DECISION N° CM/SJ/001/03/2016 ON THE IMPLEMENTATION OF MONETARY SANCTIONS APPLICABLE ON THE UMOA REGIONAL FINANCIAL MARKET

WEST AFRICAN MONETARY UNION

COUNCIL OF MINISTERS

THE PRESIDENT

DECISION N° CM/SJ/001/03/2016 RELATING TO THE IMPLEMENTATION OF THE MONETARY SANCTION REGIME APPLICABLE ON THE UMOA REGIONAL FINANCIAL MARKET

The Council of Ministers of the West African Monetary Union,

Having regard to the Treaty of the West African Monetary Union dated January 20, 2007 (hereinafter "the Treaty"),

Having regard to the Convention of July 3, 1996 establishing the Regional Council of Public Savings and Financial Markets (hereinafter "the Convention"),

Having regard to the Annex to the Convention relating to the composition, organization, functioning, and powers of the Regional Council of Public Savings and Financial Markets (hereinafter "the Annex to the Convention");

Having regard to the General Regulation relating to the organization, functioning, and control of the UMOA Regional Financial Market (hereinafter "the General Regulation");

Having regard to the deliberations of the Council of Ministers of the UMOA at its session of March 24, 2016;

DECIDES

TITLE I: GENERAL PROVISIONS

Article 1: Definitions

For the purposes of this Decision, the following terms shall mean:

• "Regional financial market actors": Central Market Structures, Commercial Intermediaries, Other Intermediaries, Issuers, and any other actor authorized or empowered or who may be authorized or empowered by the Regional Council.

• "Other Intermediary": Any natural person, placed under the authority of a Central Market Structure or a Commercial Intermediary or acting on behalf of the latter (executives, employees, agents, etc.).

• "Benefit realized": The gain realized or the loss avoided.

• "Council of Ministers": The Council of Ministers of the Union as referred to in the Treaty.

• "Regional Council" or "CREPMF": The Regional Council of Public Savings and Financial Markets created pursuant to the Convention.

• "Issuer": Private or public law companies or any entity with or without legal personality, excluding States, which issues or proposes to issue Securities that have been or will be subject to an visa from the Regional Council or whose Securities have been or will be subject to private placement or a public offering.

• "Member State of the Union": The member countries of the UMOA, namely Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.

• "Inside Information": Non-public, specific, and precise information which, if made public, could have an impact on the value and/or price of a Security.

• "Instruction": An implementing text adopted by the Regional Council.

• "Commercial Intermediary": Management and Intermediation Companies (SGI), Wealth Management Companies (SGP), Stock Investment Advisors, Business Brokers, Salesmen, and any other actor authorized or empowered and/or who may be authorized or empowered by the Regional Council.

• "Breach": Any act contrary to financial market regulation that does not have a criminal character.

• "Breach of professional obligations": Breaches of the first to third categories.

• "Central Market Structure": The Regional Securities Exchange (BRVM) and/or the Central Depository Settlement Bank.

• "Public Treasury": The Administration responsible for managing the financial resources of a Member State of the Union and generally attached to the Ministry in charge of the Economy of said State.

• "Securities":

  • ordinary shares, preferred shares with or without voting rights, accompanied by particular rights of all kinds, temporarily or permanently;
  • bonds and other debt instruments giving access to capital or other securities giving the right to the allocation of debt instruments;
  • units in Collective Investment Schemes (OPC);
  • subscription warrants and rights attached to the aforementioned securities;
  • and any other type of financial instrument qualified as such by the Regional Council.

• "UMOA" or "Union": The West African Monetary Union;

Article 2: Purpose

This Decision aims to determine the breaches of financial market regulation subject to monetary sanctions.

Article 3: Scope of Application

The prescribed sanctions may be pronounced by the Regional Council against any Regional financial market actor or any person, responsible for facts or omissions constituting breaches of the regulation of said Market.

TITLE II: DETERMINATION OF BREACHES, QUANTUM OF MONETARY SANCTIONS AND RECOVERY

Article 4: Classification Modalities of Breaches

Breaches are grouped according to their seriousness into four categories based on the underlying risk scale as defined in Annex 1 below.

First category breaches concern violations of regulation inducing mainly risks of nullity or administrative risks resulting from the failure to complete certain formalities or non-compliance with specifications.

Second category breaches group violations of regulation resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as violations of regulation resulting from non-compliance with rules relating to information.

Third category breaches relate to violations of regulation that are likely to affect the financial structure of the entity or operation concerned or to violations of regulation relating to operations, control systems, pricing, and accounting maintenance.

Fourth category breaches target insider breach, market manipulation, dissemination of false information, unauthorized use of investors' savings for personal purposes, and infringement on public information.

