Law No. 2018-036 bis on the Regulation of Credit Institutions

ISLAMIC REPUBLIC OF MAURITANIA

Honor - Fraternity .. Justice
PRESIDENCY OF THE REPUBLIC
VISA: D.G.L.T E J.a
. .... ..... LAW N° /PRI ON THE REGULATION OF CREDIT INSTITUTIONS

The National Assembly has adopted;
The President of the Republic promulgates the law whose text follows:

TITRE I: GENERAL PROVISIONS
Article 1: This law aims to regulate, with a view to protecting public deposits, ensuring the proper functioning and solidity of the financial system, the conditions for exercising the activity, the supervision and control of credit institutions operating in Mauritania, as well as the resolution and treatment of their difficulties.

Subject to, where applicable, specific legislative provisions for certain categories, credit institutions operating on the territory of the Islamic Republic of Mauritania are subject to the provisions of this law, regardless of the location of their registered office, the nationality of their directors, or that of the owners of their share capital.

For the purposes of this law, a credit institution is considered to be any legal entity that habitually carries out one or more of the following activities:

1. receiving funds from the public, regardless of duration or form;
2. granting credits in all their forms;
3. making available to clients all means of payment or managing them.

Credit institutions include banks, financial institutions, and microfinance institutions.

Payment institutions and financial companies are subject to this law under the conditions set forth therein or by regulatory texts of the Central Bank.

For the purposes of this law and without prejudice to specific provisions governing them, the following are not considered credit institutions:

1. the Public Treasury;
2. the Central Bank of Mauritania, hereinafter referred to as "the Central Bank";
3. insurance and reinsurance companies;
4. representations of international financial institutions in respect of their financial activities;
5. notaries and other ministerial officers in the exercise of their functions;
6. foreign public aid or cooperation agencies whose activity in Mauritania is authorized under treaties, agreements, or conventions concluded with the Islamic Republic of Mauritania.

Article 2: Banks may carry out all operations provided for in Article 1 as well as any other activity related to their main activity, such as:

1. exchange operations;
2. operations on gold, precious metals, and coins;
3. simple leasing operations for movable or immovable property;
4. offering insurance products to the public, in accordance with current legislation;
5. investment services;
6. any other non-banking operation previously authorized by the Central Bank.

Financial institutions and microfinance institutions may only carry out the operations specified in their approval or, where applicable, in the legislative or regulatory provisions specific to them. Financial institutions are considered to be financial institutions with a special legal status as defined in point 10 of Article 3 of this law.

The Central Bank classifies credit institutions into categories, based notably on the operations they are authorized to carry out and their size. It sets the specific application modalities of this law for these categories.

The Central Bank establishes and maintains up to date the list of approved credit institutions classified by category on its website.

Article 3: For the application of this law and the regulatory texts taken for its application, the following terms shall be understood as:

