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Directive
No. FXD/31/2006
Amendment
to Directive No. FXD/25/2004
Establishment
and Operation of Foreign Currency Account for Non-Resident
Ethiopians and Non-Resident Ethiopian Origin
Whereas, it is necessary to create
incentives for Ethiopians in Diaspora to maintain foreign currency
account at home country so as to encourage domestic investment;
Whereas, operation of foreign
currency account by non-resident Ethiopians can support the
international foreign exchange reserve and ease the balance of
payments problem of the country;
Whereas, allowing Ethiopians abroad
to open foreign currency account could encourage foreign direct
investment;
Now, therefore, in accordance with Articles 6
and 61 of the Monetary and Banking Proclamation No. 83/1994, the
National Bank of Ethiopia hereby amends Directive No. FXD/25/2004
issued on the establishment and operation of foreign currency
account for non-resident Ethiopians in domestic commercial banks.
Article
1
Definitions
For
the purpose of these Directives, unless the context provides
otherwise,
1.1
“Non-resident Ethiopians” shall mean:
a)
All Ethiopian nationals living and working abroad for more
than one year
b)
Business entities owned by non-resident Ethiopians and
located outside the Ethiopian territory for more than one year
c)
Ethiopian nationals living and working abroad or in due
process of leaving abroad for work for more than one year and who
can produce authenticated documents
1.2
“Non-Resident (NR) Foreign National of Ethiopian
Origin” shall
mean
(1)
A non-resident and holder of a valid identification card,
obtained pursuant to Proclamation 270/94, attesting that he/she is
a foreign national of Ethiopian origin.
(2)
A business entity owned by non-resident foreign nationals
of Ethiopian origin and located outside the Ethiopian territory.
1.3
“Non-
Resident (NR) Foreign Currency Account” refers to the two types of account stated under
Article 4 of this Directive and maintained in foreign currency by
the debit of which funds can be transferred abroad and/or used
locally without any permit from the Bank.
1.4
“Opening Banks” are authorized commercial
banks in Ethiopia,
1.5
“The Bank” is the National Bank of
Ethiopia,
1.6
"The account" is a foreign currency
account opened by non-resident Ethiopians or foreign nationals of
Ethiopian origin.
1.7
“Certificate” means commercial banks’
deposit certificate issued to the depositor in recognition of
his/her ownership of the deposited sum of money;
1.8
“Foreign Currencies” refer the three types
of currency indicated under Article 5 of this Directive and which
the Bank accept for purposes of foreign exchange.
1.9
“Deposits”
shall
mean foreign currency deposits received by the opening bank. They
shall also include cash certificate, cheque or other deposits of
similar nature.
Article
2
Eligibility
Criteria
2.1
The following individuals and/or enterprises may open a
foreign currency account in any of the authorized commercial banks
in Ethiopia.
a)
Non-Resident Ethiopian
b)
Non-Resident Foreign Nationals of Ethiopian origin
2.2 Non-Resident
Ethiopians/foreign nationals of Ethiopian origin shall present the
following documents to open an NR Foreign Currency Account in
domestic banks.
a)
Application forms properly filled and signed by the account
holder
b)
For individuals, valid passport and/or identification card
of foreign nationals of Ethiopian origin of the applicant
c)
For businesses, certificate of ownership entitlement for
the organization and/or article and memorandum of association.
2.3 Applicants
who could not be physically present to open the NR account in the
domestic banks shall use the Ethiopian Embassies, correspondent
banks or remittance service providers nearby to prove their
identities.
Article 3
Opening Foreign Currency
Account
3.1
A foreign currency account may be opened for
individuals and/or enterprises that fulfill the eligibility
criteria set under Article 2 (2.1) of this Directive.
3.2
Persons residing abroad can open such accounts in
person or by post in his/her name. Opening banks may also
establish contact with potential account openers using e-mail,
fax, telex and/or other electronic media authorized by the Bank.
The bank should, however, receive authenticated documents
afterwards to open the accounts.
3.3
A request for opening an account for deposit in
foreign currency shall be accompanied by a letter of application
and a specimen signature.
