Decision No. CM/SJ/001/03/2016 on the Implementation of Monetary Sanctions Applicable to the UMOA Regional Financial Market

UNION MONETARY WEST AFRICAN

COUNCIL OF MINISTERS

THE PRESIDENT

DECISION NO. CM/SJ/001/03/2016 ON THE IMPLEMENTATION OF MONETARY SANCTIONS APPLICABLE TO 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 20 January 2007 (hereinafter "the Treaty"),

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

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

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

Having regard to the resolutions of the UMOA Council of Ministers at its session on 24 March 2016;

DECIDES

TITLE I: GENERAL PROVISIONS

Article 1: Definitions

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

• « Acteurs du marché financier régional » : Les Structures Centrales du marché, les Intervenants Commerciaux, les Autres Intervenants, les Emetteurs et à tout autre acteur agréé ou habilité ou qui serait agréé ou habilité par le Conseil Régional. -> "Regional financial market actors": Market Central Structures, Commercial Intermediaries, Other Intermediaries, Issuers and any other actor approved or authorized or who may be approved or authorized by the Regional Council.

• « Autre Intervenant » : Toute personne physique, placée sous l'autorité d'une Structure Centrale du marché ou d'un Intervenant Commercial ou agissant pour le compte de ces derniers (dirigeants, employés, mandataires, etc.). -> "Other Intermediary": Any natural person, placed under the authority of a Market Central Structure or a Commercial Intermediary or acting on behalf thereof (executives, employees, agents, etc.).

• « Avantage réalisé » : Le gain réalisé ou la perte évitée. -> "Realized benefit": The gain realized or the loss avoided.

• « Conseil des Ministres » : Le Conseil des Ministres de l'Union tel que visé dans le Traité. -> "Council of Ministers": The Council of Ministers of the Union as referred to in the Treaty.

• « Conseil Régional » ou « CREPMF » : Le Conseil Régional de l'Epargne Publique et des Marchés Financiers créé en vertu de la Convention. -> "Regional Council" or "CREPMF": The Regional Council for Public Savings and Financial Markets established pursuant to the Convention.

• « Emetteur » : Les sociétés de droit privé ou public ou toute entité dotée ou non de la personnalité juridique, à l'exclusion des Etats, qui émet ou se propose d'émettre des Valeurs Mobilières qui font ou ont fait l'objet d'un visa auprès du Conseil Régional ou dont les Valeurs Mobilières font ou ont fait l'objet d'un placement privé ou d'un appel public à l'épargne. -> "Issuer": Private or public law companies or any entity with or without legal personality, excluding States, that issues or proposes to issue Securities which have been or will be subject to a visa with the Regional Council, or whose Securities have been or will be subject to private placement or public offering.

• « Etat membre de l'Union » : Les pays membres de l'UMOA que sont le Bénin, le Burkina Faso, la Côte d'Ivoire, la Guinée Bissau, le Mali, le Niger, le Sénégal et le Togo. -> "Member State of the Union": The UMOA member countries, namely Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

• « Information privilégiée » : une information non publique, particulière et précise qui, si elle était rendue publique, pourrait avoir une incidence sur la valeur et/ou le cours d'une Valeur Mobilière. -> "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 » : Un texte d'application adopté par le Conseil Régional. -> "Instruction": An implementing text adopted by the Regional Council.

• « Intervenant Commercial » : Les Sociétés de Gestion et d'Intermédiation (SGI), les Sociétés de Gestion de Patrimoine (SGP), les Conseils en Investissements Boursiers, les Apporteurs d'Affaires, les Démarcheurs et tout autre acteur agréé ou habilité et/ou qui serait agréé ou habilité par le Conseil Régional. -> "Commercial Intermediary": Investment and Intermediation Companies (SGI), Wealth Management Companies (SGP), Stock Investment Advisors, Business Brokers, Sales Representatives and any other actor approved or authorized and/or who may be approved or authorized by the Regional Council.

• « Manquement » : Tout agissement contraire à la règlementation du marché financier n'ayant pas un caractère pénal. -> "Breach": Any act contrary to the financial market regulation that does not have a criminal nature.

• « Manquement aux obligations professionnelles » : Les manquements de la première à la troisième catégorie. -> "Breach of professional obligations": Breaches from the first to the third category.

• « Structure Centrale du marché » : La Bourse Régionale des Valeurs Mobilières et/ou le Dépositaire Central Banque de Règlement. -> "Market Central Structure": The Regional Securities Exchange and/or the Central Depository Settlement Bank.

