I. Introduction

In line with the proposed study and directives, we have produced the attached procedure manual for opening and operating non-resident foreign currency account for Ethiopians in Diaspora.  The procedure is based on the expected workflow.

Every efforts have been made on the draft manual to contain essential guidelines in respect to the main duties and responsibilities of commercial banks in handling the accounts.  Attempts are also made to enlist all the detail tasks so as to solve unnecessary bottlenecks in processing applications.

II. Opening Non-Resident Foreign Currency Account

2.1 Types of payment instruments acceptable to open a foreign currency account

2.1.1 The types of negotiable instrument to operate the foreign currency account are cheques, drafts, traveler's cheques and casher cheques, international money order, etc.
2.1.2 Foreign currency deposits by Non-Resident Ethiopians or Non-Resident Ethiopian origin should be made in one or more of the following currencies.
a) The US Dollar
b) Pound Sterling
c) Euro
d) Japanese Yen
2.1.3 Opening non-resident foreign currency account for Ethiopians in Diaspora can be possible by the following three methods.  These are: 
2.1.3.1   Personal presence of the account holder at domestic commercial banks,
2.1.3.2   Through foreign correspondent banks and
2.1.3.3   Direct contact of the account holder with the opening bank through telex   and/or letters or other authenticable communication means.

2.1.4 Applicants who could not be physically present to open the NR account in the domestic banks shall use the Ethiopian Embassies nearby to prove their identities.

2.2 Methods of opening the account
2.2.1 Procedure at the counter of domestic commercial banks

a) Eligibility Requirements

2.2.1.1 While opening non-resident foreign currency account for Ethiopians in Diaspora, the assigned section of the opening bank shall receive pre-prepared application form properly filled and signed by the account holder.  Application format for opening the account is attached.
2.2.1.2 Applications are filled in three copies.  The first copy to the opening bank, the second copy for dispatch to the NBE and the third copy is a receipt to the account holder.
2.2.1.3 The application form should be submitted together with:
a.   Valid Passport, and residence permit of the country where applicant lives
b. Authenticated certificate of ownership entitlement for business enterprises and/or article and memorandum of association if a/c is to be opened in the name of the business establishment.
c. Valid passport and/or identification card of foreign nationals of Ethiopia origin of the applicant.
2.2.1.4 The assigned staff should check.
a) Passport and/or identification card of foreign nationals of Ethiopian origin holders and the applicant are the same
b) The validity of the passport & identification card of foreign nationals of Ethiopian origin  
c)   The amount indicated in words and figure are similar
d) The signature are consistent
e) The passport holder is Ethiopian nationality and/or foreign nationals of Ethiopian origin.
f) The type of currency is one of the currency indicated in the directives
2.2.1.5 Opening of the account is processed and a deposit book or letter is prepared in sufficient copies in depositor's name.
2.2.1.6 An account is opened in the name of the depositor and every accounting procedure will be done.
2.2.1.7 Prepare statement of the account every month.

2.2.2 Opening through correspondence or any other foreign banks

a) Eligibility Requirement

2.2.2.1 The opening bank may designate its correspondence banks or other commercial banks to process the opening of the account for those who are living abroad but unable to come here at the premise of the local banks.
2.2.2.2 Reasonable service charge required by the foreign banks to process opening of the account may be born by the applicants
2.2.2.3 All foreign banks which are assigned by the local commercial banks to open the account should strictly follow all the procedure enlisted under 2.1 here above
2.2.2.4 On receipt of documents from foreign bank, send an advise to clients for collection of the deposit
2.2.2.5 A deposit certificate or deposit book shall be given to the depositor by the correspondence bank.
2.2.2.6 The domestic bank should carryout all the accounting procedure and issue statement of the account every month.

b) Accounting procedure
Debit foreign correspondent bank a/c
Credit Customer's a/c

  
2.2.3 Opening through Electronic means or other communication media.

a) Eligibility requirements

2.2.3.1 The opening local commercial bank may directly contract the applicant through electronic media and letters.
2.2.3.2 The assigned staff should check the consistence of the signature, name and other relevant information filled in the application form and sent information by the applicant.
2.2.3.3 A deposit book or certificate may be kept in the custody of the opening bank and a certificate of custody shall be sent to the depositor or the depositor book may be sent to the depositor through post if the depositor wishes to do so.
2.2.3.4 An account is opened in the name of the depositor and every accounting procedure will be done.
2.2.3.5 Prepare statement of the account every month.

b) Accounting procedure
Debit the bank/agency from which the instrument originates
Credit customer's a/c

 
III. Operating the Accounts

3.1 Crediting the account

a) Eligibility Requirement

3.1.1 All non-resident foreign currency accounts should be credited after ascertaining that the foreign currency has originated from abroad.  The following foreign currency crediting should be considered foreign originating
a) Direct credit from foreign sources to the account holder through the banking system
b) Cheques brought by the account holder from abroad
c) Cash notes if the account holder presents foreign currency declaration form
d) A transfer from another type of foreign currency account owned by individuals and/or enterprises of non-residents
e) Gifts from friends and other individuals and/or institutions from abroad

3.1.2 Crediting a non-resident foreign currency account through the banking system could be made in one or more of the following methods of remittances.
a) Telegraphic Transfer (T.T)
b) Mail Transfer (M.T)
c) Drafts from a correspondent bank
d) Cheques
e) Swift Transfer

3.1.3 The standard operational procedure for telegraphic, mail and swift transfers as well as drafts and cheques should be applied to handle remittances to a non-resident foreign currency account.

