Central Bank Enforces Black Book on Fraud as Financial Sector Grows

By zainab.joaque@awokonewspapersl.com

Freetown, Sierra Leone – The Bank of Sierra Leone (BSL) is ramping up its fight against financial fraud with a new Banking System Prudential Control Committee, signaling a tougher stance on malpractice in the sector.

Comprised of internal auditors and compliance officers, the committee will focus on fraud prevention, regulatory enforcement, and safeguarding the stability of the financial system. At the heart of these efforts is the continued enforcement of the “Black Book”—a registry barring individuals implicated in fraud from operating in the banking sector.

“This initiative is critical to maintaining trust and integrity in our financial system,” the BSL stated, underscoring its commitment to tackling rising fraud risks.

The crackdown comes as Sierra Leone’s financial sector shows signs of robust growth. According to the latest Monetary Policy Statement, Reserve Money (RM) expanded in Q4 2024, fueled by rising Net Domestic Assets (NDA). Meanwhile, Broad Money (M2) grew due to increases in both NDA and Net Foreign Assets (NFA).

Private sector credit also saw an uptick, though the Monetary Policy Committee (MPC) warned that more aggressive lending is needed to spur investment and economic growth.

One major concern is the banking sector’s heavy appetite for 364-day government securities, which offer attractive yields but divert funds away from private sector lending.

“This crowding-out effect undermines banks’ role in driving private investment,” the MPC noted, calling for a rebalancing to ensure businesses have better access to credit.

Despite these challenges, Sierra Leone’s banking sector remains well-capitalized, with most Financial Soundness Indicators (FSIs) within regulatory limits. The Non-Performing Loans (NPLs) ratio sits comfortably below the 10% threshold.

However, risks persist—loan concentration in a few sectors, high lending rates, and fraud incidents continue to hinder private sector growth. The MPC has pledged to address these vulnerabilities while pushing for stronger credit expansion to fuel sustainable economic development.

With fraud enforcement tightening and monetary conditions evolving, Sierra Leone’s financial sector stands at a crossroads. The central bank’s dual mandate—ensuring stability while fostering private sector growth—will be put to the test in the coming months.

For now, the message is clear: fraud will land you in the Black Book, but a more dynamic and inclusive banking system remains the ultimate goal. ZIJ/2/4/2025