• « Trésor Public » : L'Administration chargée de gérer les ressources financières d'un Etat membre de l'Union et rattachée généralement au Ministère chargé de l'Economie dudit Etat. -> "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.

• « Valeurs Mobilières » : -> "Securities":

  • les actions ordinaires, les actions de préférence avec ou sans droit de vote, assorties de droits particuliers de toutes natures, à titre temporaire ou permanent ; -> ordinary shares, preferred shares with or without voting rights, carrying particular rights of all kinds, temporarily or permanently;
  • les obligations et les autres titres de créance donnant accès au capital ou les autres valeurs mobilières donnant droit à l'attribution de titres de créance ; -> bonds and other debt instruments granting access to capital or other securities entitling the holder to receive debt instruments;
  • les titres des Organismes de placement Collectif (OPC) ; -> units of Collective Investment Undertakings (CIUs);
  • les bons de souscriptions et droits rattachés aux valeurs mobilières précitées ; -> subscription warrants and rights attached to the aforementioned securities;
  • et tout autre type d'instrument financier qualifié comme tel par le Conseil Régional. -> and any other type of financial instrument qualified as such by the Regional Council.

• « UMOA » ou « Union » : l'Union Monétaire Ouest Africaine ; -> "UMOA" or "Union": the West African Monetary Union;

Article 2: Object

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

Article 3: Scope

The prescribed sanctions may be imposed by the Regional Council on any Regional financial market actor or any person responsible for acts or omissions constituting breaches of the regulation of said Market.

TITLE II: DETERMINATION OF BREACHES, MONETARY SANCTION AMOUNTS AND RECOVERY

Article 4: Classification modalities for breaches

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

First category breaches relate to violations of regulation primarily inducing risks of nullity or administrative risks resulting from the non-completion of certain formalities or non-respect of specification document stipulations.

Second category breaches group violations resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as violations resulting from non-compliance with information rules.

Third category breaches relate to violations affecting the financial structure of the concerned entity or operation, or violations concerning operations, control systems, pricing and accounting records.

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

Article 5: Monetary sanction amounts

5.1. The monetary sanction amounts for breaches of professional obligations are fixed as follows:

	Minimum	Maximum
Market Central 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 case of multiple breaches subject to the same proceedings.

5.2. The monetary sanction amounts for fourth category breaches are fixed as follows:

Nature of breach	Quantum
Market manipulation	Five times the value of the benefit derived
Dissemination of false information
Unauthorized use of investors' funds for personal purposes
Insider breach	Ten times the value of the benefit derived
Infringement on public information

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

Article 6: Sanction amount grids

Within the ceiling defined in Article 5 for each category of Regional financial market actor or person, the grids annexed to this Decision establish the monetary sanction amounts by nature and by author of the breach.

Article 7: Sanction determination modalities

The sanction amount for breaches is fixed with regard to the principles of personal liability and proportionality, and in relation to elements from the factual environment, notably aggravating factors such as multiple breaches, repeated breaches, the effect of the breach on the market, the extent of the damage suffered by savers, and the realized benefit.

Article 8: Recovery of monetary sanctions

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

In case 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, for the purpose of recovering the amount of the imposed monetary sanction, 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 integrated into this Decision by the Council of Ministers.

Article 10: Transitional provisions

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

Article 11: Application of the Decision

The implementation modalities and implementing texts for this Decision shall be adopted by the Regional Council.

