Financial Crime World

Chad’s Banking System: Compliance Procedures for Banks

Overview of Chad’s Banking System

The banking system in Chad is limited in size and services, with a cash-based economy dominating transactions. However, there are ten commercial banks operating in the country, offering financial instruments such as letters of credit, short-term loans, foreign exchange operations, and long-term savings instruments.

Regulation and Oversight

Commission de Banque de l’Afrique Centrale (COBAC)

The COBAC regulates Chad’s banking sector, ensuring that all commercial banks operate within the country’s laws and regulations. The Central African Monetary Union (CEMAC) also plays a crucial role in guaranteeing the convertibility of the Central African CFA Franc (FCFA) into Euro at a fixed rate.

Foreign Exchange Controls

Restrictions on Transferring Funds

There are no restrictions on transferring funds into Chad, but several restrictions apply to money departing the country. Individuals transferring more than $1,000 must provide documentation of the source and purpose of the transfer. Transactions exceeding $10,000 for individuals and $50,000 for companies are automatically notified to COBAC.

U.S. Banks and Local Correspondent Banks

International Transfers

There are no U.S. banks operating in Chad, but several local banks have correspondent banks in the U.S. and Europe, facilitating international transfers through Society for Worldwide Interbank Financial Telecommunication (SWIFT) identification codes.

Compliance Procedures for Banks

Chad’s banking sector is subject to various compliance procedures, including:

  • Providing documentation of the source and purpose of transactions exceeding $1,000
  • Notifying COBAC of transactions exceeding $10,000 for individuals and $50,000 for companies
  • Obtaining approvals from the Central Bank for transfers exceeding $800,000

New Legislation and Restrictions

Holding Foreign Currency in Chad

A new legislation restricting foreign exchange holdings and cash outflows was delayed in 2020. Holding large sums of foreign currency in Chad raises risks of government appropriation through legal procedures.

Chad’s banking system is subject to various compliance procedures, including regulations on foreign exchange controls and restrictions on transferring funds. Banks operating in the country must adhere to these procedures to ensure smooth transactions and avoid potential risks.