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Senegal Imposes Sanctions for Non-Compliance with Banking Regulations

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New Law Aims to Strengthen Country’s Banking Sector

Dakar, Senegal - The government of Senegal has introduced a new law imposing sanctions on banks that fail to comply with prudential regulations.

Sanctions for Non-Compliance

According to the law, any bank found guilty of non-compliance with prudential regulations will be subject to:

  • Imprisonment of one month to two years
  • A fine ranging from XOF 10 million to XOF 100 million
  • In the event of repeated offenses, a maximum penalty of five years’ imprisonment and a fine of up to XOF 300 million

Strengthening the Banking Sector

The law aims to strengthen the country’s banking sector by ensuring that banks:

  • Maintain sufficient capital and liquidity to meet their obligations
  • Integrate operational risk into their supervisory processes
  • Maintain a minimum capital ratio of 7.5% and total capital ratio of 11.5%

Minimum Share Capital Requirements

The law also sets minimum share capital requirements for commercial banks (XOF 10 billion) and financial institutions with a banking nature (XOF 3 billion).

Insolvency, Recovery, and Resolution of Banks

The government has introduced measures to deal with insolvency, recovery, and resolution of banks. The law provides for three procedures:

  • Preventive settlement
  • Judicial recovery
  • Liquidation of assets

In the event of liquidation, bank account holders will be reimbursed immediately after creditors of legal costs and super-privileged wages have been paid up to an amount determined by the competent judicial authority.

Challenges Ahead

Despite the introduction of these measures, the government has yet to implement the FSB Key Attributes of Effective Resolution Regimes, which provides a framework for resolving failing banks in an orderly manner. However, the government remains committed to strengthening the country’s banking sector and ensuring the stability and security of its financial system.