Financial Crime World

Mozambique’s Banking Sector: Regulation and Governance

In an effort to strengthen its financial system, Mozambique has implemented a range of regulatory measures aimed at ensuring the stability and solvency of its banking sector.

Risk Management and Capital Requirements

One key area of focus is risk management. Banks in Mozambique are required to:

  • Establish and disclose risk-mitigation policies, standards, and procedures that define responsibilities and lines of authority.
  • Control exposure to various risks inherent to the institution’s activities.

Another critical aspect is capital requirements. Banks must comply with:

  • Minimum levels of own funds
  • Ratios
  • Prudential limits
  • To ensure the sustainability of banking activities. The Mozambican financial system has adopted the Basel II core principles, which aim to improve risk management and capital adequacy.

Code of Conduct for Credit Institutions and Financial Companies

In addition, a Code of Conduct for Credit Institutions and Financial Companies has been enacted by the Bank of Mozambique (BM). This code sets out specific duties for financial entities, including:

  • Principles such as:
    • Assistance to clients
    • Clarity
    • Competence
    • Integrity
    • Legality
    • Non-discrimination
    • Respect for good banking practices

Banking Ombudsman and Class Actions

Unlike some other jurisdictions, Mozambique does not have:

  • A banking ombudsman in place.
  • The concept of class actions.

Deposit Guarantee Fund

The Mozambican banking system has established a Deposit Guarantee Fund (Fundo de Garantia de Depósitos) to provide protection for depositors in case of bank failure.

Mozambican Banking Sector: Overview

The Mozambican banking sector comprises a variety of credit institutions, each with its own scope of activity. Banking financial institutions are authorized to:

  • Undertake all activities within the scope of other credit institutions.
  • Accept deposits, credit and payment transactions, money market transactions, financial and foreign exchange transactions, and investment services.

Overall, Mozambique’s regulatory framework aims to promote a stable and solvent banking sector that is able to meet the needs of its citizens and support economic growth.