Instruction No. 034-11-2016 on the Accounting Treatment of Third-Party Operations

The Governor of the Central Bank of West African States (BCEAO), Having regard to the Treaty of the West African Monetary Union (UMOA) of January 20, 2007, particularly Article 34; Having regard to the Statutes of the Central Bank of West African States (BCEAO), annexed to the UMOA Treaty of January 20, 2007, particularly Articles 30, 31, 32, 33 and 34; Having regard to Regulation No. 02/2010/CM/UEMOA of March 30, 2010 on common funds for securitized claims and securitization operations in the UEMOA; Having regard to the Uniform Act on banking regulation, particularly Articles 50, 51, 52, 53 and 54; Having regard to Decision No. 357-11-2016 of November 15, 2016 establishing the Revised UMOA Banking Accounting Plan and its related annex, particularly Article 99, HAS DECIDED:

Chapter 1: General Provisions
Article 1
In application of the provisions of the Revised UMOA Banking Accounting Plan, banks and financial institutions with a banking character, hereinafter referred to as subject institutions, account for the operations they perform on behalf of third parties under the conditions set out in this Instruction, including the establishment of loans, the management of securitized or assigned claims and securities on behalf of third parties, excluding collection operations and consortium operations governed by specific Instructions. Avenue Abdoulaye FADIGA P.O. Box 3108 – Dakar - Senegal Tel.: (221) 33 839 05 00 / Fax: (221) 33 823 93 35 www.bceao.int INSTRUCTION NO. 034-11-2016 ON THE ACCOUNTING TREATMENT OF THIRD-PARTY OPERATIONS The Governor

Chapter 2: Rules relating to the accounting for loans established on behalf of third parties
Article 2
The loans covered by this Instruction are operations performed on behalf of a third party using resources provided by that party.
The operations in question are performed under the responsibility of the concerned third party, the fund provider. The subject institution merely provides its assistance for their execution and monitoring.
Article 3
Resources received from the fund provider are recorded as a debit to a cash account and a credit to a deposit account of class 1 or 2, depending on the quality of the fund provider. Upon disbursement, the fund provider's deposit account is debited and the beneficiary's account is credited. Upon repayment of the loans, the beneficiary's account is debited and the fund provider's account is credited.
Article 4
Loans established on behalf of third parties are accounted for off-balance sheet as a debit to the appropriate account named 'Loans established on behalf of third parties' and a credit to the account named 'Resources allocated for the establishment of loans on behalf of third parties'. This entry is reversed upon each repayment made by the loan beneficiary.

Chapter 3: Accounting rules relating to the management and recovery of securitized or assigned claims
Article 5
When managing and recovering securitized or assigned claims, subject institutions must track them off-balance sheet.
Upon securitization or assignment, the outstanding claim amount is recorded as a debit to the 'Claims managed on behalf of third parties' account and a credit to the 'Claims to be recovered on behalf of third parties' account. This entry is reversed upon each repayment of the assigned claims.

Chapter 4: Accounting rules relating to the management of securities on behalf of third parties
Article 6
The client securities portfolio under a deposit or management contract is tracked off-balance sheet at the acquisition value of the securities, as applicable, credited to tangible or dematerialized securities accounts. Assigned securities are removed from off-balance sheet accounts at their acquisition value.

Chapter 5: Final Provisions
Article 7
This Instruction repeals and replaces all prior provisions dealing with the same subject matter.
It enters into force on January 1, 2018 and shall be published wherever necessary.
Done in Dakar, on November 15, 2016
Tiémoko Meyliet KONE