Several regulatory authorities are involved in supervising and monitoring the banking system in order to regulate this sensitive activity, in particular:

• the Council of Ministers of the West African Monetary Union (UMOA), which sets the legal and regulatory framework applicable to credit activity applicable to credit activities;
• the Central Bank of West African States (BCEAO), the issuing institution of the UMOA, which draws up the prudential and accounting regulations and also carries out, on its own behalf, oversees the banking system;
• the Commission Bancaire de l’UMOA (Banking Commission of the WAMU), which is responsible for the organisation and supervision of banks and financial institutions. of banks and financial institutions.

These are banking operations such as receiving funds from the public, lending operations, and providing and managing means of payment for customers (article 2 of the Banking Law).

Under the Banking Law, credit institutions are legal entities that carry out banking transactions as a regular activity. Credit institutions are licensed as (i) banks or (ii) banking financial institutions. Given the protection required for depositors and the importance of the banking system in financing the economy, the exercise of the profession is subject to prior approval (agrément). Accordingly, no one may carry on the business of a bank or financial institution without prior approval (article 7 of the Banking Law). In any event, approval is granted by order of the Minister of Finance after receiving the opinion of the BCEAO. For your information, financial institutions are categorised in five different categories namely:

• Category 1: financial lending institutions;
• Category 2: financial institutions for leasing or rental with call option;
• Category 3: financial factoring institutions;
• Category 4: financial institutions providing guarantees; and
• Category 5: financial payment institutions.

No, not automatically. For example, banks are required to inform BCEAO of any new e-money-related services at least two months before they start issuing e-money or marketing them to the general public.

Article 9 of the Banking Law provides that, subject, where applicable, to compliance with authorisations and other specific legislative and regulatory provisions relating to the exercise of certain activities or professions, credit institutions are also authorised to carry out the following transactions considered to be related to their activities:

• transactions in gold and precious metals;
• manual or book-entry foreign exchange transactions;
• investment transactions, i.e. the acquisition of holdings in existing or new companies and the purchase of securities issued by public or private entities;
• advisory and assistance services in financial management, asset management, management and placement of transferable securities and financial products, financial engineering and, in general, all operations designed to facilitate the creation and development of businesses, including the search for financing and partners;
• simple leasing of movable or immovable property by banking financial institutions authorised to carry out leasing transactions;
• acting as intermediaries as commission agents, brokers or otherwise in all or part of the banking transactions and related transactions.

To date, cryptocurrencies do not have any explicit legal status and their legal framework remains incomplete. Thus, to our knowledge, no regulation has yet been put in place in the WAEMU zone. Moreover, there is no community (communautaire), legislative or regulatory text that sets out the conditions and/or modalities for the purchase, sale, payment and use of these cryptocurrency services in Senegal and in the WAEMU zone.

For your information, in a communiqué dated March 18, 2021 on the warnings to the public on speculative investment offers proposed to the public by private companies that promise high returns, the Regional Council for Public Savings and Financial Markets (CREPMF) now AMF-UMOA, seems to associate crypto-currency trading, the purchase and sale of goods online, and operations as falling under the public call to savings on the WAMU regional financial market, which is subject to prior approval by the CREMPF. Also in the above-mentioned communiqué, the CREMPF invites the promoters of these structures involved in crypto-currency trading activities, the purchase and sale of goods online to:

• immediately cease their irregular activities and;
• contact the competent authorities in order to comply with the regulations in force, under penalty of sanctions.

The CREMPF also invited the public to be extremely vigilant and to refer only to actors or operations that have been approved by CREMPF. In addition, the CREPMF reminded people of the following rules of vigilance before any investment:

• Make sure that the company offering the product is authorized to do so and obtain as much information as possible themselves (head office, business partners, existence of financial statements, activities carried out, etc.);
• No sales pitch should obscure the fact that there is no such thing as high return without high risk.

Please see our comments in question 6. Due to the absence of specific texts or regulations regarding cryptocurrencies in the WAEMU region, we are not in a position to provide you with exact legal answers relating to this question.

