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Public Entities Must Comply with New FX Regulation

YAOUNDE, CAMEROON - The Bank of Central African States (BEAC) and the Ministry of Finance have implemented a new Foreign Exchange (FX) Regulation that requires public entities to take certain actions to comply with its provisions.

Key Requirements

  • Public entities can determine if a company is in breach of the FX Regulation and sanction it accordingly.
  • Both the BEAC and Ministry of Finance can request information from banks concerning their clients.

Domiciliation for Importation of Goods

The importation of goods into the Central African Economic and Monetary Community (CEMAC) zone is now subject to domicile requirements. All importations of goods worth XAF 5,000,000 or more must be domiciled with a credit establishment in the country of final destination.

Domiciliation for Importation of Services

The importation of services must also be documented by a contract between a non-resident and a resident company. All expenditures related to service imports must be declared to the BEAC, and those worth XAF 5,000,000 or more must be domiciled with a CEMAC bank.

Loans

Public entities that obtain loans from non-residents must declare them to the Ministry of Finance and the BEAC 30 days prior to disbursement. Supporting documents for loan transactions must also be transmitted to the Ministry of Finance and the BEAC 30 days after the transaction.

Other Current Account Transactions

Current account transactions, including transfers of funds to non-CEMAC countries worth XAF 100,000,000 or more, must be declared by credit establishments to the BEAC and the Ministry of Finance. Public entities that receive foreign currency must also declare it to the BEAC.

Violations and Sanctions

The FX Regulation provides for fines and other sanctions for violations, including:

  • Fines up to 10% of the transaction value for failure to domicile with a local bank
  • 100% of the amount concerned if a service import is fictitious
  • Suspension of transfer operations within the CEMAC banking system

What You Need to Do

Businesses affected by the FX Regulation should:

  • Contact their external advisors promptly to request a copy of the regulation and seek further advice on compliance.
  • Implement measures such as:
    • Regulatory mapping: reading and understanding all requirements imposed by the FX Regulation
    • Informing stakeholders: performing an assessment of affected personnel and informing them about new rules
    • Internal assessment: assessing the impact of new status as a CEMAC Resident

About the Author

Abraham Abia is the Managing Partner of Clarence Abogados & Asociados. He holds a BA (Hons) in History from SOAS, University of London and a LLB and LPC from the University of Law (“formerly the College of Law of England and Wales”). Abraham worked as a regional in-house counsel for Schlumberger and Centurion Law Group before founding Clarence. For enquiries, please contact us at info@clarenceabogados.com.