Regulation No. 02/18/CEMAC/UMAC/CM on Foreign Exchange Regulation in the CEMAC

COMMUNITY OF ECONOMIC AND MONETARY STATES OF CENTRAL AFRICA (CEMAC) REGULATION NO. 02/18/CEMAC/UMAC/CM ON FOREIGN EXCHANGE REGULATION IN THE CEMAC MINISTERIAL COMMITTEE

THE MINISTERIAL COMMITTEE, Having regard to the Revised Treaty of 25 June 2008 on the Economic and Monetary Community of Central Africa (CEMAC); Having regard to the Convention of 25 June 2008 governing the Monetary Union of Central Africa (UMAC); Having regard to the Monetary Cooperation Convention of 23 November 1972 between the member states of the Bank of Central African States (BEAC) and the French Republic; Having regard to the current Statutes of the BEAC; Having regard to the Convention of 16 October 1990 establishing a Central African Banking Commission (COBAC) and subsequent amending texts; Having regard to the Convention of 17 January 1992 on the harmonization of banking regulation in the Central African States and subsequent amending texts; Having regard to the BEAC Operations Account Convention of 3 October 2014; Having regard to the Treaty of 10 July 1992 establishing the Inter-African Conference on Insurance Markets (CIMA); Having regard to Additional Act No. 03/01-CEMAC-CCE-03 of 8 December 2001 establishing the Central African Financial Market Surveillance Commission (COSUMAF); Having regard to Regulation No. 06/03-GEMAC-UMAC of 12 November 2003 on the organization, functioning and supervision of the Central African Financial Market; Having regard to Regulation No. 05/01-UEAC-CM-06 of 3 August 2001 establishing the CEMAC Customs Code; Having regard to Regulation No. 01/17/CEMAC/UMAC/COBAC on the conditions and supervision of microfinance institutions in the CEMAC; Having regard to Regulation No. 01/CEMAC/UMAC/CM of 11 April 2016 on the prevention and repression of money laundering, terrorist financing and proliferation in Central Africa; Considering that foreign exchange regulation contributes to the achievement of the common monetary policy objectives of member states; Considering the need for CEMAC economies to preserve their external balance; Taking into account the liberalization of CEMAC economies and the development of international trade; After receiving the conforming opinion of the BEAC Board of Directors delivered during its extraordinary session on 19 December 2018 in Yaoundé, Republic of Cameroon; Meeting in ordinary session on 21 December 2018 in Yaoundé, Republic of Cameroon; On the proposal of the Governor of the BEAC, HAS ADOPTED UNANIMOUSLY THE REGULATION DONT LA TENEUR SUIT:

Table of Contents TITLE I - GENERAL PROVISIONS... 5 CHAPTER I - DEFINITIONS AND ACRONYMS... 5 CHAPTER II - OBJECT - SCOPE OF APPLICATION - GENERAL PRINCIPLES... 11 CHAPTER III - ADMINISTRATIVE ORGANIZATION OF FOREIGN EXCHANGE REGULATION... 12 Section 1: The BEAC... 12 Section 2: The Ministry in charge of finance and credit... 13 Section 3: The COBAC... 14 Section 4: Approved intermediaries... 14 CHAPTER IV - SETTLEMENT OF OPERATIONS WITH THE EXTERIOR... 15 CHAPTER V: CESSION AND RE-ASSIGNMENT OF CURRENCIES... 16 TITLE II - ACCOUNTS OF RESIDENTS AND NON-RESIDENTS... 16 CHAPTER I - FOREIGN CURRENCY ACCOUNTS OF RESIDENTS... 16 CHAPTER II - NON-RESIDENT ACCOUNTS... 17 Section 1: Foreign currency accounts of non-residents... 17 Section 2: CFA Franc accounts of non-residents... 18 TITLE III - CURRENT TRANSACTIONS... 18 CHAPTER I - EXPORT AND IMPORT OF GOODS... 18 Section 1: Export of goods and repatriation of receipts... 18 Section 2: Import of goods and settlement... 19 Section 3: Transactions relating to gold and precious stones... 20 CHAPTER II - EXPORT AND IMPORT OF SERVICES... 20 Section 1: Export of services and repatriation of receipts... 20 Section 2: Import of services and settlement... 21 CHAPTER III - TRAVELS... 23 CHAPTER IV - MANUAL EXCHANGE... 23 CHAPTER V - OTHER CURRENT TRANSACTIONS... 24 CHAPTER II : LOANS - BORROWINGS - REPAYMENTS... 26 Section I: Borrowings and repayments... 26 CHAPTER III : DIRECT AND PORTFOLIO INVESTMENTS... 29 Section I: Inward direct investments... 29 Section 2: Outward direct investments... 29 Section 3 - Inward portfolio investments... 30 Section 4 - Outward portfolio investments... 31 TITLE V - HEDGING OPERATIONS AGAINST EXCHANGE RATE RISK... 31 TITLE VI - COMMUNICATION OF INFORMATION AND REPORTS ON OPERATIONS WITH THE EXTERIOR... 32 TITLE VII: CONTROLS, OFFENCES AND SANCTIONS... 33 CHAPTER I : CONTROLS... 33 CHAPTER II : OFFENCES AND SANCTIONS... 33 Section I: General provisions... 33 Section 2: Monetary administrative sanctions... 34 Section 3: Non-monetary administrative sanctions... 39 TITLE VIII - SPECIAL, TRANSITIONAL AND FINAL PROVISIONS... 39 CHAPTER I : SPECIAL PROVISIONS... 39 Section I: Escrow, guarantee and similar accounts... 39 Section 2: Safeguard measures relating to the preservation of CEMAC external accounts... 40 CHAPTER II : TRANSITIONAL AND FINAL PROVISIONS... 41

