CEMAC Foreign Exchange Regulation No. 02/18

CENTRAL AFRICAN ECONOMIC AND MONETARY COMMUNITY REGULATION N° ____ / 18 / CEMAC / UMAC / CM CENTRAL AFRICAN MONETARY UNION FOREIGN EXCHANGE REGULATION IN CEMAC MINISTERIAL COMMITTEE

THE MINISTERIAL COMMITTEE

Having seen the revised Treaty of June 25, 2008, of the Central African Economic and Monetary Community (CEMAC); Having seen the Convention of June 25, 2008, governing the Central African Monetary Union (UMAC); Having seen the Monetary Cooperation Agreement of November 23, 1972, between the member states of the Bank of Central African States (BEAC) and the French Republic; Having seen the current Statutes of the BEAC; Having seen the Convention of October 16, 1990, establishing a Central African Banking Commission and subsequent amending texts; Having seen the Convention of January 17, 1992, on the harmonization of banking regulations in the Central African States and subsequent amendments thereto; Having seen the BEAC Operations Account Convention of October 3, 2014; Having seen the Treaty of July 10, 1992, establishing the Inter-African Conference on Insurance Markets (CIMA); Having seen Additional Act N° 03/01-CEMAC-CCE-03, of December 8, 2001, establishing the Central African Financial Market Supervisory Commission (COSUMAF);

Having seen Regulation N° 06/03-CEMAC-UMAC, of November 12, 2003, on the organization, functioning, and supervision of the Central African financial market; Having seen Regulation N° 05/01-UEAC-097-CM-06 of August 3, 2001, on the CEMAC Customs Code; Having seen Regulation N° 01/17/CEMAC/UMAC/COBAC on the conditions for exercising and controlling the activities of microfinance institutions in CEMAC; Having seen Regulation N° 01/CEMAC/UMAC/CM, of April 11, 2016, on the prevention and repression of money laundering and the financing of terrorism and proliferation in Central Africa; Considering that foreign exchange regulations contribute to achieving the objectives of the common monetary policy of the 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 obtaining the approval of the BEAC Board of Directors issued at its extraordinary session of December 19, 2018, in Yaoundé, Republic of Cameroon; Convened in ordinary session on December 21, 2018, in Yaoundé, Republic of Cameroon; At the proposal of the Governor of the BEAC,

UNANIMOUSLY ADOPTS THE REGULATION WHOSE CONTENT IS INDICATED BELOW:

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Table of Contents

TITLE I - GENERAL PROVISIONS ................................................................................................. 5
CHAPTER I - DEFINITIONS AND ACRONYMS.......................................................................................... 5
CHAPTER II - OBJECTIVE - SCOPE - GENERAL PRINCIPLES ....................................................... 12
CHAPTER III - ADMINISTRATIVE ORGANIZATION OF FOREIGN EXCHANGE REGULATION................ 13
Section 1: Of the BEAC............................................................................................................................ 13
Section 2: Of the Ministry in charge of currency and credit ............................................................... 14
Section 3: COBAC .................................................................................................................................. 15
Section 4: Of accredited intermediaries......................................................................................... 15
CHAPTER IV - SETTLEMENT OF EXTERNAL TRANSACTIONS ........................................................ 16
CHAPTER V: ASSIGNMENT AND RE-ASSIGNMENT OF FOREIGN CURRENCIES ........................................................................... 17
TITLE II - RESIDENT AND NON-RESIDENT ACCOUNTS................................................................ 18
CHAPTER I - RESIDENT ACCOUNTS IN FOREIGN CURRENCY .............................................................. 18
CHAPTER II - NON-RESIDENT ACCOUNTS...................................................................................... 18
Section 1: Non-resident accounts denominated in foreign currency........................................... 18
Section 2: Non-resident accounts in CFA Francs........................................................................... 19
TITLE III - CURRENT TRANSACTIONS............................................................................................ 19
CHAPTER I - EXPORT AND IMPORT OF GOODS................................................................................ 19
Section 1: Export of goods and repatriation of proceeds........................................................... 19
Section 2: Import of goods and settlement...................................................................................... 20
Section 3: Transactions in gold and precious stones ........................................................................... 21
CHAPTER II - EXPORT AND IMPORT OF SERVICES......................................................................... 21
Section 1: Export of services and repatriation of proceeds....................................................... 21
Section 2: Import of services and their payment....................................................................................... 22
CHAPTER III: TRAVEL.............................................................................................................................. 23
CHAPTER IV - MANUAL EXCHANGE .......................................................................................................... 24
CHAPTER V - OTHER CURRENT TRANSACTIONS .......................................................................... 25
TITLE IV: FINANCIAL AND CAPITAL TRANSACTIONS ................................................................... 27
CHAPTER I: FOREIGN SECURITIES ........................................................................................ 27
CHAPTER II: BORROWINGS-LOANS-REPAYMENTS ................................................................. 28
Section 1: Borrowings and Repayments ..................................................................................................... 28
Section 2: Loans and Repayments....................................................................................................... 30
CHAPTER III: DIRECT INVESTMENTS AND PORTFOLIO INVESTMENTS ............................................ 31
Section 1: Inward Direct Investments.............................................................................................. 31
Section 2: Outward Direct Investments .............................................................................................. 31
Section 3 - Inward Portfolio Investments......................................................................................... 32
Section 4 - Outward Portfolio Investments.......................................................................................... 33
TITLE V - HEDGING OPERATIONS AGAINST EXCHANGE RATE RISK ............... 33
TITLE VI - COMMUNICATION OF INFORMATION AND RECORDS OF EXTERNAL TRANSACTIONS... 34
TITLE VII: CONTROLS, INFRINGEMENTS AND SANCTIONS.................................................................. 35
CHAPTER I: CONTROLS...................................................................................................................... 35
CHAPTER II: INFRINGEMENTS AND SANCTIONS....................................................................... 36
Section 1: General Aspects............................................................................................................... 36
Section 2: Pecuniary Administrative Sanctions................................................................................. 36
Section 3: Non-Pecuniary Administrative Sanctions ............................................................................ 41
TITLE VIII - SPECIAL, TRANSITIONAL AND FINAL PROVISIONS ......................................... 42
CHAPTER I: SPECIAL PROVISIONS......................................................................................... 42
Section 1: Trusts, Guarantee Accounts and Assimilated Accounts................................................... 42
Section 2: Safeguard Measures related to the Preservation of CEMAC External Accounts................................................................................................................................................ 43
CHAPTER II: TRANSITIONAL AND FINAL PROVISIONS................................................................. 44

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TITLE I - GENERAL PROVISIONS

CHAPTER I - DEFINITIONS AND ACRONYMS

Article 1 - For the purposes of this Regulation, the expressions and acronyms shall be understood as follows:

1. Administrative Authority: state entity involved in the implementation of foreign exchange regulations.
2. Assent: a declaration whose terms are binding on the competent authority, which cannot annul it.
3. BEAC or Central Bank: Bank of Central African States.
4. Goods: physical assets or products over which property rights can be established and whose economic ownership can be transferred from one institutional unit to another through transactions.
5. Exchange Office: legal entity accredited by the Ministry in charge of currency and credit to carry out manual exchange activities.
6. CIF: Cost, Insurance, Freight.
7. CEMAC: Central African Economic and Monetary Community.
8. Manual Exchange: banknotes or traveler's checks, sold or bought in a bank or exchange office in exchange for local currency.
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 natural or legal person.
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: a deposit account opened with an authorized credit institution in the name of a beneficiary creditor, whose funds are blocked for an agreed period.
15. Guarantee account: an account opened with an authorized credit institution as security for a contractual commitment assumed by a debtor.
16. Legal tender: quality recognized for the currency in circulation in CEMAC, which no one can refuse to accept for the settlement of transactions denominated in CFA Francs.
17. Exchange rate risk hedging: a financial technique to protect against fluctuations in the exchange rate of the currency in which an asset or liability is denominated.
18. Leasing: a professional credit technique that includes a lease of movable or immovable equipment, accompanied by a promise of sale for the lessee, at an agreed price taking into account, at least in part, the payments made as rent.
19. Import/export declaration: a document issued by the customs administration certifying an 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 instructs an authorized intermediary to carry out on their behalf the formalities of an import or export transaction from its inception to its settlement.
22. Credit institution: an entity that habitually carries out banking operations in accordance with the banking regulations of the CEMAC States.
23. Sub-delegated establishment: a legal entity other than a credit institution, an exchange office, and a microfinance institution, which benefits from a delegation from a credit institution to carry out, under its responsibility, foreign currency purchase operations within the framework of its usual activity, mainly hotels, travel agencies, airport shops, and casinos.
24. Foreign or abroad: countries other than those of CEMAC.
25. Euro: currency with legal tender and discharging power within the countries of the European Central Bank system.
26. Export: exit of goods or services destined abroad or to a free zone installed in the national territory of one of the CEMAC countries or any other space considered foreign.
27. CFA Franc: Franc of Financial Cooperation in Central Africa or XAF, currency with legal tender and discharging power in the CEMAC countries.
28. FOB: Free on Board; a clause used in international trade for the transport of goods by sea or river.
29. GABAC: Action Group Against Money Laundering in Central Africa.
30. Import: entry of goods or services into CEMAC, from abroad or from a free zone installed in one of the CEMAC countries or any other assimilated foreign area.
31. Authorized intermediary: credit institution, postal administration, and for manual exchange operations, microfinance institutions, and authorized exchange offices.
32. Portfolio investment: cross-border transactions and positions in debt securities or shares, other than those of direct investment or reserve assets.
33. Direct investment: participation of 10% or more on behalf of a resident in the capital of a non-resident company or of a non-resident in the capital of a resident company that grants them control or significant influence over its management, as well as a real estate investment made abroad by a resident or in CEMAC by a non-resident or an investment in a company under indirect control or influence of the investment company, related companies, as well as debts.
34. Liberality: an act by which a person disposes, free of charge, by donation or will inter vivos, of all or part of their assets or rights for the benefit of another, whether or not belonging to their family.
35. AWB: air waybill (air cargo manifest).
36. Foreign exchange market: intangible financial space where convertible currencies are exchanged.
37. Non-resident: a natural or legal person with habitual residence or predominant economic interest outside CEMAC; mainly concerned are:
    • heads of diplomatic missions, diplomats and assimilated persons, as well as members of their families;
    • foreign patients, including long-term patients and accompanying persons;
    • tourists;
    • students;
    • officials 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 firms carrying out specific temporary tasks in CEMAC countries unless they are registered in the State Register of Commerce and Movable Credit (Commercial Register) of a CEMAC State, even provisionally.
38. Foreign exchange transaction: a spot or forward, manual or automated transaction, whose settlement involves or implies the conversion of the CFA Franc to another currency and vice versa.
39. Electronic payment: a payment made at least partially by electronic means of payment, as defined in the electronic money regulation.
40. Discharging power: the property of extinguishing debts, attributed to the official currency in circulation in the CEMAC member states.
41. Arm's length principle: a rule according to which the prices of transactions between related entities are established by reference to the prices charged by independent companies.
42. Proliferation: activity aimed at manufacturing, acquiring, developing, possessing, transporting, transferring, or using nuclear, biological, chemical weapons or their means of delivery, particularly for terrorist purposes.
43. Financial market regulator: authority responsible for the supervision of the Central African financial market.
44. Resident: a natural or legal person who has their habitual residence or predominant economic interest in CEMAC, even if they stay discontinuously for more than one year in one of the CEMAC countries or intend to carry out an economic activity for at least one year, including refugees, locally recruited employees of extraterritorial enclaves, staff of international organizations who do not have diplomatic or assimilated diplomatic status, and branches of multinationals.
45. Foreign resident: a resident natural person, national of a country other than those of CEMAC.
46. Factor income: income corresponding to institutional units in exchange for their contribution to the production or provision of financial assets and the leasing of natural resources to other institutional units.
47. Exchange risk: uncertainty about the value of one currency relative to another in the short and medium term in relation to the future evolution of their respective conversion rates.
48. Service: intangible provision provided 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: a transaction executed at least partially electronically on behalf of an originator, through a payment service provider, in order to make funds available to a beneficiary.
51. VAT: value added tax.
52. UEMOA: West African Economic and Monetary Union.
53. UMAC: Central African Monetary Union.
54. Securities and financial instruments: securities and similar rights recorded in an account, issued by public or private legal entities, which confer identical rights by category, fungible, freely transferable and movable by operation of law, giving direct or indirect access to a share of the issuing entity's share capital or a creditor position on its assets, which include shares representing partners' rights, bonds and other debt securities representing creditors' rights, as well as units or shares of Collective Investment Schemes in Transferable Securities.
55. CEMAC securities: securities issued in a CEMAC member state by a resident public or private legal entity and denominated in CFA Francs.
56. Foreign securities: securities issued in a CEMAC member state by a public or private legal entity and denominated in foreign currency or issued in CFA Francs by a non-resident.
57. Firm sale: a contract by which the seller transfers ownership of a thing and agrees to deliver it to the buyer, who agrees to pay the price.
58. Issuing Area: area grouping the CEMAC countries that use the CFA franc issued by the BEAC.
59. Franc Zone: monetary cooperation area that includes France and Monaco, Comoros, the CEMAC member states, composed of Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea, and Chad, as well as the UEMOA member states, including Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, and Togo, linked by Monetary Cooperation Agreements.