3.4
An individual and/or enterprises may open all or
one of the foreign currency accounts enumerated under Article 4
(4.1) of this Directive.
3.5
Power of attorney holders are not allowed to open
foreign currency accounts and credit the account on behalf of
non-residents and/or foreign nationals of Ethiopian origin.
However, power of attorney holders are allowed to withdraw
from these accounts for the purposes enumerated in Article 7.1 of
this Directive in addition to investment purposes provided that
the document explicitly empowers them to operate the accounts.
3.6
The minimum amount required for an initial deposit
to open current accounts shall be USD 100 or its equivalent in any
of the eligible currency under Article 5 (5.1) of this Directive.
3.7
The minimum amount required in an initial deposit
to open a fixed deposit foreign currency account shall be USD
5,000 or its equivalent in any of the eligible currencies under
Article 5 (5.1) of this Directive.
3.8
The maximum amount to be deposited in current
accounts shall be USD 50,000.
3.9
Two or more eligible joint depositors may together
open a single account.
3.10
An individual may open current account in only one
of the domestic banks whereas he/she may open fixed deposit
accounts in more than one banks
Article
4
Types of Permitted Account
Commercial
banks may open the following types of non-resident foreign
currency accounts
a)
Fixed (time deposit) account, which takes the form of a
deposit certificate, issued in the name of the depositor. Maturity
period may vary based on the agreement made between the depositor
and the opening bank. However, the minimum maturity period for
such an account shall be three months.
b)
Current account, which takes the form of current deposits
where withdrawals may be made at any time upon demand by writing a
check and/or a pre-arranged procedure adopted by the opening bank.
c)
Non-repatriable Birr account which may take the form of
saving deposit that can be used for local payments only.
Article 5
Types of Currency
5.1
Banks are required to maintain foreign currency
accounts in the following types of currency only.
a)
The US Dollar
b)
Pound Sterling
c)
Euro
Article 6
Crediting
the Account
6.1
A foreign currency account opened by non-resident
Ethiopians shall be credited only with resources transferred or
originated from abroad in one or a combination of the following
ways.
a)
Direct crediting of the account from foreign sources
through the banking system.
b)
Traveler’s cheques brought by the account holder from
abroad
c)
Cash notes provided that the account holder presents a
signed and sealed foreign currency declaration form from the
Customs Authority
d)
Check deposits that originate from abroad
e)
A transfer from another type of non-resident foreign
currency account owned by individuals and/or enterprises.
f)
Receipt through international payment cards/credit cards
Article
7
Use
of the Account
7.1
The foreign currency accounts may be used
a)
To make local payments in Birr
b)
To transfer to other foreign currency accounts, which may
include transfer to another foreign currency accounts in any of
the authorized commercial banks in Ethiopia.
c)
To make foreign payments such as import and other foreign
service payments provided the account holder has the required
business license to do so
d)
To effect transfer abroad
e)
To convert into a Birr account at the ruling exchange rate
f)
Payments for bank charges, if any, levied by the opening
bank.
g)
To serve as collateral or guarantee for loans or bids
7.2
Current accounts may be withdrawn against a cheque written
and a withdrawal slip or according to any other pre-arranged
procedure.
7.3
Opening bank maintaining these accounts shall allow
repatriation abroad of the deposits opened in any of the account
stated in Article 4 a and b of this Directive upon the request of
the account holder.
7.4
Repatriation of the deposits shall not exceed the initial
balance plus any interest receipt on the deposit amount.
Article 8
Closure of the Account
8.1
A fixed deposit foreign currency account stated
under Article 4 of this Directive can be closed upon request by
the depositor with a prior notification of not less than 7 working
days. Withdrawal of the fund prior to maturity is subject to
interest penalty.
8.2
If a fixed deposit is not closed on maturity, the
opening bank in consultation with the depositor may renew it.
8.3
A fixed account may be withdrawn against the
deposit certificate and the specimen signature previously left
with the bank or according to pre-arranged procedure
8.4
A
foreign currency account will be closed if the fund transferred to
the account is found to be through money laundering or from
terrorist financing services.
Article
9
Interest Rates
9.1
Interest shall not be paid to a non-resident
foreign currency current account.
