Bright Simons, Vice President of IMANI Africa, has stated that the practice of shipping fresh dollar notes from Accra to Monrovia, where they are deposited into vaults under police escort, is a contentious issue in both Liberia and Ghana.
According to Simons, this practice has long been a subject of controversy in both countries.
He clarified that the currency in question is not Liberian currency printed in London and transported via Ghana, but rather United States Dollar banknotes, which only the US has the authority to print.
He emphasized that the origin of these US dollar banknotes is uncertain and raised questions about their source since Liberia cannot print them.
“The Liberian Central Bank explains the practice by claiming that the fresh cargo of dollars is meant to replace old and mutilated USD currency notes. They claim that they send the old/defaced USD notes to the US Federal Reserve (the equivalent of a central bank in the US)”.
“The Federal Reserve then replaces the dirty and mutilated notes with fresh currency and sends them over to Liberia. The confusion is that there are a number of steps and middlemen involved that add a real layer of confusion”.
Bright Simons
Simons stated that the central bank of Liberia transferred funds from multilateral banks to the Federal Reserve Bank of New York, which then paid a private cash broker (e.g. Travellex) to deliver the funds to Liberia, with Travellex earning fees for its services.
He noted that Travellex transports the physical cash via commercial cargo services (e.g. Emirates or Kenyan Airways) to the Bank of Ghana’s vaults.
The cash, Simons explained, is then flown to Monrovia, escorted by police, and deposited into the Central Bank of Liberia’s vaults.
Simons wondered what fees the Bank of Ghana receives for its “overnight custody” service and what value this service adds considering the flights used are regular cargo services.
He further questioned why the Central Bank of Liberia does not use a direct cargo service from the USD source to Monrovia, bypassing Accra.
Lack Of Clear Protocol Sparks Concerns
Furthermore, Bright Simons pointed out that the controversy stems from the seemingly informal and discretionary approach taken in the Liberian arrangement, which lacks a clear and established protocol.
Simons highlighted that the United States has strict protocols in place for the repatriation of old USD banknotes and the export of new ones, demonstrating a strong commitment to regulating the global circulation of its currency.
He noted that the US has an “Extended Custodial Inventory (ECI) Program” for managing USD banknotes, which only authorized contractors like major banks and financial services companies (e.g. American Express) can participate in.
These contractors, Simons indicated, use strategically located vaults in global financial hubs like London to facilitate banknote exports and imports.
“In 2004, there was a big scandal when an ECI contractor, a big Swiss Bank, exploited the ECI program to supply physical cash from Zurich to some countries under US sanctions. Since then the US Federal Reserve Board has tightened the program further”.
“The question then is: did the central bank of Liberia use an authorized ECI vault in London to release the dollars to the cargo transporter? If it did, how come the specific Bank is not identified but only the freight forwarder, IBI Logistics?”
Bright Simons
Simons questioned how there is no record of the mutilated or old dollars being flown out of Liberia for replacement and why Liberia pays the full face value of the dollars to private brokers like Travellex.
He also wondered why the private brokers were never identified on the cargo manifest and why the 4907 HS Code was never used to ensure a more accurate description.
“Why are the latest FATF recommendations on the customs declaration of imported banknotes not being observed? Etc”. – Bright Simons
Simons further questioned why Liberia does not use the Federal Reserve Bank of New York’s streamlined “Foreign Bank International Cash Services Program” for wholesale banknote distribution, instead of relying on a complex and costly system involving multiple brokers and commissions.
Additionally, he sought clarification on Ghana’s involvement as an intermediary in the transaction, questioning the need for its participation.
As such Simons maintained that the Liberian central bank’s lack of transparency will continue to fuel suspicions about the USD transshipments through Accra, with Liberian citizens footing the bill for brokerage fees and commissions.
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