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CHAPTER II - OBJECTIVE - SCOPE - GENERAL PRINCIPLES

Article 2. This Regulation defines the organization, as well as the terms and conditions for carrying out foreign exchange transactions in the CEMAC member states.

Article 3. This Regulation applies to payments and settlements of current or capital transactions to or from abroad and to manual exchange operations of all resident and non-resident economic agents.

Article 4. All transactions covered by this Regulation must comply with the regulations in force in CEMAC relating to the prevention and repression of money laundering and the financing of terrorism and proliferation.

Article 5. Capital transactions are free, unless otherwise provided in this Regulation.

Article 6. All transfers, payments, and settlements of current transactions abroad can be carried out freely, and are subject to justification of the origin of funds and presentation of the documents required by foreign exchange regulations.

However, up to a maximum of 1 million CFA Francs per month and per economic agent, these transactions shall be carried out freely with a simple indication of the origin of the funds, provided they have been declared to the Central Bank.

Article 7. The currency issued and with legal tender and discharging power in CEMAC is the Franc of Financial Cooperation in Central Africa, abbreviated CFA Franc.

The CFA Franc is linked to the euro by a fixed parity, at a rate of 1 CFA Franc to 0.001524 Euros.

Article 8. Exchange rates for the purchase and sale of currencies other than the euro are based on the fixed exchange rate of the CFA Franc against the euro and the exchange rate of these currencies against the euro in the foreign exchange markets.

Accredited intermediaries must display the exchange rates applied for the purchase and sale of foreign currencies at their counters.

Article 9. Accredited intermediaries shall collect a commission, called manual exchange commission, on the exchange of foreign currency banknotes, determined by the free play of competition. This covers all costs related to manual foreign currency exchange and the intermediation margin.

However, the Central Bank may establish a maximum rate depending on market conditions.

Article 10. Imports of foreign currency by BEAC are exempt from all customs duties and taxes.

Article 11. Provided they have prior authorization from the Central Bank, authorized intermediaries may import foreign currency under the terms and conditions specified by its Instruction.

Imports of foreign currency by authorized intermediaries are subject only to a stamp duty of 0.01% of their nominal value.

Article 12. Under penalty of administrative and criminal sanctions provided for by current regulations, the export of CFA Franc currencies is prohibited, with the exception of the possibility offered only to residents to hold for themselves, during their travels, a maximum amount of 5000 FCFA.

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CHAPTER III - ADMINISTRATIVE ORGANIZATION OF FOREIGN EXCHANGE REGULATION

Section 1: Of the BEAC

Article 13. In accordance with its Statutes, the BEAC conducts CEMAC's foreign exchange policy. As such, it develops the rules relating to the implementation of foreign exchange policy and ensures, in collaboration with the Ministry in charge of currency and credit, that agents ---