Please our comments on 6 & 7 above.

The following stages are involved:

• be duly incorporated in the form of an authorised company;
• pay up the share capital in full;
• submit an application for authorisation to the Minister of Finance, containing the required information;
• submit five (5) copies of the application to the BCEAO National Directorate for Senegal.
• The Central Bank examines the application and forwards it to the Banking Commission. The Minister of Finance of the country concerned issues the authorisation order, after receiving the favourable opinion of the aforementioned Commission.
• Approval is evidenced by registration on the list of banks or financial institutions. The share capital must be fully paid up by the date of authorisation, up to the minimum amount required in the authorisation decision.
• The institution must also join the Association Professionnelle des Banques et Etablissements Financiers (APBEF) within one month of being registered (article 16 of the Banking Law).

The average period is around 6 months. After this period, approval is deemed to have been refused if it is not granted within six months of receipt of the complete application by BCEAO (article 16 of the Banking Act).

Banks must have their registered office in the territory of one of the WAMU Member States. Banks and financial institutions that are already authorised and wish to set up in a WAMU Member State are exempt from any other authorisation procedure, in order to carry on their business or offer services in other Member States under the freedom to provide services, subject to obtaining an authorisation.

Public limited companies with fixed capital or, by special authorisation of the Minister of Finance given with the assent of the Commission Bancaire, in the form of cooperative or mutual companies with variable capital. Exceptionally, banks may take the form of other legal entities. They must have their registered office in the territory of one of the WAMU Member States. They cannot take the form of a one-person company.

Under Senegalese law, credit institutions are required to establish a corporate governance mechanism in line with good practice and adapted to their size, their structure, and the nature and complexity of their activities (Article 4 of Circular No 01-2017/CB/C of 27 September 2017 relating to the Governance of Credit Institutions and Financial Companies in the WAEMU).

The registration and oversight of directors and senior management is generally regulated by the Banking Law and more specifically by Circular no 02-2017/CB/C of 27 September 2017 on the Conditions of Exercise of the Functions of Directors and Officers in Credit Institutions and Financial Companies of the WAEMU.

The provisions of the Banking Law regulate the status of directors and require the directors to be of Senegalese nationality or of the nationality of one of the other member states of the WAEMU. However, the Minister of Finance may, on advice of the Banking Commission, grant individual exemptions to the nationality requirement. In such a case, a director must hold at least one master’s degree or an equivalent diploma and must have at least five years of professional experience in the banking sector, finance sector or any other field relevant to the functions envisaged (Article 24, Banking Law).

Persons involved in the direction, administration, management, control or operation of credit institutions are bound by professional banking secrecy.

Under Senegalese law, employees of banks are bound by the provisions of the Senegalese Labour Code and the provisions of the Interprofessional National Collective Agreement, as well as by the specific provisions of the Collective Agreement on Banks and Financial Institutions in Senegal. In fact, under Senegalese labour law, employees are classified into different categories, which correspond to different remuneration scales. The Collective Agreement on Banks and Financial Institutions provides for specific classifications of bank employees according to the job they As such, bank employees are classified into:

• workers and employees, further classified into seven different subcategories;
• agents, classified into four subcategories; and
• executives, classified into four subcategories.

Depending on the category into which the bank or financial institution employee is classified, a specific remuneration is provided for by the Ministry of Labour, which sets up the categorical salary scales in the private sector. The basic salaries provided for by the Ministry for the different categories are mandatory and cannot be reduced by the employer.

The prudential system completes the Banking Law. This prudential system was adopted by the WAEMU Council of Ministers on the proposal of the BCEAO, pursuant to Article 44 of the Banking Law. In Senegal, in addition to the Law of 2008, Decision no 013-24-06/CM/WAEMU relating to the prudential framework applicable to credit institutions (“the Decision”) is intended to establish a prudential framework in force within the WAEMU and in particular in Senegal.

