The Banking and Financial Services (Amendment) Act, 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:
6. (1) A company shall not conduct a banking business
without a banking licence.

e repeal of section 6
and the substitution therefor of the following:
6. (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

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.

ion 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 principal Act 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.

s 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

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.

tatement
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

t 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 principal Act 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.

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

mendment
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

120