1. Central Bank, the Central Bank of Mauritania created by Law No. 73-118 of May 30, 1973 and the texts amending its statutes;
2. credit operation, any act by which a person acting for consideration:
   a) makes or undertakes to make funds available to another person, who must repay them, or; b) takes, in the interest of another person, an engagement by signature in the form of a guarantee, suretyship, or any other guarantee. For the purposes of this law, credit operations include leasing and hire-purchase operations and similar operations, factoring operations, sale with right of repurchase of bills and securities, and stock lending operations as provided by current legislation, as well as financing operations not using interest rates and/or practicing profit and loss sharing.
3. leasing and hire-purchase operations, leasing operations, accompanied by an option to purchase equipment, materials, business assets, intangible fixed assets, or immovable property purchased or constructed for leasing by the lessor who remains the owner. The option to purchase must be exercisable by the lessee at a price agreed in advance and at the latest on the maturity date of the lease or rental contract;
4. factoring, the agreement by which a credit institution undertakes to collect and mobilize commercial claims held by clients, either by acquiring said claims or by acting as the creditor's agent, in the latter case with a guarantee of good performance;
5. funds received from the public, funds that a person collects from a third party, notably in the form of deposits or otherwise, with the right to dispose of them for its own account, subject to the obligation to return them with or without interest. The following are not considered funds received from the public for the purposes of this law:
   a) sums left on account in a company by directors, managers, general managers, as well as partners or shareholders if they hold a percentage of capital set by the Central Bank; b) employee deposits of a company, if they do not exceed a percentage of the equity of said company set by the Central Bank; c) funds received from credit institutions or insurance companies; d) funds received in exchange for capital or loan securities issued or placed with the public; e) funds received by payment institutions and used exclusively for payment operations; f) any other category of funds defined by the Central Bank;
6. means of payment, all instruments that, regardless of the medium or technical process used, allow any person to transfer funds, including electronic money;
7. financial institutions, credit institutions other than banks and microfinance institutions whose authorized operations are fixed in their approvals or by virtue of their specific regulation;
8. microfinance institutions, microfinance institutions governed by Ordinance No. 05-2007 of January 12, 2007 on the regulation of microfinance institutions;
9. financial company, a company whose main activity is to take and manage financial participations and which, either directly or through companies with the same corporate purpose, controls one or more institutions carrying out financial operations, at least one of which is a credit institution;
10. financial institution with a special legal status, any public or semi-public institution created by law or decree and habitually carrying out one of the activities listed in paragraph 2 of Article 1;
11. payment institution, the institutions referred to in Chapter IV of Title II of this law;
12. fictitious bank, a bank that has been incorporated and approved in a country where it has no physical presence and is not affiliated with a regulated financial group subject to effective consolidated supervision.

TITLE II: ON APPROVAL, CONDITIONS OF OPERATION, AND PROHIBITIONS
CHAPTER 1: ON APPROVAL AND CONDITIONS OF OPERATION
Article 4: No one may habitually carry out the operations referred to in Article 1 of this law without having been previously approved by the Central Bank.

Except for approved credit institutions, no one may use, in any language, a name, trade name, commercial name, sign, advertisement, or generally in their activity, expressions that suggest they are approved as a credit institution, or create confusion on this subject; it is in particular prohibited to claim the status of bank, banker, financial institution, or to create the appearance of this status, notably by using terms such as bank, banker, banking, or financial institution.

No one may use the terms "Islamic bank" or any other term referring to this specificity, if they are not part of banks or other establishments approved in accordance with Title III of this law.

It is prohibited for any credit institution to imply that it belongs to a category other than the one under which it obtained its approval or to create confusion on this subject.

The Central Bank is authorized to conduct investigations with natural or legal persons who, based on a strong presumption, are suspected of violating this article. It may demand the immediate cessation of any activity it deems illegal.

To conduct its investigations or stop illegal activity, the Central Bank is authorized to call upon public force.

Any established offense exposes its perpetrators, the directors and managers of the formal or informal structures concerned, and all intermediary persons to the criminal sanctions provided for in Article 121 of this law, without prejudice to other applicable criminal sanctions.

Article 5: The application for approval is submitted to the Central Bank, which examines it. To this end, the Central Bank is authorized to request all documents and information, hear any person it deems necessary, and conduct all necessary investigations.

The Central Bank defines by regulatory text the approval procedure and the documents to be attached to the approval application and the proofs to be provided.

Article 6: Credit institutions with their registered office abroad may not carry out the activities referred to in Articles 1 and 2 of this law in Mauritania except through subsidiaries approved as credit institutions by the Central Bank.

Where the applicant is controlled by a financial company established abroad, the approval is subject to the existence of regulation and supervision by the banking supervisory authority of the country of origin equivalent to those existing in Mauritania for financial companies. The Central Bank ensures that the legislative and regulatory provisions of the country of origin will allow the necessary exchange of information on the financial company to supervise the credit institution whose creation is envisaged.