TITRE I - GENERAL PROVISIONS CHAPITRE I - DEFINITIONS AND ACRONYMS Article 1. For the purposes of this Regulation, expressions and acronyms shall be understood as follows:

1. Administrative Authority: State entity involved in the implementation of foreign exchange regulation.
2. Conforming Opinion: Opinion whose terms bind the competent authority, which cannot overrule it.
3. BEAC or Central Bank: Bank of Central African States.
4. Goods: Physical assets or products on which property rights can be established and whose economic ownership can be transferred from one institutional unit to another through transactions.
5. Exchange Bureau: Legal entity approved by the Ministry in charge of finance and credit to exercise manual exchange activities.
6. CAF: Cost, Insurance and Freight.
7. CEMAC: Economic and Monetary Community of Central Africa.
8. Manual Exchange: Banknotes or travel checks sold or purchased in a bank or exchange bureau against local currencies.
9. CIMA: Inter-African Conference on Insurance Markets.
10. COBAC: Central African Banking Commission.
11. Non-resident account: Account opened in the name of a non-resident legal entity.
12. Resident account: Account opened in the name of a resident natural or legal person.
13. Foreign currency account: Account denominated in a currency other than the CFA Franc issued by the BEAC.
14. Escrow account: Deposit account opened with an authorized institution in the name of a beneficiary creditor, whose resources are immobilized for an agreed period.
15. Guarantee account: Account opened with an authorized institution as security for a contractual commitment taken by a debtor.
16. Legal tender: Quality recognized to the currency in circulation in the CEMAC that no one can refuse to receive for settling transactions denominated in CFA Francs.
17. Exchange rate risk hedging: Financial technique aimed at protecting against fluctuations in the exchange rate of the currency in which an asset or liability is denominated.
18. Financial leasing: Professional credit technique involving a contract for the lease of movable or immovable equipment, accompanied by a promise of sale to the lessee, for an agreed price taking into account, at least in part, payments made under leases.
19. Import/Export declaration: Document issued by customs administration attesting to the import or export of goods or services.
20. Foreign currency: Currency other than the CFA Franc issued by the BEAC.
21. Domiciliation: Act by which an importer or exporter mandates an approved intermediary to carry out, on their behalf, the formalities of an import or export transaction from initiation to clearance.
22. Credit institution: Entity that habitually carries out banking operations as defined by banking regulation in the CEMAC states.
23. Sub-delegated institution: Legal entity other than a credit institution, exchange bureau or microfinance establishment, which benefits from a delegation by a credit institution to carry out, under its responsibility, foreign currency purchase operations within the normal course of business, notably hotels, travel agencies, airport shops and casinos.
24. Foreigner or exterior: Country other than those of the CEMAC.
25. Euro: Currency having legal tender and discharge power within the countries of the European System of Central Banks.
26. Export: Outflow of goods or services destined for foreign countries or a free zone installed on the national territory of one of the CEMAC countries, or any other equivalent foreign space.
27. CFA Franc: Franc of the Financial Cooperation in Central Africa or XAF, currency having legal tender and discharge power in CEMAC countries.
28. FOB: Free On Board.
29. GABAC: Central African Anti-Money Laundering Action Group.
30. Import: Inflow of goods or services into the CEMAC, originating from foreign countries or a free zone installed in one of the CEMAC countries, or any other equivalent foreign space.
31. Approved intermediary: Credit institution, postal administration, and for manual exchange operations, microfinance establishments and approved exchange bureaus.
32. Portfolio investment: Cross-border transactions and positions relating to debt securities or shares, other than those of direct investment or reserve assets.
33. Direct investment: Participation of 10% or more held by a resident in the capital of a non-resident enterprise, or by a non-resident in the capital of a resident enterprise, conferring control or significant influence over its management, as well as real estate investment made abroad by a resident or in the CEMAC by a non-resident, including investments in enterprises under indirect control or influence of the investment enterprise, sister companies, and debts.
34. Gratuitous transfer: Act by which a person disposes, free of charge, by inter vivos donation or will, of all or part of their assets or rights in favor of another person, whether family-related or not.
35. LTA: Air Transport Letter (Air Waybill).
36. Foreign exchange market: Intangible financial space where convertible currencies are exchanged.
37. Non-resident: Natural or legal person whose habitual residence or predominant center of economic interest is outside the CEMAC, including:

• Heads of diplomatic missions, diplomats and assimilated personnel, as well as their family members;
• Foreign patients, including long-term, as well as accompanying persons;
• Tourists;
• Students;
• Civil servants employed in extraterritorial enclaves;
• Embassies, consulates, civil and military missions, international and regional organizations;
• Military personnel on mission;
• Seasonal workers;
• Crew members of ships, aircraft and oil platforms;
• Companies or enterprises performing specific temporary tasks in CEMAC countries, unless registered in the commercial and credit register of a CEMAC state, even provisionally.

38. Foreign exchange operation: Spot or forward transaction, manual or automated, the settlement of which involves or implies the conversion of CFA Francs into another currency and vice versa.
39. Electronic payment: Payment made wholly or partly using an electronic means of payment, as defined by regulations on electronic money.
40. Discharge power: Property of extinguishing debts, attached to the official currency in circulation in CEMAC member states.
41. Arm's length principle: Rule according to which prices of transactions between related entities are established by reference to prices charged by independent enterprises.
42. Proliferation: Activity aimed at manufacturing, procuring, developing, possessing, transporting, transferring or using nuclear, biological, chemical weapons or their vectors, particularly for terrorist purposes.
43. Financial market regulator: Authority in charge of supervising the Central African financial market.
44. Resident: Natural or legal person whose habitual residence or predominant center of economic interest is within the CEMAC, even if residing there discontinuously for more than one year in one of the CEMAC countries, or intending to exercise an economic activity there for at least one year, including refugees, locally recruited employees of extraterritorial enclaves, personnel of international organizations without diplomatic or assimilated status, and branches of multinationals.
45. Foreign resident: Resident natural person, national of a country other than those of the CEMAC.
46. Factor production income: Income accruing to institutional units in return for their contribution to production or provision of financial assets and leasing of natural resources to other institutional units.
47. Exchange rate risk: Uncertainty affecting the value of a currency relative to another, in the short and medium term, related to future variations in their respective conversion rates.
48. Service: Intangible provision supplied by a resident to a non-resident and vice versa.
49. Current transactions: Flows of goods, services, as well as primary and secondary income.
50. Transfer: Transaction executed at least partly electronically for the account of an order giver, through a payment service provider, with the aim of making funds available to a beneficiary.
51. VAT: Value Added Tax.
52. UEMOA: West African Economic and Monetary Union.
53. UMAC: Monetary Union of Central Africa.
54. Securities and other financial instruments: Instruments and rights assimilated to securities, recorded in accounts, issued by public or private legal entities, conferring identical rights per category, fungible, freely transferable and movable by operation of law, granting direct or indirect access to a portion of the issuing entity's capital or a general claim right on its assets, including shares representing shareholders' rights, bonds and other debt securities, as well as social shares or units of collective investment schemes in securities.
55. CEMAC securities: Securities issued in a member state of the CEMAC by a resident public or private legal entity and denominated in CFA Francs.
56. Foreign securities: Securities issued in a member state of the CEMAC by a public or private legal entity and denominated in foreign currency, or issued in CFA Francs by a non-resident.
57. Firm sale: Contract by which the seller transfers ownership of a thing and undertakes to deliver it to the buyer, who undertakes to pay the price.
58. Emission zone: Area grouping CEMAC countries using the CFA Franc issued by the BEAC.
59. Zone Franc: Monetary cooperation space comprising France and Monaco, Comoros, CEMAC member states (Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea and Chad) as well as UEMOA member states (Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo), linked by monetary cooperation agreements.

