) A receiver shall have unrestricted access to and receivership, that persons who previously
control of
bank in
control over the offices, books of account, records and other assets had authorisation to give instructions on
receivership. of the bank in receivership ,its subsidiaries and its financial holding behalf of the bank with respect to dealing in
company. the bank's assets or assets held in trust by
the bank are no longer so authorised and that
(2) At the request of the receiver, a law enforcement officer only the receiver and persons authorised by
or officers shall assist the receiver to gain access to premises or the receiver have such authority;
control over records of a bank in receivership.
(f) suspending the payment of capital
(3) A receiver shall take any of the following actions to distributions in general and payment of any
secure the property, offices, books, records, and assets of a bank in kind to directors, key management personnel,
receivership in order to prevent their dissipation by theft or other and significant shareholders of a bank in
improper action - receivership; provided, however, that base
compensation may be paid to directors or key
(a) changing the locks and limiting access to the management personnel for services rendered
new keys on external entrances to the offices in their capacity as directors or key
and on doors to internal offices which contain management personnel of the bank; and
financial assets or information or equipment
which could enable a person to gain unlawful (g) any other action that it considers necessary.
access to financial assets of a bank in
receivership; (4) A person who willfully interferes with a receiver's
access to or control over the offices, books of account, other records,
(b) changing or establishing access codes to the and other assets of a bank in receivership for which he has been
computers of a bank in receivership and appointed commits an offence and is liable on summary conviction
granting access only to a limited number of to a fine or to a term of imprisonment not less than one year but not
trustworthyemployees; exceeding 5 years.

(5) A receiver shall furnish the Deposit Protection Fund

with such information and reports in the form and manner as may be
determined by the Institution with the approval of the Central Bank.
106 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 107

Inventory of 95. (1) A receiver shall, within 30 days of taking possession (b) transactions with affiliates, insiders or key
assets and of a bank in receivership - management personnel of the bank
new financial conducted within 5 years prior to the effective
position.
(a) make an inventory of the assets and property date of the receivership;
of the bank and transmit a copy thereof to
the Central Bank, which shall make a copy (c) gratuitous transfers to third parties made
available for examination by the public. within 3 years prior to the effective date of
the receivership;
(b) establish a new financial position for the
bank, based on a determination of liquidation (d) transactions in which the consideration
values of the bank's assets. given by the bank considerably exceeded the
received consideration, made within 3 years
(2) Liabilities shall be deemed due and payable and prior to the effective date of the
interest shall cease to accrue as of the date of the appointment of the receivership;
receiver.
(e) a transaction based on a forged or fraudulent
(3) Un-matured liabilities shall be discounted to present document that the bank has executed to the
value at the rate of interest determined by the Central Bank. detriment of creditors;
Repudiation 96. (1) Within 30 days from the date of appointment, a (f) any act done with the intention of all parties
of contracts. receiver may repudiate any non-performed or partially performed involved to withhold assets from bank
contract, to the extent that the fulfilment of such contract is creditors, or otherwise impair their rights,
considered to be burdensome for the bank in receivership and the within 5 years prior to the effective date of
repudiation would promote the orderly administration of the bank's the receivership;
affairs and protect depositors' interest.
(g) transfers of property of the bank or financial
(2) Any liability arising from a repudiation under holding company to, or for the benefit of, a
subsection (1), shall be determined as of the date of repudiation and creditor on account of a debt incurred within
shall be limited to actual direct damages incurred and shall not include one year prior to the effective date of the
any damage for lost profits or opportunity or non-monetary damages. receivership which has the effect of
increasing the amount that the creditor would
(3) In case of repudiation of a lease contract of immovable receive in a liquidation of the bank: provided,
and movable property, the owner shall be given 30 days' notice of however, that payment of deposits in an
the receiver's intention to repudiate the contract. amount equal to or less than an amount to
be determined by the Central Bank, in the
Avoidance of 97. (1) A receiver may set aside the following transactions case of banks per depositor or for such
pre-receiv-
ership
affecting the assets of a bank in receivership and recover the assets amounts as may be determined in accordance
transfer. from the transferee or other beneficiary of the transaction if detrimental with the Deposit Protection Act shall not be
to the interest of depositors and other creditors - subject to this provision; and