The preamble to the Decision states that the WAEMU community framework, and in particular the minimum capital requirements according to risks (credit, operational, market), are based on the Basel II and Basel III rules, and the Basel rules have been transposed taking into account the characteristics of the economies and specificities of the WAEMU banking system. It consists of a series of provisions organized around three themes:

• the conditions for exercising the profession (minimum capital and its representation, special reserve, accounting regulations);
• the regulation of specific operations (shareholdings, fixed assets, loans to main shareholders, managers and shareholders, managers and staff); and
• management standards (coverage of risks by effective equity capital, of medium and long-term assets by stable resources, division of risks, liquidity rules, structure of liquidity rules, portfolio structure).

Regarding the thresholds of banks’ share capital, Decision No 003 of 30/03/2015/CM/WAEMU fixing the minimum share capital of credit institutions of the member states of the WAEMU has set the minimum share capital of credit institutions of the member states of the WAEMU at XOF10 billion for banks and XOF3 billion for financial institutions of a banking nature.

Article 36 of the Banking Law stipulates that banks and financial institutions must at all times have equity capital at least equal to the minimum capital determined under Article 34 of the Banking Law.

Credit institutions with legal personality are required to set up a special reserve, including any legal reserve required by the laws and regulations in force, funded by an annual deduction from net profits, after deducting any retained losses. The amount of this deduction is set by an instruction from the BCEAO. The special reserve may be used to cover losses, provided that all other available reserves have first been used.

Among the requirements of the prudential system is the integration of operational risk into the process of supervising credit institutions. In this respect, the Banking Commission has proposed two approaches to the evaluation of operational risks based on weightings applied to an institution’s Net Banking Income. These weights are identical to those defined by the Basel Committee, namely 15% for the basic approach and a level varying between 12% and 18% for the standard approach.

Among other things, it requires institutions wishing to use the standard approach to set up an operational risk management function with strong involvement of the executive body, which defines the roles and responsibilities of each player. In the area of credit risk, the precise assessment of risk under the standard approach is based primarily on the counterparty weightings set by the French banking commission, which is the ACPR (Autorité de contrôle prudentiel et de résolution). These weightings depend on the ratings established by External Credit Assessment Institutions or rating agencies. In addition, the Annex to the Decision also provides for the reinforcement of the core capital to be mobilized by the banks under Pillar 1 requirements (minimum capital requirements). Indeed, banks must hold a level of core capital corresponding to a minimum threshold of 5% of the amount of their exposure to credit, market and operational risks. This ratio is reinforced by the introduction of a conservation buffer established at a maximum level of 2.5% of the bank’s total exposure to risk, following the example of the threshold defined by Basel III.

By end-2022, WAEMU banks had to meet a minimum common equity tier 1 capital ratio of 7.5% and a minimum total capital ratio of 11.5%, both inclusive of a 2.5% capital conservation buffer.

According to articles 50 and 51 of the Banking Law, credit institutions:

• must keep at their registered office, principal place of business or principal branch in the Republic of Senegal, specific accounts of the transactions they handle on the territory of the Republic of Senegal.
• are required to prepare their accounts in consolidated and combined form, in accordance with the accounting provisions and other rules laid down by the Central Bank.
• must close their accounts on 31 December of each year.
• before 30 June of the following year, credit institutions must submit their annual accounts to the Central Bank and the Banking Commission, within the timeframe and under the conditions prescribed by the Central Bank.

These accounts must be certified as true and fair by one or more auditors, chosen from the list of auditors approved by the Court of Appeal or any other authorised body acting in its stead. The choice of auditor is subject to approval by the Commission Bancaire.

Banks must appoint at least two Statutory Auditors and two alternates, as must banking-type financial institutions making public offerings. The annual accounts of each credit institution are published in the Official Gazette of the Republic of Senegal, at the request of the Central Bank. The costs of this publication shall be borne by the credit institution.

One of the requirements of the Basle Core Principles for Effective Banking Supervision is that supervision should be carried out on a consolidated basis. This implies that bank supervisors should take cognizance of the overall risks of the banking group when applying their supervisory methods.