9.2
Commercial banks are allowed to set their own
interest rate on non-resident fixed foreign currency account
provided that the interest rate does not exceed the prevailing
LIBOR rate.
9.3
Interest on a non-resident fixed foreign currency
deposit shall be payable only if they are kept for a minimum
period of three months.
9.4
Payment of interest on fixed deposit maturing on
Saturday/Sunday/holiday/non-business working day shall be
determined based on the succeeding working day.
9.5
Interest rate payment on non-repatriable Birr
accounts shall be double of the minimum saving deposit rate set by
the NBE.
Article
10
Issuance of Certificate
10.1
The opening bank shall issue to the depositor a
fixed deposit certificate in depositor’s name if the established
account is a fixed account.
10.2
The interest rate that the opening bank agrees to
pay shall be clearly stated on the deposit certificate
10.3
For a current account, the opening bank shall issue
to the depositor a chequebook or an advice notifying of the
opening of the account.
10.4
In the case of Article 3.2, the certificate of
deposit (CD), or a chequebook may be kept in the custody of the
opening bank and a certificate of custody shall be issued to the
depositor or the deposit book may be sent to the depositor through
post if he/she wishes to do so.
Article
11
Conversions
of Non-Resident Foreign Currency Accounts
To
Resident Birr Account
11.1
When non-resident Ethiopians change their permanent
residence to Ethiopia, their non-resident forex account shall be
converted to resident Birr account at the prevailing inter-bank
exchange rate by the opening bank; or
11.2
For fixed deposit, the account may remain as non-resident
foreign currency account if the account holder returns to Ethiopia
for permanent settlement before the maturity date of the account.
Upon maturity of the account, however, such deposit should
be converted to resident Birr account.
11.3
Provision of Article 7.1(e) of this Directive shall apply
if requested by the account holder.
Article
12
Prohibitions
12.1
Foreign exchange acquired either
from forex bureaus or any other local sources or foreign exchange
held locally shall not be used to credit and/or open a foreign
currency account.
12.2
Opening banks shall not honour
cheque drawn or endorsed by a non-resident foreign currency
account holder in favour of a resident who does not hold similar
non-resident foreign currency account.
Article
13
Obligations of the Opening Bank
13.1
The-opening bank has the following obligations: -
a)
It shall be responsible for maintaining confidentiality of
the account of the depositor
b)
It shall send a report based on the attached format every
month to the Banking and Foreign Exchange Directorate and Economic
Research and Monetary Policy Directorate of the Bank within 20
days after the end of each month
c)
The overall open foreign currency position of each bank at
the close of each business day shall not exceed 15% (fifteen
percent) of its total capital as per the Directive No. SBB/23/97.
Article
14
Provision
of Incentives
Article
15
Inspection
The
Bank may undertake inspection of any opening bank at any time to
verify that the opening bank complies with the provisions of this
Directive.
Article
16
Penalties
16.1
Any bank that violates any of the provisions of this
Directive shall be subject to penalties in accordance with the
Licensing and Supervision of Banking Business Directive No.SBB/27/2001.
16.2 Any
bank that fails to comply with the reporting requirement specified
under Article 13.1 (b) shall pay a penalty of Birr 1,000 per day
of delay. The penalty so assessed will be automatically deducted
from the bank's account maintained with the NBE.
16.3 Where
an account holder violates the provision of this Directive, the
opening bank may suspend the account and immediately report the
case to the Bank.
Article 17
Repeal
Regulation
related to the establishment and operation of foreign currency
account for non-resident Ethiopians and non-resident Ethiopian
origin issued under directive No. FXD/25/2004 is hereby repealed
and replaced by directive No. FXD/31/2006.
Article
18
Miscellaneous
Provisions
This
Directive shall enter into force as of the 28th day of
August 2006.
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Number
and Balance of Accounts Opened by Non-Resident Ethiopians
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Name
of Bank: --------------------------------
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Month
: -------------------------
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Type
of Account
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Number
of Accounts Opened
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Total
Account Balance
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Current
Account
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USD
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Euro
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Pound
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Fixed
Deposit Account
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USD
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Euro
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Pound
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Non-Repatriable
Birr Account
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