Financial Crime World

Sao Tome and Principe Overhauls Financial Regulations for Banks

The small island nation of Sao Tome and Principe has taken significant steps to modernize its financial regulations, aimed at boosting economic growth and stability.

Payment System Modernization

According to sources, the government has introduced payment platforms for VISA and MasterCard, marking a major milestone in the country’s payment system. This move is expected to enhance financial transactions and increase accessibility of services.

Banking System Overview

The banking system in Sao Tome and Principe is comprised of:

  • One Central Bank: Banco Central de Sao Tome e Principe (BCSTP)
  • Four commercial banks, including two that operate as investment banks

These institutions are responsible for facilitating financial transactions and managing foreign exchange reserves.

Challenges in the Banking System

However, the BCSTP has declared three commercial banks insolvent in recent years, citing poor financial management and lack of transparency. The affected banks include:

  • Banco Equator from Angola
  • Banco Privado de Sao Tome from Cameroon
  • Energy Bank from Nigeria

Foreign Exchange Controls

Foreign exchange controls are also in place to manage the country’s currency, the dobra (STD). The Central Bank sells hard currencies and sets indicative interest rates, while repatriation of capital is possible with prior authorization.

Government Efforts

The government has been working closely with the BCSTP to increase access to raw materials for businesses and boost economic growth. Despite challenges, the country’s financial regulatory framework is expected to improve its reputation and attract more foreign investment.

No US Banks Operating in Sao Tome and Principe

Interestingly, there are no US banks operating in Sao Tome and Principe, with Portuguese banks used instead for transferring funds.

Conclusion

For more information on the country’s financial regulations and trade finance options, readers are encouraged to consult the Trade Finance Guide or visit the US Department of State Investment Climate Statement website.