The overall supervision of banks within the WAMU is carried out by the Banking Commission, which is responsible for ensuring the soundness and security of the WAMU banking system, in particular by monitoring the institutions subject to supervision and resolving banking crises, protecting depositors and helping to maintain the stability of the regional financial system.

The following are subject to prior authorisation by the Minister of Finance for credit institutions having their registered office in Republic of Senegal:

• any acquisition or disposal of a holding which would result in the holding of the same person, directly or through an intermediary, or of the same group of persons acting in concert, firstly exceeding the blocking minority and then exceeding the majority of voting rights in the credit institution, or in the holding falling below these thresholds.
• any sale by a credit institution of more than 20% of its assets corresponding to its operations in the Republic of Senegal

The Minister of Finance, the Banking Commission and the Central Bank must be notified of the opening, closure, transformation, transfer, assignment or management of branches of credit institutions in the Republic of Senegal.

The Banking Law applies to credit institutions operating in the Republic of Senegal, irrespective of their legal status, the location of their registered office or principal place of business in the West African Monetary Union, and the nationality of the owners of their share capital or their directors.

No person may lead, administrate or manage a credit institution or one of its branches if he or she does not have Senegalese nationality or that of a Member State of the WAMU, unless he or she enjoys assimilation to Senegalese nationals by virtue of an establishment agreement. The Minister of Finance may, with the approval of the Commission Bancaire, grant individual exemptions.

In addition to the authorisations and notifications listed in point 19 above, foreign direct investment, or the sole shareholding, when it exceeds ten per cent (10%) of the bank’s capital, is also subject to a statistical declaration to the BCEAO and to the Direction de la Monnaie et du Crédit of the Ministry of Finance.

The Banking Law applies to credit institutions operating in the Republic of Senegal, irrespective of their legal status, the location of their registered office or principal place of business in the West African Monetary Union, and the nationality of the owners of their share capital or their directors. However, Banking Law does not apply to:

• the Central Bank of West African States;
• the Public Treasury;
• international financial institutions, or foreign public aid or cooperation institutions, whose activity on the territory of Senegal is authorised by international treaties, agreements or conventions to which the Republic of Senegal is a party;
• management and intermediation companies, as well as other authorised players in the regional financial market of the WAMU;
• decentralised financial systems, in particular mutual or cooperative savings and loan institutions not approved as credit institutions and subject to special regulations;
• the Administration and financial services of the Post Office and Telecommunications.

The various penalties for breaches of banking regulations are set out in articles 66 to 83 of the Banking Law. They may include:

• disciplinary sanctions that can be imposed by the Banking Commission;
• criminal sanctions;
• payment of late interest to BCEAO.

Please see our responses in points 25 & 26.

The depositor protection regime is governed by Decision no 088-03-2014 of 21 March 2014 on the creation of the Depositors’ Guarantee Fund in the WAMU; by the Articles of Association of the Depositors’ Guarantee Fund in the WAEMU; and Decision no 009 of 30/06/2017/CM/WAEMU setting the rates of contribution of members to the Depositors’ Guarantee Fund in the WAEMU and the compensation limit for eligible deposit holders.

All licensed credit institutions have the obligation to adhere to a depositor protection regime, namely the Depositors’ Guarantee Fund (the Fund) (Article 65, Banking Law). The Fund’s purpose is to protect small depositors against the loss of their savings in the event of suspension of payments by a credit institution or a Decentralised Financial System (SFD).

The Fund’s mission is to guarantee the deposits of clients of the credit institutions and SFDs licensed in the WAEMU. As such, the Fund is, among other things, responsible for indemnifying the depositors, to the limit of an amount set by the Council of Ministers of the WAEMU, against the unavailability of their funds.

The Fund is administered by its Board of Directors and its Management. The limits for compensation to the depositors are set by the Council of Ministers on the proposal of the Board of Directors. Hence, the limits for compensation are as follows:

• XOF1,400,000 per depositor for all deposits held in the books of a member credit institution; and
• XOF300,000 per depositor for all deposits held in the books of a member SFD.

