Compilation of Legislative and Regulatory Texts Applicable to Decentralized Financial Systems in the West African Monetary Union (UMOA)

---

Bénin Côte d’Ivoire Burkina Faso Togo Mali Niger Sénégal Guinée-Bissau COMPILATION OF LEGISLATIVE AND REGULATORY TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN THE WEST AFRICAN MONETARY UNION (UMOA) Bénin Côte d’Ivoire Burkina Faso Togo Mali Niger Sénégal Guinée-Bissau COMPILATION OF LEGISLATIVE AND REGULATORY TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN THE WEST AFRICAN MONETARY UNION (UMOA)

Funded by Luxembourg Cooperation COMPILATION OF LEGISLATIVE AND REGULATORY TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN THE WEST AFRICAN MONETARY UNION (UMOA)

3 TABLE OF CONTENTS ............7 ............9 ........11 .......13 .......14 .......16 .......23 .......25 .......29 .......30 .......32 ........33 .......35 .......39 .......40 ........41 PRESENTATION OF THE CONTENT OF THE "COMPILATION OF LEGISLATIVE AND REGULATORY TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN THE WEST AFRICAN MONETARY UNION (UMOA)"... I TEXTS GOVERNING THE ACTIVITY OF DECENTRALIZED FINANCIAL SYSTEMS IN UMOA.... THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6, 2007 BY THE UNION COUNCIL OF MINISTERS........................................................................................................... TITLE I: DEFINITIONS....................................................................................................... TITLE II: SCOPE OF REGULATION FOR DECENTRALIZED FINANCIAL SYSTEMS................................................................................................ TITLE III: COMMON PROVISIONS FOR DECENTRALIZED FINANCIAL SYSTEMS.............. TITLE IV: OFFENCES AND SANCTIONS............................................................................. TITLE V: PROVISIONS SPECIFIC TO MUTUALIST OR COOPERATIVE SAVINGS AND CREDIT INSTITUTIONS.................................................................................. TITLE VI: SPECIFIC PROVISIONS FOR OTHER DECENTRALIZED FINANCIAL SYSTEMS..... TITLE VII: PROVISIONS RELATING TO COLLECTIVE LIQUIDATION PROCEDURES ................. TITLE VIII: TRANSITIONAL AND FINAL PROVISIONS.......................................................... THE IMPLEMENTING DECREE OF THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6 2007 BY THE UNION COUNCIL OF MINISTERS.................................................................. TITLE I: CONSTITUTION AND OPERATION OF DECENTRALIZED FINANCIAL SYSTEMS.... TITLE II: APPROVAL AND WITHDRAWAL OF APPROVAL................................................................... TITLE III: EXCEPTIONS TO THE AFFILIATION REGIME............................................................... TITLE IV: FINANCIAL BODIES....................................................................................... TITLE V: FINAL PROVISIONS....................................................................................... THE IMPLEMENTING INSTRUCTIONS OF THE LAW ON REGULATION OF DFS (14 INSTRUCTIONS)...............................................................................................................