(a) gratuitous transfers to, or to persons related (h) any attachment or security interest, except
to, affiliates, insiders or key management one existing 6 months prior to the effective
personnel of the bank made within 5 years date of the receivership.
prior to the effective date of the receivership;
108 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 109

(2) Any action to set aside a transfer under this section (3) Upon request of a lessor of a bank premises, service
shall be taken by the receiver within one year following the effective provider or a utility provider, a bank in receivership shall place a
date of the receivership. security deposit in a bank as a condition to the lessor's, service
provider or utility company's duty to continue to provide services
(3) Notwithstanding anything contained in this section, during the receivership, and any such deposit shall not be required
the receiver may not set aside a payment or transfer by a bank in in an amount greater than the cost of services provided to the bank in
receivership if it was made in the ordinary course of business, or if it receivership, acquirer, bridge bank or asset management company
was part of a contemporaneous exchange for reasonably equivalent during the month immediately prior to the effective date of the
value, or to the extent that following the transfer the recipient extended receivership.
new unsecured credit to the bank which had not been satisfied by
the bank as of the effective date of the receivership. 99. (1) Irrevocable money and securities transfer orders Protection of
entered by a bank into a payment or securities settlement system payment,
(4) Notwithstanding anything contained in this section, recognised as such by the Central Bank shall be legally enforceable clearing, and
settlement
the receiver may not set aside a payment or transfer by a bank in and binding on third parties even upon a decision revoking the licence systems.
receivership or made pursuant to any power of an official administrator and appointing a receiver but only if the transfer orders become
under this Act. irrevocable before such decision takes effect.

(5) A receiver may recover property or the value of (2) Where a bank enters irrevocable money or securities
property transferred by a bank in receivership from a transferee of an transfer orders into a payment or securities settlement system after
initial transferee only if the second transferee did not give fair value the decision revoking the licence and appointing a receiver takes
for the property and knew or reasonably should have known that the effect and the transfer orders are carried out on the day of such
initial transfer could be set aside under this Act. decision, the transfer orders shall be legally enforceable and binding
on third parties, unless the receiver proves that the system operator
(6) A receiver may order that notice of an action to set was aware of the decision before the transfer orders became
aside a transfer be recorded in the public records for real estate irrevocable.
ownership and any other rights in property and a person taking title
to or acquiring any security interest or other interest in such property (3) No provision authorising the setting aside of contracts
after the filing of such notice takes his title or interest subject to the and transactions entered into before the appointment of a receiver
rights of the bank to recover the property. takes effect shall be applied in such a way as to require the unwinding
of netting by a payment or securities settlement system recognised
Obligations 98. (1) A parent company, subsidiary, affiliate or associate of as such by the Central Bank, except however the preservation of
of lessors of a bank that provides management company services may not alter, such netting shall not prevent the ability of the receiver to recover
bank
premises and
refuse or discontinue such services to a bank in receivership, acquirer assets directly from the transferee or beneficiary.
utility bank, bridg bank because of its receivership or because the bank has
providers. failed to pay services prior to receivership. (4) For the purposes of this section -

(2) A lessor of a bank premises, provider of utility services (a) a transfer order entered into, a money or
including, without limitation, a company that supplies electricity, securities settlement system becomes
natural gas, water or telecommunication services, internet services, irrevocable at the time defined by the
may not alter, refuse or discontinue such services to a bank in regulations of that system; and
receivership, acquirer, bridge bank or asset management company of
a bank or because the debtor has failed to pay for services prior to its (b) "netting" means the conversion into one net
receivership. claim or one net obligation of claims and
obligations resulting from transfer orders
110 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 111

which a participant or participants in a (4) The Central Bank shall prescribe the types of
settlement system either issue to, or receive contracts that shall qualify as "eligible financial contracts" under
from, one or more other participants in that subsection (2) and which may include a master agreement covering
system with the result that only a net claim more than one type of contract.
or a net obligation remains.
(5) For the purposes of this Section-
Determination 100. (1) The procedure relating to the validity and priority of
of claims. claims, liquidation of bank assets, return of bank customer's property “net termination value" means the net amount
and sale of bank assets shall be in such transparent and commercially obtained after setting off the mutual obligations
reasonable manner as shall be prescribed by the Central Bank. between the parties to an eligible financial contract
in accordance with its provisions.
(2) Subject to subsection (3) no set-off shall be allowed
with respect to claims acquired towards the bank in receivership
after the appointment of a receiver takes effect or within 3 months 102. (1) In any liquidation of a bank in receivership, the assets Priorities in
before such decision. of the bank shall be available to meet its liabilities according to the payment of
hierarchy of creditors' claims that are available to satisfy unsecured claims.
(3) Claims against a bank in receivership arising from claims.
deposits shall be set-off against any sum due from a depositor to the
bank or financial holding company as of the date on which the (2) Claims allowed to be paid under subsection (1) shall
licence is revoked and the receiver is appointed - be as follows-

