Eswatini Central Bank: Post-Monitoring Exchange Control Regulations

• The Bank has implemented a new approach to exchange controls, prioritizing post-monitoring of foreign currency transactions.
• Authorized Dealers now have more independence to process transactions with limited prior approval required.
• The Financial Surveillance Division is responsible for administering exchange control regulations and licensing Authorized Dealers with Limited Authority (ADLAs).
• Prudential standards for banks in Eswatini aim to safeguard depositors' funds and ensure the soundness of the financial sector.

The new approach emphasizes on post monitoring of foreign currency transactions.

A significant shift in approach to exchange controls has been implemented by the Financial Regulation department of the Bank, which now prioritizes post-monitoring of foreign currency transactions. This change allows Authorized Dealers more independence to process transactions with limited prior approval required. The new approach aims to improve the ease of doing business in Eswatini. The Financial Surveillance Division, responsible for administering exchange controls, has undergone a name change from Exchange Control to reflect this shift in emphasis. The division's main functions include monitoring compliance with exchange control regulations and licensing Authorized Dealers with Limited Authority (ADLAs).

The Bank's mandate for regulating and supervising banks and financial institutions is derived from various legislation, including the Central Bank Order of 1974 (as amended), the Financial Institutions Act of 2005, and the Money Laundering and Terrorism Financing Prevention Act of 2011 (as amended). The Basel Committee on Banking Supervision's Core Principles for Effective Banking Supervision are also a key reference point for the Bank's banking supervision practices. Prudential standards for banks in Eswatini relate to capital adequacy, asset quality, risk management, liquidity, and funds management. These standards aim to safeguard depositors' funds and ensure the soundness of the financial sector.

The recent change in approach to exchange controls has significant implications for Authorized Dealers and businesses operating in Eswatini. With more independence to process foreign currency transactions, these entities can operate with greater ease and efficiency. The post-monitoring approach also enhances the overall business environment in Eswatini, making it a more attractive destination for investment and trade. Furthermore, the Financial Surveillance Division's focus on exchange control regulations underscores the importance of maintaining financial stability and integrity in the country.

Lawyers should note the recent change in approach to exchange controls in Eswatini, which now emphasizes post-monitoring of foreign currency transactions, allowing Authorized Dealers more independence to process transactions with limited prior approval required.

Source: Original reporting via Financial Regulation