4 .......43 .......45 .......47 .......49 .......51 .......55 .......57 .......59 .......69 .......71 .......77 ......85 .......87 .......91 • INSTRUCTION NO. 025-02-2009 ESTABLISHING A SPECIFIC ACCOUNTING FRAMEWORK FOR DECENTRALIZED FINANCIAL SYSTEMS OF THE WEST AFRICAN MONETARY UNION. • INSTRUCTION NO. 026-02-2009 RELATING TO THE IMPLEMENTATION CONDITIONS OF THE CHART OF ACCOUNTS PROVIDED BY THE SPECIFIC ACCOUNTING FRAMEWORK FOR DECENTRALIZED FINANCIAL SYSTEMS OF THE WEST AFRICAN MONETARY UNION........................ • INSTRUCTION NO. 030-02-2009 SETTING OUT THE MODALITIES FOR ESTABLISHMENT AND PRESERVATION OF FINANCIAL STATEMENTS OF DECENTRALIZED FINANCIAL SYSTEMS OF THE WEST AFRICAN MONETARY UNION.................................................................. • INSTRUCTION NO. 004-06-2010 RELATING TO THE WITHDRAWAL OF RECOGNITION FOR SAVINGS AND CREDIT GROUPINGS IN ACTIVITY IN MEMBER STATES OF THE WEST AFRICAN MONETARY UNION (UMOA)........................................................... • INSTRUCTION NO. 005-06-2010 DETERMINING THE CONSTITUENT ELEMENTS OF THE APPROVAL APPLICATION FILE FOR DECENTRALIZED FINANCIAL SYSTEMS IN MEMBER STATES OF THE WEST AFRICAN MONETARY UNION (UMOA)...................................... • INSTRUCTION NO. 006-06-2010 RELATING TO AUDIT FUNCTIONS WITHIN DECENTRALIZED FINANCIAL SYSTEMS OF MEMBER STATES OF THE WEST AFRICAN MONETARY UNION (UMOA)......................................................................................... • INSTRUCTION NO. 007-06-2010 RELATING TO CONTROL AND SANCTION MODALITIES FOR DECENTRALIZED FINANCIAL SYSTEMS BY THE CENTRAL BANK OF WEST AFRICAN STATES AND THE UMOA BANKING COMMISSION (UMOA)................................................................... • INSTRUCTION NO. 010-08-2010 RELATING TO PRUDENTIAL RULES APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS OF MEMBER STATES OF THE WEST AFRICAN MONETARY UNION (UMOA)......................................................................................... • INSTRUCTION NO. 016-12-2010 RELATING TO THE FINANCING OF FIXED ASSETS AND PARTICIPATIONS BY DECENTRALIZED FINANCIAL SYSTEMS................................... • INSTRUCTION NO. 017-12-2010 RELATING TO THE ORGANIZATION OF INTERNAL CONTROL WITHIN DECENTRALIZED FINANCIAL SYSTEMS....................................................... • INSTRUCTION NO. 018-12-2010 RELATING TO THE OBLIGATION FOR DECENTRALIZED FINANCIAL SYSTEMS TO PRODUCE AN ANNUAL REPORT...................................................... • INSTRUCTION NO. 019-12-2010 RELATING TO THE ESTABLISHMENT OF A SECURITY OR SOLIDARITY FUND WITHIN NETWORKS OF MUTUALIST OR COOPERATIVE SAVINGS AND CREDIT INSTITUTIONS............................................................................................ • INSTRUCTION NO. 020-12-2010 RELATING TO PERIODIC INDICATORS TO BE TRANSMITTED BY DECENTRALIZED FINANCIAL SYSTEMS TO THE MINISTER IN CHARGE OF FINANCE, THE CENTRAL BANK AND THE UMOA BANKING COMMISSION (UMOA).................................................................... • INSTRUCTION NO. 021-12-2010 DETERMINING THE CATEGORY OF DECENTRALIZED FINANCIAL SYSTEMS AUTHORIZED TO APPLY THE REDUCED VERSION OF THE ACCOUNTING FRAMEWORK

