BCEAO Instruction 006-05-2018 on Monetary Sanctions for UMOA Credit Institutions

The Governor of the Central Bank of West African States, Having regard to the Treaty of the West African Monetary Union (UMOA) dated 20 January 2007, particularly Article 34 thereof; Having regard to the Statutes of the Central Bank of West African States attached to the UMOA Treaty dated 20 January 2007, particularly Articles 30 and 59 thereof; Having regard to the Annex to the Convention governing the UMOA Banking Commission, particularly Article 31 thereof; Having regard to the Uniform Act on banking regulation, particularly Articles 77 and 113 and its implementing texts; Having regard to the Uniform Act on regulation of Credit Information Offices in the Member States of UMOA, particularly Article 63 and its implementing texts, RESOLVES

Article 1: Subject Matter The present Instruction sets out the implementation procedures for monetary sanctions imposed by the UMOA Banking Commission on credit institutions, in addition to disciplinary sanctions.

Avenue Abdoulaye FADIGA P.O. Box 3108 – Dakar – Senegal Tel. (221) 33 839 05 00 / Fax. (221) 33 823 93 35 courrier.bceao@bceao.int – www.bceao.int

INSTRUCTION NO. 006-05-2018 DETERMINING THE IMPLEMENTATION PROCEDURES FOR MONETARY SANCTIONS IMPOSED BY THE BANKING COMMISSION OF THE WEST AFRICAN MONETARY UNION ON UMOA CREDIT INSTITUTIONS The Governor

Article 2: Classification of Offences under Banking Regulation and Credit Information Offices The classification of offences under banking regulation and Credit Information Offices depends, inter alia, on their nature and degree of severity. These offences are grouped into three categories according to the underlying risk scale. First category offences relate to breaches of provisions of banking regulation or Credit Information Offices, inducing administrative risks resulting notably from failure to comply with administrative formalities. Second category offences encompass breaches of provisions of banking regulation or Credit Information Offices, resulting from failure to comply with rules concerning accounting, information and internal control. Third category offences relate to breaches of provisions of banking regulation or Credit Information Offices, which are likely to affect the financial structure of the concerned institution. A classification grid of offences under banking regulation or Credit Information Offices is attached to this Instruction as an annex.

Article 3: Maximum Amount of Monetary Sanctions The amount of monetary sanctions referred to in Article 1 above is, at most, equal to: – three hundred million (300,000,000) FCFA for banks; – ninety million (90,000,000) FCFA for financial institutions with a banking character. In the event of multiple offences requiring the application of several monetary sanctions, the cumulative amount of said sanctions shall not exceed the ceiling amounts referred to in the first paragraph above.

Article 4: Quantum of Monetary Sanctions Within the limits of the ceilings defined in Article 3 above, the table attached to this Instruction sets out the amount of monetary sanctions by type of offence.

Article 5: Recovery of Monetary Sanctions The amounts corresponding to monetary sanctions are recovered by the Central Bank of West African States abbreviated as "BCEAO". Upon expiry of the two-month appeal period granted to the credit institution, the Central Bank proceeds with the automatic debit of the credit institution's account held in its books, subject to sufficient funds.

Article 6: Entry into Force This Instruction, including its annexes which form an integral part thereof, repeals and replaces all prior contrary provisions dealing with the same subject matter. It enters into force as of 28 May 2018 and shall be published wherever necessary. Done at Dakar, on 16 May 2018 Tiémoko Meyliet KONE

CLASSIFICATION GRID OF OFFENCES AND APPLICABLE MONETARY SANCTIONS BY THE BANKING COMMISSION OF THE WEST AFRICAN MONETARY UNION TO CREDIT INSTITUTIONS

Annex No. 1 CLASSIFICATION OF OFFENCES UNDER BANKING REGULATION OR CREDIT INFORMATION OFFICES

1. Category 1: Irregular maintenance of the list of administrators and directors, along with non-compliance with related obligations (Article 29 of the Banking Act); Failure to communicate documents and information to supervisory authorities (Ministry in charge of Finance, Central Bank, Banking Commission) (Article 53 of the Banking Act); Breaches of obligations to declare information to BCEAO on behalf of Credit Information Offices (Article 42, points 6 and 7 of the Act on regulation of Credit Information Offices); Failure to certify financial statements (Article 51 of the Banking Act). Category 2: Non-compliance with prudential standards (Articles 34, 36, 37 and 56 of the Banking Act); Non-compliance with decisions taken by the Council of Ministers, Central Bank and Banking Commission (Articles 56 and 57 of the Banking Act); Failure to establish special or general reserves (Article 37 of the Banking Act). Category 3: [Spans across rows]