Article 5: Quantum of Monetary Sanctions

5.1. The quantum of monetary sanctions for breaches of professional obligations is fixed as follows:

	Minimum	Maximum
Central Market Structure	2,500,000 FCFA	150,000,000 FCFA
Commercial Intermediary	1,000,000 FCFA	100,000,000 FCFA
Issuer	1,000,000 FCFA	75,000,000 FCFA
Other Intermediary	100,000 FCFA	1,500,000 FCFA

The above ceilings apply even in cases of multiple breaches subject to the same prosecution.

5.2. The quantum of monetary sanctions for fourth category breaches is fixed as follows:

Nature of Breach	Quantum
Market Manipulation	five times the value of the benefit withdrawn
Dissemination of False Information
Unauthorized Use of Investors' Savings for Personal Purposes
Insider Breach	ten times the value of the benefit withdrawn
Infringement on Public Information

The above quanta apply to any Regional financial market actor as well as to any natural or legal person, responsible for the breaches referred to in this article.

Article 6: Grids of Sanction Amounts

Within the limit of the ceiling defined in Article 5 above for each category of Regional Market Actor or any person, the grids annexed to this Decision establish the amount of monetary sanctions by nature and by author of the breach.

Article 7: Modalities for Determining Sanctions

The amount of the sanction for breaches is fixed with regard to the principles of personality and proportionality and in relation to elements arising from the environment of the facts, notably aggravating factors such as the multiplicity of breaches, repetition of breaches, the effect of the breach on the market, the extent of the damage suffered by savers, the benefit realized.

Article 8: Recovery of Monetary Sanctions

The sums corresponding to monetary sanctions are recovered by the Regional Council.

In the event of non-payment upon expiration of the appeal period referred to in Article 50 of the Annex to the Convention, the Regional Council refers the matter to the Public Treasury of the concerned State, with a view to proceeding with the recovery of the amount of the monetary sanction pronounced, according to the binding execution procedures in force in said State.

TITLE III: FINAL AND TRANSITIONAL PROVISIONS

Article 9: New Breaches

The occurrence of all new breaches shall be subject to integration into this Decision by the Council of Ministers.

Article 10: Transitional Provisions

A probationary period is granted to financial market actors, before the entry into force of this Decision, to comply with the regulation of the regional financial market.

Article 11: Application of the Decision

The modalities for implementation and the implementing texts of this Decision will be taken by the Regional Council.

Article 12: Entry into Force

This Decision, including its annexes which form an integral part thereof, enters into force as of January 1, 2017.