CHAPITRE II - OBJECT - SCOPE OF APPLICATION - GENERAL PRINCIPLES Article 2. This Regulation defines the organization as well as the conditions and procedures for carrying out foreign exchange operations in CEMAC member states. Article 3. This Regulation applies to payments and settlements of current or capital transactions destined for or originating from the exterior, as well as to manual foreign exchange operations by all resident and non-resident economic agents. Article 4. All transactions covered by this Regulation must comply with the prevailing CEMAC regulations on the prevention and repression of money laundering, terrorist financing and proliferation. Article 5. Capital transactions are free, unless otherwise provided by this Regulation. Article 6. All transfers, payments and settlements of current transactions destined for foreign countries may be carried out freely, subject to proof of the origin of funds and presentation of documents required by foreign exchange regulation. However, up to 1 million CFA Francs per month and per economic agent, these operations are carried out freely upon simple indication of the origin of funds, subject to their declaration to the Central Bank. Article 7. The currency issued and having legal tender and discharge power in the CEMAC is the Franc of the Financial Cooperation in Central Africa, abbreviated as CFA Franc. The CFA Franc is pegged to the Euro at a fixed parity, at the rate of 1 CFA Franc equal to 0.001524 Euro. Article 8. Purchase and selling rates for currencies other than the euro are established based on the fixed exchange rate of the CFA Franc against the euro and the rates of these currencies against the euro on foreign exchange markets. Approved intermediaries display purchase and selling rates for currencies in their rate sheets. Article 9. A commission known as the manual exchange fee, determined by free market competition, is charged by approved intermediaries on foreign banknote exchanges. It covers all charges related to manual exchange operations as well as the intermediary margin. The Central Bank may, however, set a maximum rate depending on market conditions. Article 10. Imports of foreign currencies by the BEAC are free from all taxes and customs duties. Article 11. Subject to prior authorization by the Central Bank, approved intermediaries may import foreign currencies under conditions and procedures specified by its Instruction. Foreign currency imports made by approved intermediaries are subject only to a stamp duty of 0.01% of their face value. Article 12. Subject to administrative and criminal sanctions provided by prevailing regulations, the export of CFA Franc banknotes is prohibited, subject to the right granted exclusively to residents to hold during their travels a maximum amount of 5,000 FCFA.

CHAPITRE III - ADMINISTRATIVE ORGANIZATION OF FOREIGN EXCHANGE REGULATION Section 1: The BEAC Article 13. In accordance with its Statutes, the BEAC conducts the CEMAC foreign exchange policy. To this end, it elaborates rules for implementing foreign exchange policy and ensures, in collaboration with the Ministry in charge of finance and credit, that economic agents comply with the applicable foreign exchange regulation in the CEMAC. Article 14. The BEAC issues a conforming opinion for the approval of exchange bureaus by the Ministry in charge of finance and credit. Article 16. Within its supervisory mission, the BEAC verifies the compliance of transactions and operations with the exterior with foreign exchange regulation. To this end, it carries out, with the assistance of COBAC and the Ministry in charge of finance and credit, on-site and documentary inspections to ensure compliance by approved intermediaries and other economic agents with all provisions relating to foreign exchange regulation. Article 17. Within the framework of its inspections, the BEAC may request economic agents to communicate information regarding their transactions with the exterior, accompanied by necessary supporting documents. Article 18. The BEAC identifies infringements of foreign exchange regulation and imposes administrative sanctions on non-compliant economic agents. To this end, it may request the assistance of the Ministry in charge of finance and credit and COBAC under conditions and procedures set out in this Regulation. The BEAC notifies the Ministry in charge of finance and credit, and where applicable COBAC, of economic agents' failures to comply with foreign exchange regulation.

Section 2: The Ministry in charge of finance and credit Article 19. The Ministry in charge of finance and credit grants and withdraws the approval of exchange bureaus. To this end, it exercises administrative control over them. Article 20. The competent administrations of the Ministry in charge of finance and credit contribute to monitoring the implementation of prevailing foreign exchange regulation in the CEMAC. They are notably responsible for:

• formalizing imports and exports of goods and services;
• verifying the actual inflow and outflow of goods and services during exports and imports;
• controlling economic agents at border posts. Article 21. The competent administrations of the Ministry in charge of finance and credit communicate to the Central Bank information relating to imports and exports of goods and services.

Section 3: The COBAC Article 23. COBAC assists the BEAC in monitoring the implementation of foreign exchange regulation. To this end, under conditions and procedures set out in this Regulation and its implementing texts, COBAC is notably responsible for:

• supervising approved intermediaries to ensure compliance with their obligations.