3.1.4 In case of direct cash deposits by a non-resident account holder:
a) Foreign currency declaration form should be submitted together with a deposit slip and an identification document.
b) Then appropriate verification should be made by the customer bank

3.1.5 In case a non-resident foreign currency account holder presents negotiable instruments such as cheques, drafts, travelers cheques, and cashier cheques, international money order, etc., on the counter of an opening bank, the following procedures should be used in crediting the accounts.
a) customers should present the instrument at the counter by filling the form prepared for the purpose
b) the instrument should then be validated based on the following procedure
· the instrument must be signed; and counter signed in case of travelers cheques
· the amount in words written on the instrument should agree with the amount in figures
· the instrument (except travelers cheques) must be enclosed
· the instrument should be that upon which there is "no stop payment"
· the expiry date of the instrument should be checked.  Specifically, six months should not have elapsed since the date shown on the instrument.
c) if the instrument passes all of the above test, then it may be accepted as outward bills purchased (OBP).  Otherwise it may be treated as outward bills for collection (OBC).
d) validated instruments are then recorded in outward bills purchased (OBP) register book.  They will be assigned an OBP number and photocopies (except travelers cheques) will be made.
e) endorsement stamp is affixed on the back of the instrument
f) necessary calculations will be made and OBP ticket will be prepared
g) then the OBP ticket and the endorsement of the instrument are signed
h) after tickets are sorted out, client advice and NBE's copy are dispatched
i) after verification by the auditor, the instrument will be forwarded to address bank for collection
j) on collection, the foreign currency will be credited to the account of non-resident Ethiopian or Ethiopian origin.

b) Accounting Procedure
1) Cash or check
Debit cash or cheque etc a/c
Credit customer's a/c

2) Credit through correspondent bank
Debit foreign correspondent bank
Credit customer's a/c

3.2 Debiting the Accounts
 
a) Eligibility Requirements

3.2.1 Diaspora foreign currency deposits should be debited for purposes enumerated herein under.

a) To make local payments in Birr
b) To make transfers to other foreign currency account
c) To make foreign payments such as import and other foreign service payments provided the account holder has the required business license to do so.
d) To pay for travel and other related expenses
e) To effect transfers abroad
f) To convert the foreign currency in to Birr account at the ruling exchange rate
g) Payments of bank charges, if any, levied by the opening bank
h) To effect payments of any kind other than those enumerated above (both locally and abroad) provided that such payments are made in line with the provisions of the country's foreign exchange rules and regulations.

3.2.2 The following modes of payments should be used in debiting a non-resident foreign currency account
a) standing instruction given by the account holder to the customer bank to pay certain amount of Birr on a certain date for a specified period of time
b) by writing cheques drawn in favour of a resident by non-resident Ethiopians or Ethiopian origin who have current account in foreign currency.  Payment to residents will be made in local currency using the ruling exchange rate.
c) a letter sent from an account holder ordering payments and transfers enumerated under 3.2.1 above.
3.2.3 The cheque stated under 3.2.2 (b) should be issued by the opening bank to the account holder.
3.2.4 In case of instruction letter or cheques for debiting the account, the letter has to fulfill the following:
a) it should be signed by the account holder.  The signature is verified against the deposit signature
b) the letter should indicate the beneficiary, full address and the beneficiary's bank and account No if any.
c) the letter should clearly state the amount of the transfer.  Amount of transfers in words and figures must agree each other.
d) the latter has to state manner of reimbursement (account No. or cash)
3.2.5 Letters are registered.
3.2.6 Calculation as to service charge and other cost is made. 
3.2.7 Necessary details are typed on appropriate format
3.2.8 After tickets are sorted out, clients advice and NBE's copies are dispatched
3.2.9 Instruction letter for payment is produced and must be verified by the auditor
3.2.10 Instruction letters and file copies of payment order are kept in files
3.2.11 The opening bank should contact the account holder through an electronic media for written confirmation if the payment order stated on the letter or cheque is in excess of 50,000 Birr.
3.2.12 Outward transfers from a non-resident foreign currency account should be made in the same kind of deposits currency.  A request for transfer in any other foreign currency shall be considered as a new foreign currency demand by the depositor and shall be treated using the ruling exchange rate.

b) Accounting Procedure
 Debit customer's a/c
Credit cash a/c

V. Closure of the Accounts

 a) Eligibility Requirement
4.1 A non-resident Ethiopian or Ethiopian origin foreign currency accounts can be closed at any time upon a request by the depositor.
4.2 Upon closure the assigned section of the opening bank should check:
a) the request is made by the account holder
b) the account holder has given the required notification period (not less than 7 working day).
c) the requested amount is similar with the initial deposit plus interest gain
d) the signature is similar with the deposit book.
e) make the necessary calculation
f) close the account and issue closing statement to the account holder
4.3  If the withdrawal is only interest gained
a) check whether the account meet the required minimum period for interest payment.
b) make the necessary calculation and issue a withdrawal statement.