(a) automatically, if such sum is matured or past (a) necessary and reasonable expenses incurred
due; or by the receiver and the Central Bank,
including professional fees under Part XII;
(b) at the option of the depositor, if the sum is
not matured or past due. (b) insured deposits to the extent of any amount
guaranteed to be repaid under the deposit;
Claims 101. (1) In determining the rights and obligations between a
relating to bank in receivership and its contractual counterparties, effect shall (c) uncollateralised credit to a bank by the
eligible be given to the termination provisions of eligible contracts between Central Bank and guarantees by the
financial
contracts. the bank and its contractual counterparties. Government and advances guaranteed by
the Government
(2) The Central Bank may order a period of temporary
stay on the exercise of the termination provisions of eligible contracts (d) uninsured deposits;
under subsection (1), subject to such safeguards as the Central Bank (e) wages or salaries earned by an employee
shall prescribe to facilitate liquidation of the bank while at the same not later than 180 days before the
time minimizing disruption to the markets for eligible financial appointment of the receiver, as may be
contracts. specified by the Central Bank except for
wages and salary earned by a director or
(3) The net termination value determined in accordance key management personnel and any variable
with an eligible financial contract between a bank in receivership and compensation component;
its contractual counterparties shall be a claim of the bank on the
counterparty or shall be admitted after its validation as a claim of the (f) compensation of employees not covered
counterparty on the bank. under item (h);
112 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 113

(g) credits extended to the bank by the Central 104. The Companies Act or any other enactment relating to Relationship
Bank until the appointment of the receiver; corporate insolvency or liquidation shall not apply to the winding up with other
and liquidation of an insolvent bank. enactments.
(h) credits extended to the bank after
the appointment of the receiver; 105. Where a receiver has sufficient reason to believe that any Miscellaneous
shareholder, director, key management personnel, attorney, receivership
(i) statutory amounts owed to the Government accountant or other professional is engaged or engaging in a criminal provisions.
or to a municipality, unless the Government or fraudulent activity in relation to the business of a bank in
or municipality consents otherwise; receivership that receiver shall-

(j) unsecured credits extended to the bank prior (a) notify the Central Bank immediately; and
to the appointment of the receiver;
(b) institute a civil action to claim damages and
(k) subordinated debt. restitution.

(3) Treatment of deficiency claims or under collateralized 106. (1) Notwithstanding anything to the contrary in the Voluntary
claims, secured by collateral or for which collateral has been pledged Companies Act, or any other law relating winding up a bank shall not winding up.
shall be as outlined in the prudential guidelines. be voluntarily wound up unless the Central Bank certifies in writing
that the bank is able to meet its obligations in full to the depositors
(4) Where the amount available for payment for any class and creditors as they accrue.
of claims is insufficient to provide payment in full, such claims of that
class shall be reduced in equal proportions. (2) Where the Central Bank, at any stage of the voluntary
winding up considers the bank unable to meets its obligations to
(5) After payment of all claims filed, the remaining depositors or creditors in full the Central Bank shall appoint a receiver
allowable claims that were not filed within the time specified by to wind up the affairs of that bank in accordance with this Act.
receiver for filing, shall be paid.
(3) The Central Bank shall issue regulations, rules or
(6) Any proceeds remaining after all claims of depositors guidelines for the winding up of a bank under subsection (2).
and other creditors have been paid shall be distributed among the
shareholders of the bank in accordance with their rights. PART XIII - ACCOUNTS AND AUDIT
Final report 103. (1) Where the proceeds from the sale of assets of a bank 107. (1) A bank or financial holding company shall cause to Maintenance
of receiver to of accounting
Central Bank.
in receivership have been distributed the receiver shall provide a be kept proper accounting records with respect to all transactions of
report to the Central Bank that includes a statement of income, that bank or financial holding company - records.
expense, sources and the period of receivership.
(a) in such form and detail and in accordance
(2) Any assets of a bank in receivership that is of with internationally accepted accounting
immaterial value that the receiver has been unable to sell or where the standards and such standards as may be
costs of sale would exceed the amount expected to be received in the prescribed by the Central Bank;
sale may be abandoned by the receiver or given to a charitable
institution that promotes public health or education. (b) in a manner that gives an accurate and reliable
account of its transactions and the accounts
(3) The creditor of a bank in receivership shall have no prepared from the records shall give a true
claim against an asset under subsection (2).
114 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 115