2. Category 1: Non-compliance with the obligation to retain client consent (Article 42, point 2 of the Act on regulation of Credit Information Offices); Failure to appoint or approve an auditor (Articles 51, 4th and 5th paragraphs of the Banking Act); Failure to publish financial statements (Article 51, 7th paragraph of the Banking Act). Category 2: Breaches of obligations to consult Credit Information Offices (Article 60 of the Act on regulation of Credit Information Offices); Breaches of obligations to inform clients regarding adverse actions and provide a copy of the credit report used (Article 43, point 4 of the Act on regulation of Credit Information Offices); Actions aimed at opposing controls by supervisory authorities (Ministry in charge of Finance, Central Bank and Banking Commission) (Articles 59 and 104 of the Banking Act); Non-compliance with rules on internal control, risk management and compliance functioning; Refusal to submit to Banking Commission or Central Bank control during liquidation (Article 96 of the Banking Act). Category 3: [Spans across rows]

3. Category 1: Exercise of the function of administrator or director without derogation from the nationality condition (Article 25 of the Banking Act); Non-compliance with professional secrecy (Article 30 of the Banking Act); Non-compliance with the obligation to provide Credit Information Offices with information on clients' credit history who have consented to sharing and consultation of their credit information (Article 42, point 5 of the Act on regulation of Credit Information Offices); Non-compliance with confidentiality of information within the credit information sharing system (Article 42, point 3 and Articles 43, points 1, 2, 5 and 6 of the Act on regulation of Credit Information Offices); Non-compliance with the rule regarding the non-opposability of professional secrecy to monetary and supervisory authorities as well as judicial authorities (Article 53 of the Banking Act). Category 2: [Empty] Category 3: Execution without authorization, by a duly approved financial institution with a banking character, of operations not provided for in the approval decision (deposit collection, etc.) (Articles 17 and 49 of the Banking Act).

4. Category 1: Failure to notify supervisory authorities of the opening, closing, transformation, transfer, assignment or management of counters or branches (Article 42 of the Banking Act). Category 2: [Empty] Category 3: Execution of threshold-crossing operations by a credit institution in the absence of required prior authorizations (Articles 39 and 40 of the Banking Act).

5. Category 1: Non-membership in APBEF (Article 55 of the Banking Act); Failure to sign the service contract with Credit Information Offices or non-membership in the Code of Conduct and Ethics (Article 42, point 4 and Article 43, point 3 of the Act on regulation of Credit Information Offices); Non-compliance with rules concerning the procedures and purpose of collecting and sharing personal information (Articles 55 and 62 of the Act on regulation of Credit Information Offices); Non-membership in a deposit guarantee scheme (Article 65 of the Banking Act). Category 2: [Empty] Category 3: Violation of the prohibition on banks engaging, for their own account or on behalf of others, in commercial, industrial, agricultural or service activities (Article 43 of the Banking Act); Violation of the prohibition on banks acquiring their own shares or granting loans secured by their own shares (Article 44 of the Banking Act); Violation of prohibitions on exercising activities due to conviction, bankruptcy, dismissal, suspension or resignation (Article 26 of the Banking Act).

Annex No. 2 QUANTUM OF MONETARY SANCTIONS

Table 2.1: Monetary Sanctions Applicable to Banks

Categories of Offence	Quantum of Monetary Sanctions
First category	Five (5) million to fifty (50) million FCFA
Second category	Fifty-one (51) million to one hundred fifty (150) million FCFA
Third category	One hundred fifty-one (151) million to three hundred (300) million FCFA

Table 2.2: Monetary Sanctions Applicable to Financial Institutions with a Banking Character

Categories of Offence	Quantum of Monetary Sanctions
First category	Two million five hundred thousand (2,500,000) to fifteen (15) million FCFA
Second category	Sixteen (16) million to sixty (60) million FCFA
Third category	Sixty-one (61) million to ninety (90) million FCFA