The Central Bank of Liberia (CBL) has issued a clarification regarding a recent publication surrounding Directive No. CBL/ID/DIR/001/2025, which introduces new regulatory requirements for institutions issuing insurance-backed court bonds.
Recently, it was reported that the bank has placed a freeze on the issuance of court bonds by commercial banks and insurance companies without prior written clearance from its Insurance Department — effectively preventing several lawmakers currently facing criminal charges, including former House Speaker J. Fonati Koffa, from securing bail.
The report further said that measure, issued on May 16, 2025, under Directive No. CBL/ID/DIR/00112025, mandates that any institution wishing to issue a court bond must first receive formal approval from the CBL’s Insurance Department.
The process requires insurers to submit notarized and certified audited financial statements, along with a full report of outstanding bonds issued prior to any new request.
However, according to the CBL statement issued on Tuesday, June 9, the formulation of this directive began as early as 2022, with the aim of enhancing financial soundness, transparency, and accountability within Liberia’s financial sector.
The reform was triggered by an invitation from the Supreme Court of Liberia on October 14, 2022, in which the Court raised concerns about the reliability of appellate bonds issued by insurance companies lacking the financial capacity to honor such obligations.
In response, the CBL initiated a comprehensive two-year consultation process involving the judiciary and stakeholders in the insurance sector. Key milestones in this process included a meeting with industry players on December 23, 2024, followed by a second invitation from the Supreme Court on March 4, 2025.
The draft directive was submitted on March 7, leading to further discussions with the Full Bench of the Supreme Court on March 20 and subsequent consultations with insurers and brokers on March 25. The directive was finalized on May 2 and formally circulated on May 16, 2025.
Under the new framework, institutions issuing court bonds are required to meet a set of compliance standards designed to ensure they possess the necessary financial capacity and regulatory credibility.
Specifically, insurers and financial institutions must submit certified, audited financial statements and provide all outstanding bonds before being granted approval to issue new ones. These measures are consistent with international best practices and aim to uphold the integrity of the court bond issuance process in Liberia.
The CBL has clarified that the directive does not prohibit or suspend the issuance of court bonds. Rather, it introduces a pre-approval and accountability process to ensure that only financially sound institutions are permitted to issue such bonds. Importantly, the directive does not infringe upon constitutional rights, including the right to bail.
Reaffirming its commitment to its legal mandate, the CBL emphasized that its actions are driven solely by its responsibility to regulate the country’s financial and insurance sectors. The Bank reiterated its dedication to strengthening institutional integrity, promoting transparency, and safeguarding the public interest.
To ensure a smooth implementation of the directive, the CBL continues to engage constructively with the judiciary, the legal community, and financial institutions. Members of the public and the media are encouraged to contact the CBL’s Communications Department for accurate and up-to-date information on the Bank’s operations and regulatory decisions.