and fair view of its state of affairs and its 109. (1) Unless otherwise authorised in writing by the Central Display of
results for the accounting period. Bank a bank or financial holding company shall not later than 3 financial
months after the end of its financial year - statements.
(2) Accounting records required to be kept by a bank or
financial holding company under subsection (1), shall be kept at its (a) cause to be published on its website and in
Head Office of the bank or financial holding company for a period of at least 3 daily newspapers with a nation-
not less than 10 years. wide circulation;

(3) Where the accounting records kept by a bank or (b) exhibit in a conspicuous position in each of
financial holding company with respect to all its transactions, are its offices and branches; and
prepared and kept in such a manner that, in the opinion of the Central
Bank, have not been properly prepared and kept, or where a bank or (c) forward to the Central Bank, copies of the
financial holding company renders returns in accordance with the bank's or financial holding company's duly
provisions of section 54, which in the opinion of the Central Bank are signed audited financial statement.
inaccurate, the Central Bank may appoint a firm of qualified
accountants to prepare proper accounting records or render accurate (2) A published financial statements of a bank or financial
returns, as the case may be, for the bank or financial holding company holding company shall disclose in detail, administrative penalties as
and the cost of preparing the accounts and rendering the returns a result of contravention of this Act and any policy guidelines in
shall be borne by that bank or financial holding company. force during the financial year in question and the external auditor's
report shall reflect such contravention.
(4) A bank or financial holding company which
contravenes this Section is liable to an administrative penalty. (3) The financial statement of a bank or financial holding
company shall bear on its face the report of an approved external
Financial 108. (1) A bank or financial holding company shall prepare auditor and shall contain statements on such matters as may be
statements.
audited financial statements in such form and detail in accordance specified by the Central Bank.
with such accounting standards as shall be prescribed by the Central (4) A bank or financial holding company which fails to
Bank. comply with any of the requirements of this section is in respect of
each such failure liable to an administrative penalty for each day
(2) A bank or financial holding company shall prepare, at during which the non-compliance continues.
the expiration of each financial year, in respect of the business
transacted by it with reference to that year audited financial statements 110 . The Central Bank shall lay down the guidelines to be Guidelines on
on a solo or consolidated basis. followed by banks in respect of accounting policies, practices, accounting
presentation of annual accounts, financial statements and disclosure standards.
(3) A financial statements required to be prepared by a of information in the annual accounts.
bank or financial holding company under subsection (1) shall be
approved by the board of directors of the bank or financial holding 111. (1) A bank or financial holding company shall appoint at External
company and signed by at least 2 directors of the bank or financial an annual general meeting a person approved by the Central Bank, Auditor.
holding company. in this section referred to as "the approved external auditor," to
serve for a period of time as may be determined by the Central Bank.
(4) A bank or financial holding company which fails to
prepare a financial statement in accordance with this section is liable (2) The Directors of a bank or financial holding company
to pay an administrative penalty. may appoint the first external auditor of the bank or financial holding
company or an external auditor to replace an external auditor who is
for any reason unable to act pending ratification or the appointment
116 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 117

