RBM outlines conditions on application for newly-introduced diaspora foreign currency denominated accounts

* Diaspora FCDAs are foreign currency accounts held in Malawi by Malawian citizens residing outside Malawi

* These accounts must not be funded with money that does not originate from Malawi and is not derived from export earnings

By Duncan Mlanjira

The Reserve Bank of Malawi (RBM) has issued a conditions to be followed when applying for diaspora foreign currency denominated accounts (FCDAs).

In a public communique issued on Friday by Deputy Governor-Economics & Regulator, Henry Mathanga, the RBM explains that the FCDAs have been created to ensure that Malawians living abroad can enjoy convenient banking services back home under favourable conditions — thereby incentivising remittances.

Conditions and eligibility

Mathanga highlights that diaspora FCDAs are foreign currency accounts held in Malawi by Malawian citizens residing outside Malawi and that these accounts must not be funded with money that does not originate from Malawi and is not derived from export earnings.

Diaspora in this case refers to Malawian citizens who have lived outside Malawi for more than 12 consecutive months — whether for employment, business, education, or any other purpose.

Authorised Dealer Banks (ADBs) may open a diaspora FCDA for a Malawian citizen who provides authentic documentation proving that they have relocated or will relocate outside Malawi for at least 12 consecutive months.

Documentation requirements

Before opening a diaspora FCDA, banks shall require the applicant to provide an employment offer letter for a period exceeding 12 months plus acceptance of the offer; a valid work or residency permit; and an admission letter from an educational institution confirming enrollment for a period of over 12 months.

Any additional documentation that clearly demonstrates — in the bank’s opinion — that the applicant will reside outside Malawi for more than 12 consecutive months, will also be accepted.

Favourable conditions provided by ADBs

Subject to compliance with foreign exchange legislation and other regulatory requirements, ADBs offer favourable conditions for operating diaspora FCDAs, that include:

* Reduced paperwork for account opening and transactions;

* Simplified processes for sending money locally and internationally;

* Ability to apply for account opening online;

* Access to online banking platforms; and

* Issuance of debit cards; Assignment of a dedicated diaspora private banker.

Treatment applicable to all diaspora FCDAs

* Cross-border remittances and payments from a diaspora FCDAs are not subject to Exchange Control requirements;

* Account holders may make hard currency withdrawals for any purpose once per calendar month, up to 50% of the account balance;

* Requests for hard currency withdrawals exceeding the 50% limit may require prior approval from the RBM.

Permitted FCDA transfers are allowed as follows: from a diaspora FCDA to another diaspora FCDA; from a diaspora FCDA to a non-resident FCDA; and from a diaspora FCDA to a resident FCDA — including transfers to foreign exchange bureau FCDAs for Malawi Kwacha equivalent cash of bank transfer.

Meanwhile, the RBM is advising all interested individuals to contact their respective bankers for more detailed information on the diaspora FCDAs.