2024 – New West African Economic and Monetary Union banking uniform law
1. Preliminary observations
The new West African Economic and Monetary Union (“WAEMU”) banking uniform law was adopted by the Council of Ministers of the WAEMU on June 2023 (the “WAEMU Banking Uniform Law”).
The WAEMU Banking Uniform Law does not apply directly in all WAEMU member states (i.e., Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo).
WAEMU member states need to adopt local implementing laws for the WAEMU Banking Uniform Law to become applicable in their respective jurisdictions.
As of today, we understand that only Benin has done so. On 2 September 2024, the President of the Republic of Benin promulgated law No. 2024-14 regulating banking activities (the “New Beninese Banking Law”). We do not, however, have any information on whether the New Beninese Banking Law has been published in the Beninese official gazette, which we understand to be a condition that needs to be met for the New Beninese Banking Law to officially become applicable in Benin.
We also understand that Burkina Faso will soon adopt its own local law to implement the WAEMU Banking Uniform Law. But we have no visibility into when this might happen.
Additionally, we have no visibility into when the other WAEMU member states might adopt implementing local laws.
With this said, we have set out in section 2 below an analysis of the main innovations set out in the WAEMU Banking Uniform Law.
2. Main innovations of the WAEMU Banking Uniform Law
This section does not intend to be exhaustive. It sets out the main innovations brought by the WAEMU Banking Uniform Law (when compared with the previous WAEMU banking uniform law).
- New scope of application: If the previous WAEMU banking uniform law only applied to credit establishments, the WAEMU Banking Uniform Law applies to banks, credit financial establishments, payment establishments, e-money companies, banking holdings, and financial companies.
- New definitions: The WAEMU Banking Uniform Law introduces new concepts. For example, it introduces the notion of “Islamic banking activity”, which it defines as an activity consisting of carrying out, as a profession, one or more Islamic banking transactions. It also introduces the notion of “FinTech” which is defined as a financial technology company that can carry out banking transactions as per the conditions and within the limits set out in its licence.
- Details on the role played by local authorities: The WAEMU Banking Uniform Law sets out in detail the role played by each relevant local authority within the banking sector of the WAEMU region (e.g., it defines the missions played by each Minister of Finance of each WAEMU member state).
- More comprehensive definition of banking transactions: Banking transactions are defined in a more comprehensive way in the WAEMU Banking Uniform Law (e.g., funds received from the public now expressly include funds pertaining to certificates of deposit).
- Express licensing requirements: FinTech companies are now subject to express licensing requirements to be able to carry out their activities.
- Entire new chapter on Islamic finance: The WAEMU Banking Uniform Law has a new chapter on Islamic finance that did not exist in the previous WAEMU banking uniform law.
- Proper regulation of the activities of intermediaries: The WAEMU Banking Uniform Law provides further details on how the activities of intermediaries are regulated. These intermediaries are banking agents and payment services agents. Banking agents can, for example, help a local bank enter into a banking transaction with a customer. Payment services agents can, for example, promote the payment services offered by a payment service provider.
- More detailed rules on control of banks, financial credit establishments, payment establishments, e-money companies, banking holdings, and financial companies: The control of these entities by the relevant local authorities is more stringent under the WAEMU Banking Uniform Law (e.g., banking establishments of a systemic national importance are subject to a more thorough control by the Commission Bancaire de l’UMOA – i.e., the “Banking Commission”, which is the entity in charge of overseeing the establishments that operate in the banking sector).
- More rules on protection of users of banking services: The WAEMU Banking Uniform Law provides additional protection for users of banking services across the WAEMU region (e.g., a customer that has a complaint against its bank, which they deem have not been properly addressed by said bank can lodge a complaint with the Banking Commission).