of a new auditor at an annual general meeting or until the Central (b) at any time, fails to fill a vacancy for such
Bank appoints a new auditor under subsection (5) person, the Central Bank shall appoint a
suitable person for that purpose and shall fix
(3) The duties of the approved external auditor shall be the remuneration to be paid by the bank or
to prepare for the shareholders, a report upon the financial statements financial holding company to such auditor.
of the bank or financial holding company and every such report shall
contain statements as to the matters and such other information as (8) An auditor of a bank or financial holding company
may be prescribed by the Central Bank. shall have a right of access at all times to the accounting records
including computerised and manual files, vouchers, reports and other
(4) For the purpose of this Section, the approved external documents such as minutes book, files and other relevant
auditor shall be an auditor who is - documentary evidence, cash and securities of a bank or financial
holding company and shall be entitled to require from directors,
(a) a member of a professional accountancy managers and officers of the bank or financial holding company
body registered in Sierra Leone; such information and explanation as he thinks necessary for the
performance of the duties of an auditor.
(b) approved by the Central Bank;
(9) The report of the external auditor shall be read together
(c) resident in Sierra Leone; and with the report of the board of directors of the bank or financial
holding company at the annual general meeting of the shareholders
(d) not disqualified by law from being appointed of the bank or financial holding company and 2 copies of each report
as an auditor for a body corporate. together with the auditor's analysis of bad and doubtful advances in
a form specified by the Central Bank shall be sent to the Central
(5) A person shall not be eligible for appointment as an Bank.
external auditor, or retain his appointment as an external auditor,
unless that person declares any interest that he has in the bank or (10) Where an external auditor appointed under this
financial holding company or with its significant shareholders or section, in the course of his duties as an auditor of a bank or financial
directors, to the Central Bank and the Central Bank shall determine holding company, is satisfied that -
upon such declaration whether such interest will compromise the
auditor's independence as an auditor of the bank or financial holding (a) there has been a contravention of this Act or
company. regulation or directive prudential standard
or that an offence under any other law has
(6) Notwithstanding subsection (5) the Central Bank shall been committed by the bank or financial
not approve an external auditor's appointment if the bank or financial holding company or any other person; or
holding company, a director or significant shareholder has an interest
in any business or activity of the external auditor which is likely to (b) the bank or financial holding company is
compromise the auditor's independence as an auditor of the bank or insolvent or there is a significant risk that
financial holding company. the bank or financial holding company losses
have been incurred by the bank or financial
(7) Where a bank or financial holding company - holding company which materially reduce its
capital funds; or
(a) fails to appoint an approved external auditor
under this section; or (c) material weakness exists that threatens the
safety and soundness of the bank or
financial holding company; or
118 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 119

(d) any irregularity which jeopardises the 113. (1) An external auditor of a bank or financial holding External
interest of depositors or creditors of the bank company shall submit to - auditor’s
or financial holding company, or any other report.
irregularity has occurred, he shall (a) the bank or financial holding company, and
immediately report the matter to the Central
Bank. (b) the Central Bank, at least once in year, a
statutory audit report and a long form audit
(11) An external auditor shall forward to the Central Bank report.
2 copies of the management reports on the bank or financial holding
company's activities not later than 3 months after the end of the bank (2) An external auditor shall state in the statutory audit
or financial holding company's financial year. report under subsection (1), whether or not -

(12) A Report submitted by an external auditor under (a) the accounts give a true and fair view the
subsection (11) shall not be construed as a violation of the external state of affairs of the bank or financial holding
auditor's professional duty of confidentiality nor constitute grounds company and its results for the period under
for liability for civil damages. review;

(13) An external auditor who acts in contravention of or (b) the external auditor was able to obtain all the
fails deliberately or negligently to comply with any of the provisions information and explanation required for the
of this section commits an offence and is liable on conviction to a efficient performance of the external auditor's
fine. duties;

(14) A bank or financial holding company shall notify the (c) the bank or financial holding company's
Central Bank of the termination of the appointment of its external transactions are within the powers of the
auditor. bank or financial holding company; and

(15) A bank or financial holding company shall comply (d) the bank or financial holding company has
with a request of the Central Bank that the appointment of an external complied with the provisions of this Act and
auditor be revoked. any other relevant legislation.

(16) A bank or financial holding company which fails to (3) The external auditor shall submit a long form audit
comply with this section shall be liable to an administrative penalty. report on the accounts and the affairs of the bank or financial holding
company generally and in addition comment on the matters to be
Special audit. 112. (1) The Central Bank may at the expense of a bank or specified in directives made by the Central Bank.
financial holding company -
114. The Central Bank may periodically or as it considers it Meeting with
(a) require an external auditor to undertake a necessary, arrange meetings between the Central Bank, a bank or external
further audit or provide additional information financial holding company and its external auditor to discuss matters auditor.
or both as the Central Bank considers relevant to the Central Bank's responsibilities which have arisen in
necessary; or the course of the statutory audit of that bank or financial holding
company including relevant aspects of its business, its accounting
(b) engage an independent external auditor to and internal control systems, and its annual financial statements and
audit the whole or part of the accounting management letter.
records of the bank or financial holding
company.
120 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 121