Done in Dakar, on March 24, 2016

Amadou BA

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Annex 1

CLASSIFICATION OF BREACHES OF REGULATION

No.	FIRST CATEGORY BREACHES	SECOND CATEGORY BREACHES	THIRD CATEGORY BREACHES	FOURTH CATEGORY BREACH
1	• Breach of obligations provided for by the General Regulation and texts taken for its application inducing mainly risks of nullity or administrative risks resulting from the failure to complete certain formalities or non-compliance with specifications. • Breach of procedures for the designation of directors or executives	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information. • Breach of obligations to transmit periodic information to the Regional Council	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance. • Breach of prudential standards • Lack of first-demand guarantee intended to cover risks of reduction or loss of capital or intended to cover risks related to exercise (articles 4, 7, and 10 of CREPMF decision n° 009/01/2000)	Breaches provided for by the Annex to the Convention. • Insider breach consisting in the realization of one or both of the following acts: 1°) the use of privileged information held by a person by acquiring or disposing, for their own account or for the account of others, either directly or indirectly, of Securities. 2°) the communication of this information to another person outside the normal framework of their work, profession, or functions or for purposes other than those for which it was communicated to them.
2	• Breach of obligations provided for by the General Regulation and texts taken for its application inducing mainly risks of nullity or administrative risks resulting from the failure to complete certain formalities or non-compliance with specifications. • Failure to submit files of Statutory Auditors to the Regional Council for approval (instruction 32/2005)	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information. • Breach of obligations to fill regulatory functions and failure to designate holders of positions to be filled. • Breach of the obligation to hold a valid professional card. • Failure to declare facts likely to tarnish the honorability of persons holding professional cards (article 4 in fine of Instruction 41/2009)	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance. • Breach of the obligation to have tariffs homologated or approved (Decision n° CM/12/12/2011) • Failure to transmit to the Regional Council, at the end of subscriptions, the issuance report (articles 15 of Instruction 47/2011 and 15 of Instruction 36/2009)	Breaches provided for by the Annex to the Convention. • Breach of market manipulation consisting in the realization of one or both of the following acts: a) Which give or are likely to give false or misleading indications on the offer, demand, or price of a Security b) Which fix, by the action of one or more persons acting in a concerted manner, the price of one or more Securities at an abnormal or artificial level,
3	• Breach of obligations provided for by the General Regulation and texts taken for its application inducing mainly risks of nullity or administrative risks resulting from the failure to complete certain formalities or non-compliance with specifications. • Failure to declare the opening of a liaison or representation office	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information. • Failure to display tariffs (article 3 of Instruction 17/99) • Failure to transmit homologated tariffs to BRVM and DC/BR (article 3 of Instruction 17/99)	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance. • Failure of custody account agreement (Instruction 20/99) • Failure of management mandate (Instruction 19/99) • Poor maintenance of client files	Breaches provided for by the Annex to the Convention. • 2°) the fact of carrying out operations or issuing orders that resort to procedures giving a fictitious image of the state of the market or to any other form of deception or artifice. • Breach of dissemination of false information consisting in the communication or diffusion of information, regardless of the medium used, which give or are likely to give inaccurate, imprecise, or misleading indications on Securities, including by spreading rumors or disseminating inaccurate or misleading information.
4	• Breach of provisions of specifications	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information. • Failure to submit the internal anti-money laundering device to Statutory Auditors • Failure to transmit to the Regional Council, the report on the implementation of the entire anti-money laundering device (article 17 of Instruction 35/2008)	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance. • Failure of internal device defining internal prevention and detection procedures and rules for money laundering (article 15 of Instruction 35/2008) • Failure to set up anti-money laundering mechanism (article 13 of Instruction 35/2008) • Failure of information and training policy (article 14 of Instruction 35/2008) • Execution of short sales operations • Maintenance of client accounts with debit balance • Failure to timestamp stock exchange orders	Breaches provided for by the Annex to the Convention. • Unauthorized use of investors' savings for personal purposes • Infringement on public information
5	• Breach of provisions of specifications	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information.	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance.	Breaches provided for by the Annex to the Convention.
6	• Breach of prior declaration formalities to the Regional Council	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information. • Breach of the obligation of formalities with the Regional Council for the purpose of obtaining prior authorization or approval • Failure to transmit trade advice by SGI to clients • Cumulation of incompatible functions or tasks and/or likely to involve conflicts of interest (article 23 of the General Regulation) • Failure to set up a backup system consisting of a server installed in a secure location and off-premises	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance. • Breach of specific accounting rules • Failure to designate Statutory Auditors • Breach of the obligation to fill the position of internal controller. • Failure of business plan	Breaches provided for by the Annex to the Convention.
7	• Breach of obligations provided for by the General Regulation and texts taken for its application inducing mainly risks of nullity or administrative risks resulting from the failure to complete certain formalities or non-compliance with specifications.	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information.	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance.	Breaches provided for by the Annex to the Convention.
8	• Breach of obligations provided for by the General Regulation and texts taken for its application inducing mainly risks of nullity or administrative risks resulting from the failure to complete certain formalities or non-compliance with specifications.	• Breach of obligations provided for by the General Regulation and texts taken for its application resulting from non-compliance with conditions for maintaining authorization regarding human, technical, and organizational means, as well as rules relating to information. • Failure of maintenance for software and computer hardware • Crossing of threshold in the absence of declaration (article 164 of the General Regulation)	• Breaches of obligations provided for by Decisions of the Council of Ministers, the General Regulation, and texts taken for its application which are likely to affect the financial structure or relate to operations, control systems, pricing, and accounting maintenance.	Breaches provided for by the Annex to the Convention.

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Annex 2

QUANTUM OF MONETARY SANCTIONS

Sanctions applicable to breaches of Central Structures

Categories of Breaches	Quantum of Penalties
First Category	Two million five hundred thousand (2,500,000) to twenty-five (25) million F.CFA
Second Category	Twenty-six (26) million to one hundred (100) million
Third Category	One hundred one (101) million to one hundred fifty (150) million

Sanctions applicable to breaches of Commercial Intermediaries

Categories of Breaches	Quantum of Penalties
First Category	One (1) million to ten (10) million
Second Category	Eleven (11) million to fifty (50) million
Third Category	Fifty-one (51) million to one hundred (100) million

Sanctions applicable to breaches of Issuers

Categories of Breaches	Quantum of Penalties
First Category	One (1) million to five (5) million
Second Category	Six (6) million to fifty (50) million
Third Category	Fifty-one (51) million to seventy-five (75) million

Sanctions applicable to breaches of Other Intermediaries

Categories of Breaches	Quantum of Penalties
First Category	One hundred (100) thousand to five hundred (500) thousand
Second Category	Five hundred and one (501) thousand to one (1) million
Third Category	One million and one thousand (1,001,000) to one million five hundred thousand (1,500,000)

Sanctions applicable to breaches of the fourth category

Nature of Breach	Quantum
Market Manipulation	five times the value of the benefit withdrawn
Dissemination of False Information
Unauthorized Use of Investors' Savings for Personal Purposes
Insider Breach	ten times the value of the benefit withdrawn
Infringement on Public Information