Where the applicant is controlled by a foreign bank, the approval is subject to the agreement or non-objection opinion of the supervisory authority of the country of origin, and provided that this authority exercises consolidated supervision. The Central Bank ensures that the legislative and regulatory provisions applicable to credit institutions in the country of origin are not of a nature to hinder the supervision by the Central Bank of the credit institution whose approval is requested in Mauritania.

Article 7: The Central Bank verifies whether all conditions of incorporation, organization, and management required by current laws and regulations are met. This includes notably:

1. the legal form;
2. minimum capital;
3. the lawful origin of the funds used to constitute the initial capital;
4. the ownership structure, the solvency of shareholders, and their ability to provide the necessary equity to ensure the development of activities and provide necessary financial support in case of difficulties;
5. the honorability and experience of the persons called upon to administer, direct, or manage the credit institution and its agencies;
6. the corporate governance organization and the internal control and risk management system envisaged, including money laundering and terrorist financing risks.

To base its decision, the Central Bank takes into account the applicant's ability to achieve its development objectives under the conditions required for the proper functioning of the banking and financial system and the protection of depositors.

The Central Bank also assesses the appropriateness of approving the credit institution and its ability to achieve, in compliance with current legislation, its activity program and development objectives, as well as the technical and financial means it plans to implement.

The Central Bank ensures that no obstacle will prevent effective accounting and prudential supervision of the credit institution and potentially its group, both on an individual and consolidated basis.

Article 8: Subject to, where applicable, specific legislative provisions for certain categories, credit institutions established in Mauritania must be incorporated as a public limited company with fixed capital. They cannot take the form of a single-member company.

Article 9: Credit institutions must demonstrate a fully paid-up share capital at least equal to the minimum capital, the amount of which is defined by regulatory texts of the Central Bank.

The minimum capital referred to in paragraph 1 must be fully paid up in cash and transferred in a single installment to an account opened at the Central Bank before the credit institution begins its activity.

The shares of credit institutions must be in registered form or subject to account registration directly with a central securities depository under Mauritanian law. They must have a determined nominal value.

The Central Bank sets by regulatory text the specific modalities for increasing and reducing capital and, where applicable, the conditions for blocking or using funds paid for the release of initial capital or capital increase.

Article 10: No capital contribution or increase may be made through a credit or any other form of commitment granted to shareholders or related persons as defined in Article 23 of this law, under penalty of nullity of the operation and criminal sanctions provided. In case of infringement, the Central Bank shall have the necessary accounting corrections made ex officio and inform the board of directors and statutory auditors of the credit institution.

Article 11: No one may be approved or maintain their approval as a credit institution unless they exercise, as their main activity, effective activities with clients or banking correspondents established in Mauritania.

Article 12: The Central Bank notifies its decision within a period not exceeding six (6) months from the receipt of a complete file and the issuance of a receipt. This period is extended to nine months when the agreement or conforming opinion of a foreign supervisory authority is required.

Any significant modifications relating to the approval conditions during the examination period of the application or after the grant of approval, but before the start of activities, must be duly notified to the Central Bank within 15 days from the moment the applicant became aware of the changes.

The approval decision specifies, among other things, the name, the category of credit institution, the legal form, where applicable, activity restrictions, and specific application conditions of this law.

Article 13: Credit institutions are required, under penalty of sanctions provided for in matters of commercial register registration, to include on all deeds, correspondence, and other documents intended for third parties, notably letters, account statements, advertisements, and various publications, their approval number, their commercial register number, their registered office, as well as their paid-up capital.

CHAPTER 2: ON PRIOR AUTHORIZATION, MODIFICATION, AND WITHDRAWAL OF APPROVAL
Article 14: Credit institutions must permanently comply with the criteria required for the grant of approval and the conditions set by it. Failure to comply with these criteria or conditions exposes the concerned credit institution and its directors to disciplinary sanctions provided for in Article 120 of this law.

