Ghana’s banking sector is set for a major governance reset as the Bank of Ghana moves to enforce annual fit and proper assessments for all board members and managers of financial institutions.
The directive forms part of the Central Bank’s updated guidelines on Fit and Proper Persons for Accountable Institutions and signals a tougher stance on leadership standards within the financial system.
Under the new framework, banks and other regulated institutions are required to conduct fit and proper tests not only before appointing directors and key management personnel but also on a recurring annual basis. The Bank of Ghana says the move is aimed at strengthening accountability, safeguarding depositor funds, and reinforcing confidence in the financial sector.
Annual Assessments Become Mandatory
The Central Bank is clear that fitness and propriety are not one time requirements. By insisting on yearly assessments, the regulator is emphasizing that competence, integrity, and financial soundness must be sustained throughout a person’s tenure. Boards are expected to ensure that directors and senior executives remain suitable for their roles as institutions evolve and risks within the sector change.
According to the Bank of Ghana, accountable institutions must undertake comprehensive due diligence as part of the assessment process. This includes verifying all material information provided by board members and managers through independent sources. The approach reflects lessons from past banking sector challenges, where weak governance and poor oversight contributed to systemic risks.
Extensive Documentation Required
The fit and proper assessment process comes with detailed documentation requirements. Financial institutions are expected to collect and review an application letter, an updated curriculum vitae, and a completed personality note form for each individual under review. In addition, candidates must provide a tax clearance certificate, a certified financial statement of affairs, and copies of academic and professional certificates.
The Central Bank has also mandated the submission of a police report, an enhanced due diligence questionnaire, and regulatory references covering a minimum period of six years. Where applicable, bankruptcy or insolvency certificates must be included. For corporate entities, beneficial ownership disclosures are required. These measures are designed to give boards a full picture of an individual’s background, financial standing, and ethical record.
Board Responsibilities Under the New Rules
The updated guidelines place significant responsibility on the boards of financial institutions. Boards are required to appoint only qualified directors and key management staff and to conduct thorough due diligence before all appointments. They must also establish and maintain a robust fit and proper policy that aligns with the Bank of Ghana’s expectations.
Beyond appointments, boards are tasked with overseeing assessments related to outsourcing arrangements and ensuring the ongoing competence of both board members and key personnel. This means governance oversight is no longer limited to internal leadership but extends to critical third party relationships that could expose institutions to operational or reputational risks.
Role of Key Management
While boards carry the ultimate responsibility, key management also has clearly defined duties under the new framework. Senior executives are expected to conduct fit and proper assessments for middle and lower management staff and submit their findings to the board. They must also ensure that annual assessments are carried out for heads of control functions such as risk management, compliance, anti money laundering and combating the financing of terrorism, and internal audit.
This layered approach ensures that governance standards are embedded throughout the organization and not concentrated solely at the board level. By involving key management in the process, the Bank of Ghana aims to promote a culture of accountability across all tiers of financial institutions.
Sanctions for Non Compliance
The consequences of failing a fit and proper assessment are severe. Where an individual is found not to be fit and proper, the Bank of Ghana may reject or revoke the appointment. In more serious cases, the regulator can issue a prohibition order lasting up to ten years. Such an order can prevent the individual from holding shares, serving as a director, or performing any key function within a regulated institution.
These sanctions underscore the Central Bank’s determination to weed out unsuitable leadership and prevent repeat governance failures. They also send a strong message to boards and management teams that compliance with the new guidelines is non negotiable.
The introduction of annual board fitness exams marks a significant shift in regulatory expectations. For banks, it means higher compliance costs and more rigorous internal processes. However, it also offers an opportunity to strengthen governance frameworks, improve decision making, and rebuild public trust.
