Financial Crime World

SAO TOME AND PRINCIPE: BANKING COMPLIANCE REGULATIONS IN THE SMALL ATLANTIC ISLAND NATION

Modernizing Payment Systems

In May 2021, the government of Sao Tome and Principe introduced payment platforms for VISA and MasterCard, a move aimed at modernizing the country’s payment systems. This development is seen as a major step towards promoting financial inclusion in the country.

Banking Operations

The Central Bank of Sao Tome and Principe (BCSTP) is responsible for supervising the national financial system, including selling hard currencies and establishing indicative interest rates. The country’s national currency is the dobra (STD), which has been pegged to the Euro at an exchange rate of 1 Euro to 24.50 STD since January 2010.

Banking Sector Overview

The banking sector in Sao Tome and Principe includes four commercial banks, with two also operating as investment banks:

  • Banco Internacional de Sao Tome e Principe (BISTP): A joint venture between the government and Portuguese bank Caixa Geral de Depositos and Angolan Bank.
  • ECOBANK: Based in Lomé, Togo.
  • Afriland First Bank: Based in Cameroon.
  • BGFI: Based in Gabon.

Foreign-Exchange Controls

The BCSTP has implemented measures to regulate foreign exchange transactions. The Central Bank sells hard currencies and establishes indicative interest rates. Repatriation of capital is possible with prior authorization.

U.S. Banks and Local Correspondent Banks

There are no U.S. banks operating in Sao Tome and Principe, with Portuguese banks used for transferring funds. Despite the challenges faced by the banking sector, the government has been working closely with the BCSTP to promote financial inclusion and increase access to raw materials for businesses.

Challenges and Insolvencies

In recent years, three commercial banks have been declared insolvent by the BCSTP:

  • Banco Equator: Based in Angola.
  • Banco Privado de Sao Tome: Based in Cameroon.
  • Energy Bank: Based in Nigeria.

The government has worked closely with the Central Bank to address these challenges and ensure a stable banking sector.

Conclusion

Overall, the banking compliance regulations in Sao Tome and Principe have undergone significant changes in recent years. While there are challenges to be addressed, the country is making efforts to promote financial inclusion and increase access to raw materials for businesses.