Termination 115. (1) An external auditor of a bank or financial holding PART XIV - MISCELLANEOUS
of external company shall cease to act as an external auditor if -
auditor’s 116. (1) Where a person is dissatisfied or aggrieved with a Review of
a ppointment.
(a) the Central Bank requests the bank or decision of the Central Bank he may petition the Central Bank in decisions of
financial holding company in writing to writing within 10 working days of the said decision for a review. Central Bank.
revoke the appointment of the external
auditor (2) The Central Bank shall make a decision on a petition
under subsection (1) within 6 months after receipt of complete
(b) the external auditor or a member of the information and accordingly inform the petitioner of its decision.
external auditor's firm or establishment
becomes a director of that bank or financial 117. (1) Except as otherwise provided in this Act any person Offences.
holding company; who contravenes any provision of this Act or statutory instruments
made under this Act commits an offence and shall be liable on
(c) the external auditor resigns by notice in conviction to a fine or to imprisonment for a term not exceeding 2
writing to that bank or financial holding years or both the fine and imprisonment.
company;
(2) Where an offence under this Act is committed by a
(d) the external auditor ceases to qualify under body of persons, then in the case of a -
subsection (4) of section 111 for appointment
as auditor of a bank or financial holding (a) body corporate, any person who at the time
company; or the offence was committed was a director,
manager or officer of that body corporate;
(e) the external auditor is otherwise removed by
a decision taken at an annual general (b) firm, every person who at the time the offence
meeting of that bank or financial holding was committed was a partner or principal
company or officer of that firm; or

(f) the external auditor has served out the (c) partnership, every person who at the time
maximum period prescribed by the Central the offence was committed was a partner,
Bank for external auditors. shall be deemed to have committed that
offence and shall be liable to an administrative
(2) A bank or financial holding company shall comply penalty;
with a request of the Central Bank that the appointment of its external
auditor be revoked. (3) In any proceedings for an offence under this Act it
shall be a defence for the person charged to prove that -
(3) An external auditor who does not comply with
provisions of this Section commits an offence and is liable on summary (a) the offence was committed without his
conviction to a fine or to a term of imprisonment of not less than one knowledge or connivance; or
year or both.
(b) he took all reasonable precautions and
exercised all due diligence to prevent the
commission of the offence.
122 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 123

(4) Notwithstanding anything contained in this Act or (d) under any law in force in Sierra Leone.
any other law, the Central Bank may compound any offence
punishable under this Act by accepting such sums of money as it (2) Except in the performance of his duties under this Act
thinks fit, not exceeding the maximum fine to which a person would a director, manager, officer, employee or agent of a bank or a financial
have been liable if he had been convicted of an offence under this holding company shall during or after his relationship with the Central
Act. Bank preserve and aid in preserving secrecy with regard to all matters
relating to the affairs of a bank or financial holding company and of
(5) Where an offence under this Act has been any of its customers that may come to his knowledge in the
compounded no proceedings shall be instituted or continued against performance of his duties.
such person.
(3) A defaulting customer who refuses to pay his debts
Maintenance 118. (1) A person who acquired knowledge in his capacity as to a bank shall not be covered under this section.
of secrecy.
director, manager, officer, employee or agent of a bank or financial
holding company, or as its auditor, inspector, potential bidders, (4) The duty of confidentiality imposed under this section
administrator, receiver or liquidator, shall not disclose to any person shall not apply where a customer -
the identity, assets, liabilities, transactions or other information in
respect of depositors and any other customer except - (a) issued with a credit card or charge card by a
bank, has had the card suspended or
a) with written authorisation of the depositors cancelled by that bank by reason of default
and any other customer or the heirs or legal in payment, and the bank discloses
representatives of such depositors and any information related to the name and identity
other customer; of the customer, the amount of indebtedness
and the date of suspension or cancellation
(b) for the purpose of the performance of his of the credit card or charge card to another
duties within his scope of employment in bank or institution that is issuing credit cards
conformity with this Act; or charge cards in Sierra Leone;

