Banking and Financial Services Amendment Act No. 7 of 2020

Enactment Banking and Financial Services [No. 7 of 2020 115 (Amendment) Short title Act No. 7 of 2017 Amendment of Section 2 Repeal and replacement of section 6 Providing banking business, financial business or financial services without licence A BILL An Act to amend the Banking and Financial Services Act. [ 26th October, 2020 ENACTED by the Parliament of Zambia.

1. This Act may be cited as the Banking and Financial Services (Amendment) Act, 2020, and shall be read as one with the Banking and Financial Services Act, in this Act referred to as the principal Act.
2. Section 2 of the principal Act is amended by the deletion of the definition of “insolvency” and the substitution therefor of the following: “insolvency” means a situation where a financial service provider — (a) is unable to pay a debt when it falls due; (b) has assets that are insufficient to meet liabilities; or (c) has regulatory capital which is at zero or lower.
3. (1) The principal Act is amended by the repeal of section 6 and the substitution therefor of the following:
4. (1) A company shall not conduct a banking business without a banking licence. (2) A body corporate shall not conduct a financial business without a financial business licence, or provide a financial service without a financial institution licence. (3) A person, without a banking licence, financial institution licence or a financial business licence, shall not collect funds by purporting to conduct a banking business, financial service or financial business. GOVERNMENT OF ZAMBIA ACT No. 7 of 2020 Date of Assent: 23rd October, 2020 Singles copies of this Act may be obtained from the Government Printer, P. O. Box 30136, 10101 Lusaka. Price K12.00 each

116 No. 7 of 2020] Banking and Financial Services (Amendment) (4) A person who contravenes subsections (1), (2) and (3) commits an offence and is liable, on conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both. (5) Where a person obtains funds under subsection (3), that person shall, in addition to the penalty imposed under subsection (4), repay the funds in accordance with the Bank’s directives and within the period determined by the Bank. (6) Where funds repayable under subsection (5) remain unpaid at the end of the period determined by the Bank for repayment, the funds payable shall be recoverable by the Bank and kept in trust for the person lawfully entitled to the funds. 4. Section 21 of the principal Act is amended by the deletion of subsection (2) and the substitution therefor of the following: (2) The Register shall be open for public inspection during normal operating hours of the Bank. (3) The Bank may maintain a Register in an electronic form or any other form determined by the Bank. 5. The principal Act is amended by the repeal of the heading immediately after section 51 and the substitution therefor of the following: REGULATORY AND SUPERVISORY POWER OF BANK 6. The principalAct is amended by the insertion of the following new section immediately after section 62: 62A. The Bank may exercise its authority over a financial service provider where the Bank considers that it is necessary to implement supervision for the purposes of the prevention and combating of money laundering and financing of terrorism or proliferation or any other serious offence. 7. The principal Act is amended by the repeal of section 72. 8. The principal Act is amended by the repeal of section 73 and the substitution therefor of the following: 73. (1) The Bank shall, where the Bank takes possession of a financial service provider— (a) restructure or re-organise the financial service provider; (b)sell the financial service provider as a going concern; Amendment of section 21 Repeal and replacement of heading Insertion of section 62A Anti-money laundering and counter financing of terrorism supervision Repeal and replacement of section 73 Repeal of section 72 Possession of financial service provider by Bank

Banking and Financial Services [No. 7 of 2020 117 (Amendment) (c) close the financial service provider; (d) transfer all or part of the business of the financial service provider to a bridge bank; (e) initiate a purchase and assumption transaction; (f) dispose of some of the assets of the financial service provider; or (g) take an action that the Bank considers necessary to enable the Bank carry out its functions in accordance with this Act. (2) Where the Bank decides to close a financial service provider under subsection (1) (c), the closure may take effect— (a) by an order of the Bank placing the financial service provider under liquidation; or (b) in the case of a financial business, by cancelling the financial business licence and recommending to an appropriate authority the placing of the financial business into liquidation. (3) Despite subsection (1), the Bank shall, on taking possession of a financial service provider, prepare a statement of affairs showing the financial position of the financial service provider. 9. The principal Act is amended by the repeal of section 74. 10. The principal Act is amended by the repeal of section 75 and the substitution therefor of the following: 75. (1) A financial service provider or an interested person acting on the financial service provider’s behalf may, within twenty-one days after the date on which the Bank takes possession of the financial service provider, petition the Minister to establish a tribunal to enquire into the the decision of the Bank to take possession of the financial service provider. 11. Section 82 of the principal Act is amended by the deletion of subsection (2) and the substitution therefor of the following: (2) Except as may be prescribed under subsection (1), the total value of a grant, credit facility and guarantee specified in subsection (1) shall not exceed twenty-five percent of the regulatory capital. Repeal of section 74 Petition to Minister against possession Amendment of section 82 Repeal and replacement of section 75

118 No. 7 of 2020] Banking and Financial Services (Amendment) 12. Section 132 of the principalAct is amended by the deletion of subsection (1) and the substitution therefor of the following: (1) Despite the Corporate Insolvency Act, or any other written law, in any compulsory winding-up or dissolution of a financial service provider, the following shall be paid in priority to all other debts in the order set: (a) expenses incurred in the process of compulsory winding-up or dissolution; (b) depositors whose deposit claims— (i) are covered by a deposit protection scheme; and (ii) not covered by a deposit protection scheme; (c) taxes and rates dues; (d) wages and salaries of employees of the financial service provider, excluding executive employees, senior management and other categories of staff that the Bank may determine, for a period of three months; (e) charges and assessments due to the Bank; or (f) other claims against the financial service provider in an order of priority that the Court may determine on application by the Bank. 13. Section 137(3) of the principal Act is amended by the deletion of the words “or set aside by a tribunal on appeal or by the Court”. 14. Section 140 of the principal Act is amendment by the deletion of subsection (1) and the substitution therefor of the following: (1) A tribunal shall hear and determine an appeal on its merits, within thirty days of being convened, taking into account this Act and any other relevant written law. 15. The principal Act is amended by the repeal of section 141 and the substitution therefor of the following: 141. (1) A tribunal may order compensation against the Bank where the tribunal finds the Bank to have acted contrary to this Act or any other written law on the matter before the tribunal. (2) An appeal against a decision of a tribunal, on a point of law, shall lie to the Court of Appeal. Amendment of section 132 Act No. 9 of 2017 Amendment of section 137 Amendment of section 140 Repeal and replacement of section 141 Decision of Tribunal

Banking and Financial Services [No. 7 of 2020 119 (Amendment) 16. Section 160 (1) of the principal Act is amended by the deletion of paragraph (b) and the substitution therefor of the following: (b) funds paid toward the purchase of a share or other interest in a security, issued by a financial service provider not listed or quoted on an exchange regulated under the Securities Act and any interest or dividend relating thereto, excluding any charge that may lawfully be withheld, in respect of which the owner has not, within the last ten years— (i) increased or decreased the amount of the funds or deposit; (ii) corresponded, in writing, with the bank or financial institution; or (iii) otherwise indicated an interest in the funds as evidenced by a memorandum in the records of the financial service provider; and. Amendment of section 160 Act No. 41 of 2016

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