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Business news for Friday, February 19, 2021
Source: GNA
2021-02-19
The Bank of Ghana
The Bank of Ghana (BoG) has published the Crowdfunding policy to guide banks in this transaction.
This policy will promote innovative digital crowdfunding solutions that comply with customer privacy and data protection regulations, good governance and accountability, relevant regulations against money laundering and terrorist financing (AML / CFT), settlement procedures. and protection of the interests of taxpayers.
Known locally as “susu”, “nnoboa” or “ntoboa”, the concept of crowdfunding is not new in Ghana and has traditionally been used by families, groups or communities to mobilize money to meet the needs of its members. Market women, fishmongers, farmers, merchants, among other groups, have used this informal system, for example, to raise funds for businesses, payment of medical bills, funeral expenses and the education of their children.
In recent times, FinTech innovations in digital platforms and payments are revolutionizing the crowdfunding system by expanding the scope of bankable projects and the geographic coverage of the service beyond national borders. High sponsorship of the digital crowdfunding service has been observed among associations and corporate entities in order to raise money to finance development and humanitarian projects. This development has the potential to deepen financial intermediation and improve financial inclusion. As a result, it must have a regulatory environment conducive to orderly development.
Explaining how crowdfunding works, the central bank said that all crowdfunding models require both the fundraiser and the funder to perform due diligence on the platform before considering fundraising or financing a project on the platform. The funder has an obligation to further investigate the fundraiser’s profile.
Due diligence involves extensive research on the platform, fundraising and project review, project platform reviews, articles and project studies, seminars and trade associations.
The fundraiser and funder register on the selected platform and agree to the terms and conditions of the platform after due diligence has been performed.
Fundraiser is required to set funding limits and define rewards (if applicable). The fundraiser also submits documentation to the platform and provides answers to questions from sponsors. The funder, on the other hand, decides and confirms the financing amount and then makes the payment online into an escrow account.
Once the target amount is reached, the funds are transferred to the fundraiser minus the fees and commissions charged by the platform, while the funder receives any rewards owed based on the type of crowdfunding model. In case the goal is not reached, the funds are returned to the funders.
Explaining the basis for regulation, the BoG said: “The extensive regulatory reforms of the financial sector over the past ten (10) years have laid the foundation for the safe and efficient delivery of digital financial services.
“Laws promulgated as part of the reforms include the Payment Systems and Services Law of 2019 (Law 987), the Data Protection Law of 2012 (Law 843), the Law of Banks and Specialized Deposit Institutions of 2016 ( Law 930), the Securities Industry Law, 2016 (Law 929), Law against Money Laundering, 2008 (Law 749), Deposit Protection Law, 2016, (Law 931); and the Cybersecurity Act 2020. These laws together provide the legal basis for the digital delivery of crowdfunding products and services, on which the Bank of Ghana’s crowdfunding policy is based.
