Opening bank accounts now made easier for low-risk customers

The content originally appeared on: INews Guyana

The process for low-income earners to open accounts at any of the local commercial banks has now been made simpler and hassle-free.

During his presentation of Budget 2023 earlier this week, Finance Minister, Dr Ashni Singh reiterated the Government’s commitment to making financial products and services readily accessible to citizens and people living and working in Guyana.

“We have launched, recently, an initiative designed to simplify the process of opening a bank account for low-risk customers. This is expected to ease the hassle that these customers typically encounter, promote deeper intermediation, and facilitate greater financial inclusion,” the Finance Minister stated.

Only last week, the measures for the local banks to simplify financial services were published in the Official Gazette and according to Bank of Guyana (BoG) Governor, Dr Gobind Ganga, they took effect immediately.

“That is already implementable… That is in effect immediately,” the Central Bank Governor stated.

According to the gazetted document, which was sent to all the licensed financial institutions in Guyana, the BoG has simplified the requirements to open and maintain a bank account for low-risk customers by making corresponding amendments to sections of SG No. 13.

It was noted that this approach is consistent with Section 17 of the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Act 2009 and is aligned with a risk-based approach as well as with international best practices in order to promote financial inclusion in the country.

The low-risk customers to benefit from this initiative include small savers with monthly deposits up to $500,000.

“Examples of low-risk customers include individuals who belong to lower economic strata of the society whose accounts show small balances and low turnover, salaried employees whose salary structures are well defined, Government departments, and Government-owned companies, regulators and statutory bodies,” the BoG detailed in a circular published on January 14.

With these new measures, in order to open an account for a low-risk customer, a bank would now have to: verify the customer’s identity with only one form of identification required (a National Identification Card, a passport or driver’s licence); obtain a proof of address but a self-attestation is acceptable if no other proof of address is available; obtain the source of income for which self-attestation is also acceptable if no other source is available, and obtain the Tax Identification Number (TIN).

The commercial banks are expected to provide the forms for self-attestation with a specimen outlined by the Central Bank.

“While the objective is to remove impediments to opening a bank account, a bank should thereafter verify all the information provided by the customer through other reliable and independent means such as the postal service or the use of available databases, and maintain documentation of same. It is important to note that reliable and independent means do not imply requesting additional documents from customers,” the gazetted document detailed.

Additionally, it was stipulated that after a customer has been rated as low-risk, Know Your Customer details should be updated once every seven years. The prescribed time limit shall apply from the date of the opening of the account or the last verification date.

These amendments to the AML/CFT Act come on the heels of the Guyana Government recognising the burdensome process within the local banking system.

In fact, only at a recent engagement with key Private Sector stakeholders, including representatives from the major commercial banks in Guyana, discussions were held on the difficulties persons face in doing simple bank transactions.

Vice President Bharrat Jagdeo, who was at the meeting alongside President Dr Irfaan Ali at State House on January 5, pointed out that the restriction should be eased for persons conducting transactions of up to $500,000, whereby they can just walk in without any difficulty and get it done.

Additionally, they would not have to specify the use of these monies to the institution.

“You walk in. You can open an account and open an account without all this fancy forms to fill up; withdraw your money without telling the bank what you’re using it for. It’s causing disintermediation here. People are scared of going in the banks,” the VP had stated.

Depending on the level of transactions, different requirements would be needed. Those depositing higher figures on an annual basis would have to go through the normal channel.

Meanwhile, President Ali had told the commercial banks that in light of the current developments, consideration should be made to rethink their strategies regarding infrastructure.

“Because of the infrastructural transformation that is taking place, you need to rethink your strategy with the suppliers and the input for infrastructure. We have gone out and given quarry licence, but then a lot of the projects are held up at the bank. And there is a clear demand for quarrying for which we now have to push to get imported,” he underscored.

According to the Head of State, the banks must match what is happening in the country.“The banks must follow the development of the country and a clear path to match what is happening with the development of the country,” the President stressed.