‘Empower regulators to deal effectively with financial fraud’

Regulators of Ghana’s financial sector must be given subpoena powers to demand for information from unregulated entities operating in the sector to clamp down on fraudulent schemes.

A lecturer at the Finance and Banking Department of Central University College, Dr. Benjamin Amoah, who made the proposition explained that, the move would ensure prompt response, including temporary injunction and freezing of assets of entities suspected to be fraudulent.

The financial sector regulators include the Bank of Ghana (BOG), Securities and Exchange Commission (SEC), National Insurance Commission and National Pensions Regulatory Authority, among others.

Speaking at a lecture organised by the Institute of Chartered Accountants, Ghana (ICAG) in Accra last Friday, he said, such powers would allow the regulators to insist on real time reporting from licensed institutions to help identify challenges in good time and impose civil or administrative sanctions on faulted ones to deter others from engaging in illegalities.

It was on the theme, ‘Addressing the threats of Ponzi Schemes in Ghana: A shared responsibility.’

Collaboration and cooperation between the local and international regulators, Dr Amoah noted that was necessary to address financial fraud as funds mobilised by Ponzi Schemes may cut across different markets through different financial instruments.

He urged for development of specific laws and establishment of special courts with the requisite skills and experience to deal with fraudulent investment schemes as well as regular capacity building for the needed legal skills and expertise for regulators and judges to handle such cases.

Additionally, Dr Amoah called for establishment of a private team to be known as the Ghana Investor Protection Corporation as part of the SEC set-up to cover securities and cash for investors when their brokerage firms fails or goes out of business.

In order to address the threats of Ponzi Schemes, Mr Emmanuel Ashong-Katai, Head of Policy, Research and Information Technology  (IT) Department, SEC, said intensive financial literacy campaign through both traditional and social media was necessary to keep the citizenry well informed and financially literate before undertaking investments.

Removal of regulatory gaps and overlaps in the financial sector and redefining of Ghana’s financial regulatory architecture, which was currently multi-layered, he said would deal with the possibility of regulatory arbitrage and abuse.

Due to limitations in provisions in the Criminal Offences Act, which do not go far enough to deal with perpetrators of Ponzi Schemes, he urged for a comprehensive legislation on such schemes to enable successful prosecution as well as an effective whistleblower financial incentive framework.

Head of Payment Systems, BOG, Dr Settor Amediku, noted that Ponzi Schemes negatively impact the economy through lack of access to loanable funds to businesses and loss of trust and confidence in the financial system.


Photo by Mercy

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