Article 12: Entry into force

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

Signed in Dakar, on 24 March 2016

Amadou BA

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Annex 1

CLASSIFICATION OF REGULATORY BREACHES

N°	MANQUEMENTS DE 1ERE CATEGORIE	MANQUEMENTS DE 2E CATEGORIE	MANQUEMENTS DE 3E CATEGORIE	MANQUEMENT DE 4E CATEGORIE
1	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Breach of rules on convening and holding Board of Directors and Shareholders' Meetings<br>• Breach of procedures for appointing directors or executives	• Breach of obligations to transmit periodic information to the Regional Council<br>• Breach of obligations to fill regulatory functions and designate officeholders	• Breach of prudential standards<br>• Lack of first-demand guarantee to cover capital reduction/loss risks or exercise-related risks (articles 4, 7 and 10 of CREPMF Decision No. 009/01/2000)	• Insider breach consisting in performing one or both of the following acts:<br>1°) Using inside information held by a person to acquire or dispose of, for their own account or on behalf of others, directly or indirectly, Securities.<br>2°) Communicating this information to another person outside normal work/professional/functional scope or for purposes other than those for which it was communicated.
2	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Failure to submit Audit Commission dossiers to the Regional Council for approval (Instruction 32/2005)<br>• Breach of obligation to hold a valid professional card<br>• Failure to declare facts that may affect the honorability of professional cardholders (article 4 in fine of Instruction 41/2009)	• Breach of obligations to appoint regulatory function holders and designate officeholders<br>• Failure to display tariffs (article 3 of Instruction 17/99)	• Breach of obligation to homologate or approve tariffs (Decision No. CM/12/12/2011)	• Market manipulation breach consisting in performing one or both of the following acts:<br>1°) Carrying out operations or issuing orders that give or may give false or misleading indications on the supply, demand or price of a Security.<br>b) Fixing, through concerted action by one or more persons, the price of one or more Securities at an abnormal or artificial level.
3	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Failure to declare opening of liaison or representation offices<br>• Failure to transmit homologated tariffs to BRVM and DC/BR (article 3 of Instruction 17/99)	• Failure to display tariffs (article 3 of Instruction 17/99)<br>• Lack of securities account agreement (Instruction 20/99)<br>• Lack of management mandate (Instruction 19/99)	• Failure to transmit issuance statement after subscription closes (articles 15 of Instruction 47/2011 and 15 of Instruction 36/2009)	• Dissemination of false information breach consisting in communicating or disseminating information, regardless of medium, that give or may give inaccurate, imprecise or misleading indications on Securities, including spreading rumors or disseminating false/misleading information.
4	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Failure to return professional cards upon departure of Professional Intermediary<br>• Breach of specification document provisions	• Failure to submit internal anti-money laundering system to Audit Commission<br>• Lack of internal AML device defining procedures and rules (article 15 of Instruction 35/2008)<br>• Failure to transmit AML system implementation report (article 17 of Instruction 35/2008)<br>• Lack of AML mechanism (article 13 of Instruction 35/2008)<br>• Lack of information and training policy (article 14 of Instruction 35/2008)	• Unauthorized use of investors' funds for personal purposes<br>• Infringement on public information
5	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Governance rules breach<br>• Failure to establish Board of Directors (Instruction 40/2009)	• Securities operations conducted on margin<br>• Client accounts maintained with debit balance<br>• Failure to timestamp stock orders
6	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Information or prior declaration formalities breach<br>• Formalities before Regional Council to obtain prior authorization/approval	• Failure by SGI to transmit executed trade notices to clients<br>• Failure to designate Audit Commission members<br>• Cumulation of incompatible functions/tasks and/or potential conflicts of interest (article 23 of General Regulation)<br>• Breach of obligation to appoint internal controller
7	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Lack of business plan endorsed by a current regulation<br>• Lack of backup system consisting of server installed in secure off-site location
8	Breaches of obligations under the General Regulation and implementing texts primarily inducing risks of nullity or administrative risks resulting from non-completion of certain formalities or non-respect of specification documents.	Breach of obligations under the General Regulation and implementing texts resulting from non-compliance with conditions for maintaining approval regarding human, technical and organizational resources, as well as information rules.	Breaches of obligations under Council of Ministers Decisions, the General Regulation and implementing texts affecting financial structure or concerning operations, control systems, pricing and accounting.	Breaches provided for in the Annex to the Convention.
	• Lack of software and hardware maintenance<br>• Breach of threshold crossing without declaration (article 164 of General Regulation)

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Annex 2

QUANTUM OF MONETARY SANCTIONS

Sanctions applicable to breaches by Central Structures

Categories of breaches	Quantum of penalties
First category	Two million five hundred thousand (2,500,000) to twenty-five (25) million FCFA
Second category	Twenty-six (26) million to one hundred (100) million FCFA
Third category	One hundred one (101) million to fifty (50) million FCFA

Sanctions applicable to breaches by Commercial Intermediaries

Categories of breaches	Quantum of penalties
First category	One (1) million to ten (10) million FCFA
Second category	Eleven (11) million to fifty (50) million FCFA
Third category	Fifty-one (51) million to one hundred (100) million FCFA

Sanctions applicable to breaches by Issuers

Categories of breaches	Quantum of penalties
First category	One (1) million to five (5) million FCFA
Second category	Six (6) million to fifty (50) million FCFA
Third category	Fifty-one (51) million to seventy-five (75) million FCFA

Sanctions applicable to breaches by Other Intermediaries

Categories of breaches	Quantum of penalties
First category	One hundred thousand (100,000) to one million (1,000,000) FCFA
Second category	One million (1,000,000) to one point five million (1,500,000) FCFA
Third category	One point five million (1,500,000) to two million five hundred thousand (2,500,000) FCFA