Any modification affecting the elements provided to the Central Bank during the approval application of a credit institution must be subject to prior authorization from the Central Bank and, where applicable and at the Central Bank's discretion, a new approval application.

Prior authorization from the Central Bank is required notably for the following cases:

1. transfer of the registered office;
2. increase or reduction of share capital;
3. direct or indirect acquisition of shares in a credit institution likely to lead to control of that institution or resulting in the holding of capital shares or voting rights equal to or greater than a percentage set by the Central Bank;
4. sale of a significant part of assets likely to lead to a change in financial structure or in the direction of its activity;
5. merger operations other than those provided for in point 1) of paragraph 5 of this article;
6. any creation or acquisition of a subsidiary, branch, or representation office abroad.

The Central Bank's decision is notified within a period not exceeding three (3) months after receipt of the last supporting documents.

The grant of a new approval under the conditions defined in Chapter 1 of Title II of this law is subject to:

1. a merger giving rise to a new legal structure or when the absorbing company is not approved or its approval does not cover the activity of the absorbed company;
2. changes affecting the nature of the activities for which the credit institution was approved.

Article 15: Acts subject to prior authorization from the Central Bank and carried out without such authorization being granted expose the credit institution, its administrators, and its directors to the sanctions provided for in Articles 120 and 121 of this law.

Article 16: The Central Bank is informed in advance by the concerned credit institution of any opening, closure, and transfer of branches or counters in Mauritania.

Article 17: The Central Bank establishes and maintains up to date the list of branches, agencies, counters, and representation offices of approved credit institutions. It also maintains up to date the list of branches and representation offices opened abroad by approved credit institutions.

Article 18: The withdrawal of approval of a credit institution may be pronounced by the Central Bank at the request of the credit institution or ex officio when the concerned credit institution:

1. obtained its approval on the basis of false documents or false declarations;
2. no longer meets one or more conditions of its approval;
3. has not started its activity within twelve (12) months from the date of notification of said approval after a formal notice that remained ineffective;
4. no longer exercises its activity regularly for at least six consecutive months in Mauritania;
5. has transferred its registered office outside Mauritania;
6. has sold all or part of its assets or liabilities, notably as part of a resolution decision taken by the Central Bank.
7. no longer complies, despite ineffective formal notices, with prudential standards and, in general, the regulation of credit institutions;
8. finds itself in a financial situation no longer allowing the continuation of operations without jeopardizing the interests of depositors and/or other creditors.

Article 19: The withdrawal of approval of a credit institution results in its removal from the list of credit institutions. It is published in the Official Journal of the Islamic Republic of Mauritania and on the website of the Central Bank.

The withdrawal decision sets its effective date.

Any credit institution whose approval is withdrawn enters liquidation in accordance with the provisions of Title VII of this law.

CHAPTER 3: ON PROHIBITIONS
Article 20: Credit institutions are prohibited from engaging, for their own account or for the account of others, in agricultural, industrial, commercial, real estate, or service activities other than financial, unless these activities are necessary or ancillary to the recovery of their claims or more generally inherent to the conduct of the activity subject to their approval.

The Central Bank determines by regulatory text under what conditions the provisions of this article apply to credit institutions exercising the activities referred to in Title III of this law.

Article 21: Credit institutions are prohibited from granting credits:

1. to their shareholders during the first year of their participation;
2. to members of their administration, management, and control bodies during the first year of their term of office; and
3. to other related persons, as defined in Article 23 of this law, during the first year of activity.

Credit institutions may not grant credits to the aforementioned persons, from the second year, for amounts exceeding a certain percentage of their equity set by the Central Bank or practice more favorable conditions than those granted to the rest of their clientele.

The prohibitions provided for in this article include credits and guarantees granted to companies in which the aforementioned persons exercise administrative, management, or control functions or hold more than a certain percentage of capital set by the Central Bank.

Article 22: Agreements signed with any of the persons referred to...