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Licensing Procedure
Procedure for obtaining a Banking License

A bank is a corporate body licensed under the Financial Institution Law No.130 of 22 April 2012

 

To carry on banking business under this regulation and includes a commercial bank, mortgage bank, merchant bank, and all branches or offices of such bank in Somalia. Banking business’ is defined by the Financial Institution Law No.130 of 22 April 2012 as business that is carried out either in Somalia or abroad, from within Somalia;

  • Accepting from members of the public of money on deposit repayable on demand or at the expiry of a fixed period or after notice;
  • Accepting from members of the public of money on current account and payment on and acceptance of cheques;
  • Employing of money held on deposit or a current account, or any part of the money, by lending, investment or in any other manner for the account and at the risk of the person so employing the money
  • And any other activity that the Central Bank may by regulation defines as banking business.
Application Procedure
Applicants for banking business licenses should inform the Central Bank of Somalia (CBS) of their intentions and ask
for consultation as early as possible, in order to obtain its preliminary views before filing an application.
Statutory requirements

Before filing an application, the applicant should first satisfy itself that it meets the statutory requirements for the granting of a banking business license. In addition to requiring confirmation that the applicant is a legal person and of the location of the applicant’s head office (as mentioned above), the that CBS will not grant a Banking Business license unless it is satisfied as to.

  • The financial condition and history of the applicant.
  • The professional competence and integrity of the proposed management and directors.
  • The adequacy of its capital structure (both minimum and ongoing) and the earning prospects.
  • The convenience and needs of the area to be served.
  • The public interest which will be served by the granting of the license.
  • The reputation of the applicant and/or its controllers.
  • The financial soundness of the applicant and/or its controllers.
  • The convenience and needs of the area to be served.
  • Any suspicion of money laundering or terrorist financing by the applicant and/or its controllers.
  • Any other matter which the Central Bank may in its sole discretion consider as relevant.
Capital

The CBS will not grant a banking license if a locally incorporated bank has an initial capital of less than $5 million.
Furthermore, at all times, a locally incorporated bank must maintain a minimum capital base of not less than the 
above amount, or such higher amount as the CBS may determine.

Business Plan

All applications for a banking business license must be supported by a business plan including, among other things, a description of the activities to be conducted by the proposed bank, its organizational structure and any other information and documents that the CBS may require. Specifically, the business plan must include information to determine the bank’s.

  • Objectives and proposed operations.
  • Financial projections.
  • Capital and solvency, according to the Directive for the Calculation of the.
  • Funding policies.
  • Organizational charts.
  • Risk management.
  • Anti-money laundering procedures.
  • Outsourcing arrangements, if any. Internal audit arrangements.
  • Compliance arrangements and key compliance responsibilities.
  • Confirmation from external auditors is also required
Submission

An application for a banking license must be submitted to the CBS in writing.

 

An application for a banking license must be submitted to the CBS in writing by or on behalf of the applicant, along with the memorandum and articles of association, or any other incorporation document or determinative for the establishment of a legal person, as well as the various questionnaires and forms that CBS has prepared in order to cover the above mentioned requirements. All matters that may be of interest to the CBS in assessing the applicant’s ability to satisfy the CBS’s requirements must be disclosed during the process.