5 .......93 .......97 .......97 .......99 ......101 .....103 .....105 ......107 ......109 .......111 .....113 .......115 .......117 .......119 .......131 .......133 .....135 .......137 THE STANDARD INTERNAL REGULATIONS OF THE SECURITY OR SOLIDARITY FUND WITHIN NETWORKS OF MUTUALIST OR COOPERATIVE SAVINGS AND CREDIT INSTITUTIONS (IMCEC) OF UMOA... TITLE I: GENERAL PROVISIONS................................................................................. TITLE II: MODALITIES FOR FUND MANAGEMENT................................................................... TITLE III: ALLOCATIONS AND INTERVENTIONS OF THE FUND......................................................... TITLE IV: FINAL PROVISIONS................................................................................... II OTHER TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN UMOA........ II.1 Circulars adopted by the UMOA Banking Commission on January 4, 2011.. • CIRCULAR NO. 001-2011/CB/C RELATING TO THE HEARING PROCEDURE FOR EXECUTIVES, ADMINISTRATORS AND SHAREHOLDER REPRESENTATIVES OF CREDIT INSTITUTIONS AND DFS OF UMOA.............................................................................................. • CIRCULAR NO. 006-2011/CB/C RELATING TO THE PROVISIONAL ADMINISTRATION OF CREDIT INSTITUTIONS AND DFS OF UMOA.................................................... • CIRCULAR NO. 007-2011/CB/C RELATING TO THE LIQUIDATION OF CREDIT INSTITUTIONS AND DFS OF UMOA............................................................................................. II.2 TEXTS RELATING TO CURRENCY AND CREDIT MANAGEMENT......................................... • FRAMEWORK LAW DEFINING AND REPRESSING USURY....................................... • FRAMEWORK DECREE RELATING TO THE CALCULATION OF THE EFFECTIVE GLOBAL RATE..................................... • DECISION NO. 397/12/2010 LAYING DOWN RULES, INSTRUMENTS AND PROCEDURES FOR IMPLEMENTING THE MONETARY AND CREDIT POLICY OF BCEAO........................... • DECISION NO. 061/03/2011 RELATING TO THE ADMISSIBILITY CRITERIA FOR BANK CREDITS GRANTED TO DFS IN SUPPORT OF BCEAO REFINANCING.......................... • INSTRUCTION NO. 003/03/11 RELATING TO THE TRANSMISSION OF INFORMATION LINKED TO BANKING CONDITIONS IN UMOA...................................................................... II.3 TEXTS RELATING TO ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING ...................................................... • DIRECTIVE NO. 07/2002/CM/UEMOA OF SEPTEMBER 19, 2002 RELATING TO ANTI-MONEY LAUNDERING IN UEMOA MEMBER STATES.........................

6 .......147 .......151 .......171 .......177 .......187 .....209 .......211 .......253 • REGULATION NO. 14/2002/CM/UEMOA RELATING TO THE FREEZING OF FUNDS AND OTHER FINANCIAL RESOURCES IN THE CONTEXT OF ANTI-TERRORISM FINANCING IN UEMOA MEMBER STATES................................................................................ • UNIFORM LAW RELATING TO ANTI-MONEY LAUNDERING IN UMOA MEMBER STATES, ADOPTED BY THE UNION COUNCIL OF MINISTERS ON MARCH 19 2003....................................................................................................................... • INSTRUCTION NO. 01/2007/RB OF JULY 2, 2007 RELATING TO ANTI-MONEY LAUNDERING WITHIN FINANCIAL BODIES.................................................... • DIRECTIVE NO. 04/2007/CM/UEMOA OF JULY 4, 2007 RELATING TO ANTI-TERRORISM FINANCING IN UEMOA MEMBER STATES........................ • UNIFORM LAW RELATING TO ANTI-TERRORISM FINANCING IN UMOA MEMBER STATES, ADOPTED BY THE UNION COUNCIL OF MINISTERS ON MARCH 28 2008...................................................................................................................... II.4 TEXTS RELATING TO PAYMENT SYSTEMS............................................................... • REGULATION NO. 15/2002/CM/UEMOA OF SEPTEMBER 19, 2002 RELATING TO PAYMENT SYSTEMS IN UEMOA MEMBER STATES........................................................ • INSTRUCTION NO. 01/2006/SP OF JULY 31, 2006 RELATING TO THE ISSUANCE OF ELECTRONIC MONEY AND ELECTRONIC MONEY ESTABLISHMENTS..........................