(c) when lawfully required to make the disclosure (b) is declared bankrupt or in case of a company
by a court of competent jurisdiction; or is insolvent and or being wound up;
124 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 125

(c) has died and the information is required by (4) The Central Bank shall seek reimbursement for any
the appointed personal representative of the outlays in defending against claims where the court ultimately makes
deceased or the testamentary executor solely a finding that the Central Bank did not act in bad faith".
in connection with the succession to the
estate. 121. (1) Property held by a bank shall be presumed to be Abandoned
property.
abandoned if the owner has, within a period of 5 years immediately
(5) A person who contravenes this section commits an after the date of deposit or payment of funds towards the purchase
offence and is liable on conviction to a fine or imprisonment for a of shares or other interests or the issuing instruments or the date
term not exceeding 2 years or both fine and imprisonment. upon which funds held in a fiduciary capacity became payable or
capable of being distributed or the expiration of the period for which
Publication 119. (1) Notwithstanding anything contained in this Act the a safe deposit box was rented, as the case may be-
of data by
Central Bank. Central Bank may publish information obtained by it from a bank in
a consolidated form as it considers fit and in the public interest. (a) not increased or decreased the amount of the
deposit or funds;
Immunity of 120. (1) The Central Bank, its officers, board members,
Central Bank. (b) not increased or decreased the principal or
employees, or agents, shall not be liable for, or in respect of, any loss accepted payment of principal or income in
or damage suffered or incurred by any person arising from a decision respect of funds held in a fiduciary capacity;
taken or action performed in absence of bad faith in the exercise of a
(c) not had any correspondence with the bank
function, power or duty in terms of this Act. concerned regarding the property;

(2) The Central Bank shall indemnify its officers, Board (d) not otherwise indicated an interest in the
property as evidenced by a memorandum
members, employees, or agents, for any legal costs they incur in
concerning them by the bank.
defending a legal action under subsection (1).

(2) The property referred to in subsection (1) include -

(3) This section shall not be applicable where the action
or claim arises out of the negligence or a wrongful act of the Board (a) a general deposit (demand, savings or
members, employees or agent of the Central Bank. matured time deposit) made in Sierra Leone
with that bank together with an interest or
dividend exc1uding any lawful charges;
 126 No. 6 The Banking Act 2019 No. 6 The Banking Act 2019 127

(b) funds paid in Sierra Leone towards the 124. Unless otherwise provided in this Act, the Central Bank Schedule of
penalties.
purchase of shares or other interests in a
may by statutory instrument prescribe a schedule of penalties for
bank together with interest or dividend
excluding any lawful charges. violation of this Act.

Minimum 122. (1) The Central Bank may, after consultation with banks, Repeal and
125. (1) The Banking Act, 2011 is hereby repealed. savings.
uniform at any time by notice published in at least one newspaper of general
business hours
and bank circulation in an affected community, fix minimum uniform hours of
holiday. business for the branches and offices of banks in any specified area. (2) Notwithstanding subsection (1)-

(2) The Central Bank may, at any time by a notice (a) a licence granted under the repealed Act,
published in at least one newspaper of general circulation in an which is in force at the coming into operation
affected community or communities, declare any day to be a bank of this Act shall continue in force as if granted
holiday and directing that no bank shall transact any business with under this Act;
the public on a bank holiday.
(b) all regulations, rules, guidelines, orders,
(3) A bank holiday shall not necessarily be a public notices, directives and instruments
holiday. prescribed or issued under the repealed
Act and in force at the coming into operation
Civil 123. (1) A pecuniary penalty not specifically designated as of this Act shall, unless they are inconsistent
proceedings.
fine incurred and imposed under this Act shall be deemed to be a with any provision of this Act or until they
debt owed to the Central Bank. are expressly revoked, remain in force;

(2) A pecuniary penalty referred to in subsection (1) (c) a bank in existence before or at the
which has not been paid to the Central Bank may be sued for and commencement of this Act carrying on
recovered in a court by the Central Bank. banking business that is incompatible with
this Act shall within a period of 90 days after
(3) In any suit under this section, production of a the coming into operation of this Act
certificate signed by the Governor giving the name and address of regularise its activity to the satisfaction of
the defendant and the amount of the pecuniary penalty due shall be the Central Bank to bring it in conformity
sufficient evidence of the amount owed by the defendant. with this Act.