Financial Crime World

GUINEA’S BANKING REGULATION COMPLIANCE REMAINS A CHALLENGE

Overview

Guinea’s financial sector is small and dominated by the banking industry, with 19 active banks operating in the country. Despite efforts to improve regulation, compliance remains a significant challenge.

Banking Industry Overview

  • Guinea has a small financial sector, with 19 active banks operating in the country.
  • The Central Bank of the Republic of Guinea (BCRG) oversees the country’s banking and e-currency sector.
  • The BCRG manages foreign exchange reserves on behalf of the government and supervises banking and credit operations in Guinea and abroad.

Payment Methods

  • Cash transactions are the most common method of payment in Guinea, with even large business deals often completed in cash.
  • Checks and bank-to-bank transfers are not as prevalent, and mobile money is gaining traction but still lags behind traditional cash-based transactions.

Challenges in Banking Regulation Compliance

  • Credit to the private sector is low, at around 13.6 percent of GDP in 2022, compared to an average of 45 percent in Sub-Saharan Africa.
  • When credit is available, it often comes with expensive terms, with an average commercial lending interest rate of 15 percent in 2022.
  • The quality of products in the microfinance sector remains mediocre, with bad debt accounting for five percent of loans.

Banking Sector Concentration and Technological Lag

  • The banking sector is highly concentrated in Conakry and lags behind technologically.
  • Banks tend to favor short-term lending at high interest rates, while the microfinance sector grew rapidly from a small base but was hit hard during the 2014-2016 Ebola crisis.

Foreign Exchange Controls and Banking Presence

  • Foreign exchange controls are in place, guaranteeing the free transfer of capital.
  • No U.S. banks have local branches or operations in Guinea, but Vista Bank, a U.S.-owned regional bank, has acquired Guinea’s largest bank and is expanding its operations in the country.
  • EcoBank is the preferred bank for most U.S. dealings with FACTA reporting requirements.

Conclusion

Despite improvements made in 2017-2018, Guinea’s banking regulation compliance remains a challenge that needs to be addressed to ensure the stability and growth of the financial sector.