7 Afin to enable better information for microfinance sector stakeholders, this compilation is designed under project AFR/017, containing the main legal texts applicable to decentralized financial systems (DFS) in the West African Monetary Union (UMOA). The objective is to contribute to the dissemination of the DFS regulatory framework within the Union. The "Compilation of Legislative and Regulatory Texts Applicable to Decentralized Financial Systems in the West African Monetary Union (UMOA)" is subdivided as follows: 1 - texts governing DFS activities in UMOA; 2 - other texts applicable to DFS in UMOA, notably: • Banking Commission circulars of UMOA; • texts relating to currency and credit management; • texts relating to anti-money laundering and counter-terrorism financing; • texts relating to payment systems; I. TEXTS GOVERNING THE ACTIVITY OF DECENTRALIZED FINANCIAL SYSTEMS IN UMOA This category of texts consists of the following elements: • The Law on regulation of DFS, adopted on April 6, 2007 by the Union Council of Ministers; • The Implementing Decree of the Law on regulation of DFS, adopted on April 6, 2007 by the Union Council of Ministers; • The Implementing Instructions of the Law on regulation of DFS (14 instructions); • The Standard Internal Regulations of the Security or Solidarity Fund within networks of mutualist or cooperative savings and credit institutions (IMCEC) of UMOA. II. OTHER TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN UMOA II.1 Circulars adopted by the UMOA Banking Commission on January 4, 2011 These are: • Circular No. 001-2011/CB/C relating to the hearing procedure for executives, administrators and shareholder representatives of credit institutions and DFS of UMOA; • Circular No. 006-2011/CB/C relating to the provisional administration of credit institutions and DFS of UMOA; PRESENTATION OF THE CONTENT OF THE "COMPILATION OF LEGISLATIVE AND REGULATORY TEXTS APPLICABLE TO DECENTRALIZED FINANCIAL SYSTEMS IN THE WEST AFRICAN MONETARY UNION (UMOA)"

8 • Circular No. 007-2011/CB/C relating to the liquidation of credit institutions and DFS of UMOA. II.2 Texts relating to currency and credit management These texts are, essentially: • The Framework Law defining and repressing usury; • The Framework Decree relating to the calculation of the effective global rate; • Decision No. 397/12/2010 laying down rules, instruments and procedures for implementing the monetary and credit policy of BCEAO; • Decision No. 61/03/2011 relating to the admissibility criteria for bank credits granted to DFS in support of BCEAO refinancing; • Instruction No. 03/03/11 relating to the transmission of information linked to banking conditions in UMOA. II.3 Texts relating to anti-money laundering and counter-terrorism financing This section includes the following texts: • Directive No. 07/2002/CM/UEMOA of September 19, 2002 relating to anti-money laundering in UEMOA member states; • Regulation No. 14/2002/CM/UEMOA of September 19, 2002 relating to the freezing of funds and other financial resources in the context of counter-terrorism financing in UEMOA member states; • The Uniform Law relating to anti-money laundering in UMOA member states, adopted by the Union Council of Ministers on March 19, 2003; • Directive No. 04/2007/CM/UEMOA of July 4, 2007 relating to counter-terrorism financing in UEMOA member states; • The Uniform Law relating to counter-terrorism financing in UMOA member states, adopted by the Union Council of Ministers on March 28, 2008; • Instruction No. 01/2007/RB of July 2, 2007 relating to anti-money laundering within financial bodies. II.4 Texts relating to payment systems This section is composed of the following texts: • Regulation No. 15/2002/CM/UEMOA of September 19, 2002 relating to payment systems in UEMOA member states; • Instruction No. 01/2006/SP of July 31, 2006 relating to the issuance of electronic money and electronic money establishments. Content of the "Compilation of Legislative and Regulatory Texts Applicable to Decentralized Financial Systems in the West African Monetary Union (UMOA)"

TEXTS GOVERNING THE ACTIVITY OF DECENTRALIZED FINANCIAL SYSTEMS IN UMOA I

THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6, 2007 BY THE UNION COUNCIL OF MINISTERS 11 THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6, 2007 BY THE UNION COUNCIL OF MINISTERS