The scheme is funded by members’ (namely all the credit institutions and SFDs affiliated to the Fund) contributions, investment income and, where applicable, donations, grants and loans, as well as any other resources compatible with the purpose of the Fund (Article 27 of the Articles of Association).

In the event that the Fund’s resources are insufficient, additional contributions are sought from member institutions, under the conditions defined by the circular of the Fund (Article 28 of the Articles of Association).

Unlike Bail-in in the European Union, Senegalese law provides for several scenarios in this case:

• The Commission Bancaire may decide to place a credit institution under provisional administration.
• The Commission Bancaire may decide to put a credit institution into liquidation. It notifies its decision to the Minister of Finance of the State concerned, who appoints a liquidator for the credit institution or company concerned.
• The Commission Bancaire may, after informing the Minister in charge of Finance of the said State, send the credit institution:

1. either a warning
2. or an injunction to take, within a specified period, the necessary remedial measures or any precautionary measures that it deems appropriate or to have an external audit carried out.

• The Chairman of the Commission Bancaire may, if necessary, invite the shareholders, members or members-policyholders of a credit institution in difficulty to contribute to its recovery. He may also invite all members of the Association professionnelle des Banques et Etablissements financiers to examine the conditions under which they could assist in the recovery of the credit institution.

Credit institutions authorised in the WAMU belong to a deposit guarantee scheme. Please see also our responses in point 26 above.

We are not familiar with this acronym (TLAC) in Senegalese law). However, as mentioned above, Banking Law obliges credit institutions to:

• have core capital, at all times, at least equal to the minimum amount without being less than the minimum core capital that could be made mandatory.
• set up a special reserve, including any legal reserve required by the laws and regulations in force, funded by an annual deduction from net profits after any retained losses. The amount of this deduction is set by an instruction from the Central Bank. The special reserve may be used to cover losses, provided that all other available reserves are first used. other available reserves are first used.

The WAEMU zone, including Senegal, is undergoing a major reform of its legal framework relating to the banking and related sectors. In response to the legal vacuum that has existed in the zone, and in line with economic trends and technological innovations linked to the development of digital applications, etc., several major legal texts are currently being revised, which will repeal those hitherto in force.

These include (i) the Uniform Law regulating banking in the WAMU, (ii) the Uniform Law regulating microfinance in the WAMU, (iii) the Uniform Law on the fight against money laundering, the financing of terrorism and the proliferation of weapons of mass destruction in WAMU Member States (new law already in force) and (iv) Instruction n°001 01-2024 relating to payment services in the WAMU, among others.

The draft banking law, which is expected to come into force, provides a clearer legal framework for the various players in the sector, fintechs authorised to carry out banking operations and Islamic finance. It maintains and confirms that banking operations are a regulated activity, the exercise of which as a regular profession requires the prior obtaining of a licence to practice.

The terms and conditions for the provision of payment services in the Member States of the West African Monetary Union are also clearer insofar as certain payment services such as (i) fund transfer transactions, (ii) payment transactions carried out by any means of communication, the issue of payment instruments, (iii) the acquisition of payment transactions, (iv) payment initiation services, (v) account aggregation or account information services, hitherto not regulated, are subject to more precise rules.

In our view, the cyber threat or cyber risk.

This threat is growing and taking many forms in the financial sector, and the players involved need to pay close attention to it. Given the interconnectivity of this highly digitised sector, the attack surface is large, the volume of data processed is considerable, and the potential gains for cybercriminals are substantial. So, while our banking systems continue to develop and modernise to bring them into line with international standards, those involved need to be constantly alerted to this issue. Our zone, including Senegal, wants to offer people an inclusive, accessible, modern and digital banking system, which, if we are not careful or if security is not strengthened, could create financial damage. This could lead to a crisis that would affect financial stability and reverberate throughout the real economy through chain reactions.