Positioned along the Atlantic coastline of West Africa, Sierra Leone is a nation rich in heritage, culture, and natural wealth. With a population exceeding 8 million and a GDP of around $4 billion, Sierra Leone presents a distinctive investment opportunity.
The nation’s advantageous location, along with its rich natural resources such as diamonds, iron ore, and bauxite, has drawn foreign investments in the mining industry. Nevertheless, Sierra Leone is also broadening its economy by investing in agriculture, tourism, and renewable energy sources.
The government has diligently worked to enhance the business climate and lure foreign investors. Important economic indicators include a rising GDP, increased exports, and a fairly stable currency.
1. Legal framework
1.1. What laws and regulations govern exchange control regime in your jurisdiction?
In Sierra Leone, exchange control is primarily governed by the following:
- Bank of Sierra Leone Act 2019;
- Banking Act 2019;
- Prohibition of quoting price and making payment in foreign currency in Sierra Leone; and
- Prohibition of the holding and/ or export of foreign currency in excess of Ten Thousand United States Dollars or its equivalent outside the banking.
1.2. Which bilateral and multilateral exchange control instruments have an effect in your jurisdiction? How is regulatory cooperation and consolidated supervision ensured?
Sierra Leone is a member of various international organizations, such as the International Monetary Fund (IMF). This membership requires the nation to conform its exchange control regulations to international benchmarks and regional accords. Involvement in this organization enhances regulatory collaboration and integrated oversight, allowing the Bank of Sierra Leone to work alongside other central banks and financial regulators to uphold financial stability.
1.3. What are the current priorities of regulators and how do they work with the banking industry?
The Bank of Sierra Leone is currently focused on improving financial inclusion, bolstering the stability of the financial sector, and advancing digital financial services. To ensure alignment with regulatory goals, the BSL interacts with the banking sector through frequent consultations, policy discussions, and joint initiatives.
2. Exchange control regime
2.1. Can a subsidiary or affiliate repatriate money to a non-resident parent company?
Yes, Subsidiaries or affiliates in Sierra Leone are permitted to repatriate profits and capital to non-resident parent companies, provided they comply with the Bank of Sierra Leone's reporting requirements and ensure that all necessary taxes and obligations have been fulfilled.
2.2. Is there limitation of transfer of foreign currency to procure goods or payment for services to non-resident person?
There are no explicit restrictions on the transfer of foreign currency for the purpose of acquiring goods or services from entities located outside the country. Nonetheless, these transactions must be carried out through authorized dealers, and appropriate documentation is necessary to guarantee adherence to anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
2.3. Can a subsidiary easily make payments for intra-group transactions?
Yes, a subsidiary can make payments for intercompany transactions.
2.4. Are there rules against intercompany netting off?
No, there are no rules against intercompany netting off.
2.5. Are permits required to transfer money to a third party or non-resident entity for procurement of goods or services?
Sending payments to non-resident entities for products or services generally does not need special permissions. Nevertheless, these transactions should be conducted through the authorised banking system and adhere to the reporting requirements established by the Bank of Sierra Leone.
2.6. What requirements or documentation must be in place before banks authorize requests for international transfers?
Banks in Sierra Leone require the following before authorising international transfer requests:
- Valid Identification;
- Completed transfer form; and
- Supporting documentation such as invoices, contracts, or other relevant documents validating the transfer.
2.7. Have there been recent directives issued by your Central Bank on Exchange Control?
The most recent directives were on the Prohibition of Quoting Prices and Making Payments in Foreign Currency in Sierra Leone and the Prohibition of the Holding and/or Export of Foreign Currency in Excess Of Ten Thousand United States Dollars or its Equivalent Outside The Banking System These were issued on 20 August 2019.
3. Exchange control contraventions
Enforcement
3.1. Which entities are responsible for enforcing the relevant laws and regulations? What powers do they have?
The Bank of Sierra Leone serves as the main authority for implementing exchange control laws and regulations. It possesses the power to carry out inspections, demand information, impose fines, and take corrective measures against entities that do not comply.
Sanctions
3.2. What sanctions are applicable in the event of a violation of the exchange control regime?
- Violating exchange control regulations can result in penalties such as fines, license revocation, operational restrictions, and in extreme cases, legal action. The severity of the penalty depends on the nature and extent of the breach.
- Non-compliance with the Bank of Sierra Leone’s directive on prohibiting quoting prices and making payments in foreign currency may attract a fine of 100 million Leones or three (3) years imprisonment or both.
- Failing to accurately report or deliberately misreport foreign exchange transactions to the Bank of Sierra Leone may result in the cancellation of the license for the offending bureau.
- Traveling or attempting to travel out of Sierra Leone with foreign currency in excess of USD $ 10,000.00 will result in the forfeiture of the excess amount to the Bank of Sierra Leone.
4. Trends and forecasts
4.1. How would you describe the current exchange control regime and trends in your jurisdiction? Are there any plans for further developments in the next 12 months, including proposals for legislative reforms?
The exchange control regime in Sierra Leone can be described as fairly liberal. Sierra Leone's foreign exchange control system seeks to strike a balance between enabling legitimate global transactions and ensuring financial stability. There is a continuous initiative to update financial regulations to conform to global best practices.
4.2. Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with regard to cryptocurrencies or financial technologies in general?
There are no defined laws and regulations regarding cryptocurrencies. However, the government is interested in using fintech innovations to boost financial inclusion. In particular, Sierra Leone launched a blockchain-based credit bureau to improve credit accessibility for its citizens. As the country further explores innovative financial solutions, future legislative changes in the fintech sector are expected.
