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Banking Regulations Compliance in Senegal: A Guide
In Senegal, banking regulations are governed by several national authorities, including the Central Bank of West African States (BCEAO) and the National Agency for the Supervision of Insurance and Retirement Funds (ANSS).
Obtaining a Banking License
To operate a banking business in Senegal, entities must obtain a banking license from the BCEAO. The type of activities that trigger the requirement of a banking license include accepting deposits, making loans, and conducting other banking operations.
- A banking license does not issue different licenses for different banking services.
- However, a banking license automatically permits certain other activities, such as payment services and the issuance of electronic money.
Regulatory Regime
The BCEAO has established a “sandbox” or “license light” regime for specific activities, allowing new players to test innovative products and services under close supervision.
Cryptocurrencies
Regarding cryptocurrencies, Senegal has imposed specific restrictions on their issuance and custody. Crypto assets do not qualify as deposits and are not covered by deposit insurance and/or segregation of funds. However, if held by a licensed entity, crypto assets are subject to related capital requirements, including risk weights.
Application Process
The application process for bank licenses in Senegal is straightforward, with the average timing taking around six months. Cross-border activity is permissible, but entities must meet certain requirements, including obtaining a license from the BCEAO.
Organizational Requirements
In Senegal, banks can operate as public limited companies (SA) or private limited companies (SAS). Organizational requirements for banks include compliance with corporate governance rules and restrictions on remuneration policies.
Capital Adequacy
Senegal has implemented the Basel III framework, but with some deviations. The leverage ratio is also applicable to banks in the country. Liquidity requirements are in place, including the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR).
Reporting and Disclosure
Banks in Senegal are required to publish their financial statements, which includes interim reporting. Consolidated supervision of a bank exists in the jurisdiction, with consequences for non-compliance.
Acquisition of Shareholdings
Reporting and approval requirements apply to the acquisition of shareholdings in or control of banks. The regulatory regime imposes conditions on eligible owners of banks and restricts foreign shareholdings.
Special Regime for Systemically Important Banks
There is a special regime for domestically systemically important banks (D-SIBs) and globally systemically important banks (G-SIBs). Sanctions can be ordered by the regulator(s) in case of a violation of banking regulations, including fines, suspension or revocation of licenses.
Bank Resolution
In the event of bank resolution, client assets and cash deposits are protected through a dedicated fund. The country has implemented a bail-in tool for resolving banks and covers certain liabilities in situations of liquidity crises.
Gone-Concern Capital (TLAC)
Banks in Senegal are required to hold gone-concern capital (TLAC) and differentiate between different types of banks. Recent trends in bank regulation in the jurisdiction include increased emphasis on risk-based supervision and enhanced prudential regulations.
Challenges Ahead
In the view of experts, the biggest threat to the success of the financial sector in Senegal is the potential for regulatory arbitrage and lack of transparency in some transactions.