Regulatory Alerts2018-03-21
BCEAO Instruction No. 003-03-2018 on Particular Provisions for Decentralized Financial Systems Engaging in Islamic Finance
The Central Bank of West African States (BCEAO) issued Instruction No. 003-03-2018 to establish the regulatory framework and operational conditions for Decentralized Financial Systems (SFDs) conducting Islamic finance activities within the UMOA region. The instruction mandates SFDs to classify as either exclusively or partially Islamic, appoint independent Internal Sharia Boards, and implement specific risk management reserves (Profit Equalization and Investment Risk Reserves) alongside rigorous compliance audits and client disclosure requirements. It further standardizes approval procedures, documentation lists, and transitional measures to ensure full alignment with Sharia principles while enabling conventional SFDs to expand into Islamic finance through dedicated branches.