13 THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6, 2007 BY THE UNION COUNCIL OF MINISTERS 13 ARTICLE 1 For the purposes of this law, the following terms shall be understood as: 1°) Agency: a structure without legal personality dependent on the registered office of a decentralized financial system and endowed with management autonomy according to the modalities provided by the statutes of the decentralized financial system; 2°) Association: a grouping of persons who meet the definition given by the relevant national law; 3°) Professional association: a grouping of all decentralized financial systems of a member state responsible, among other things, for ensuring the promotion and defense of the collective interests of its members; 4°) Central Bank: Central Bank of West African States (BCEAO); 5°) Banking Commission: UMOA Banking Commission; 6°) Confederation: an institution resulting from the grouping of federations and, exceptionally, unions under this law; 7°) Federation: an institution resulting from the grouping of unions and, exceptionally, basic institutions under this law; 8°) Counter/Kiosk: a permanent or temporary structure attached to an agency or registered office providing only routine services; 9°) Basic institution: an institution mainly composed of natural persons and subject to mutualist or cooperative action rules; 10°) Mutualist or cooperative savings and credit institution: a grouping of persons, endowed with legal personality, without profit motive and with variable capital, founded on the principles of union, solidarity and mutual assistance and having as its main object to collect savings from its members and grant them credit; 11°) Ministry: Ministry in charge of Finance; 12°) Minister: Minister in charge of Finance; 13°) OHADA: Organisation for the Harmonisation of Business Law in Africa; 14°) Financial body: a structure created by a network, endowed with legal personality, having the status of a bank or financial institution and whose main object is to centralize and manage the surplus resources of network members; 15°) Regulations: internal regulations of the institution; 16°) Network: a set of institutions affiliated to the same union, federation or confederation; 17°) Financial services: operations (deposit collection, money lending, commitment by signature) carried out by decentralized financial systems within the framework of the approval issued by the Minister; 18°) Company: a grouping of persons meeting the definition given by the OHADA Uniform Act relating to commercial company law and economic interest grouping; 19°) Statutes: statutes of the institution; 20°) Ministry monitoring structure: the body in charge of decentralized financial systems within the Ministry in charge of Finance; 21°) Decentralized financial system: an institution whose main object is to offer financial services to persons who generally do not have access to the operations of banks and financial institutions as defined by the banking regulation law and authorized under this law to provide these services; 22°) UMOA: West African Monetary Union; 23°) Union: an institution resulting from the grouping of basic institutions. TITLE I: DEFINITIONS THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6, 2007 BY THE UNION COUNCIL OF MINISTERS

14 THE LAW ON REGULATION OF DFS, ADOPTED ON APRIL 6, 2007 BY THE UNION COUNCIL OF MINISTERS CHAPTER 1: SCOPE OF APPLICATION Article 2 This law applies to institutions, structures or organizations exercising their activity on the territory of ( )1, regardless of their legal status, place of registered office or principal establishment and nationality of the owners of their share capital, if applicable, or of their executives. These institutions, structures or organizations are designated under the name "decentralized financial systems".

Article 3 Unless otherwise provided by this law, the law ( )2 on cooperatives and mutuals does not apply to decentralized financial systems. Chapter 2: Operations of decentralized financial systems Article 4 The operations that decentralized financial systems may carry out are: 1°) deposit collection: Funds, other than mandatory contributions and levies, collected by the decentralized financial system from its members or clients with the right to dispose of them within the framework of its activity, subject to reimbursing them upon request by depositors according to agreed terms, are considered deposits. 2°) lending operations: Any act by which a decentralized financial system makes funds available to a member or client for consideration, subject to the latter repaying them at the agreed maturity, is considered a lending operation. The maximum amount of loans on a single signature is fixed, as necessary, by an instruction of the Central Bank. 3°) commitment by signature operations: Any act by which a decentralized financial system takes, in the interest of a member or client, an aval, guarantee or other security is considered a commitment by signature operation.

Article 5 Operations carried out by decentralized financial systems in their capacity as financial intermediaries are performed on national territory. The provision in the preceding paragraph does not apply to confederations grouping federations of more than one UMOA member state.

Article 6 Decentralized financial systems are classified into two categories, according to the nature of operations they are authorized to perform: • institutions that collect deposits and grant loans to their members or third parties; • institutions that grant loans without exercising deposit collection activities. Decentralized financial systems of one category cannot exercise the activities of another category without prior authorization from the Minister, granted as in matters of approval. Decentralized financial systems planning to exercise activities or professions governed by specific provisions must request the required authorizations and comply with regulations applicable to the envisaged operations, subject to contrary provisions of this law. Chapter 3: Provisions relating to approval and withdrawal of approval Article 7 Decentralized financial systems must, prior to exercising their activity, be approved by the Minister.

Article 8 Approval applications are addressed to the Minister and deposited with the ministry monitoring structure, which processes them. An instruction of the Central Bank determines the constituent elements of the approval file. The ministry monitoring structure obtains all information on the quality of promoters and, where applicable, on that