OPENING AND FUNCTIONING OF FOREIGN CURRENCY ACCOUNTS: EXCHANGE CONTROL REGULATION 2018
CEMAC countries have a common Exchange Control Regulation. The CEMAC countries are (Cameroon, Central African Republic, Chad, Congo, Gabon and Equatorial Guinea).
This Exchange Regulations
provide measures for the opening of foreign currency accounts in the CEMAC and
outside CEMAC zone by residents and non-residents.
A foreign
currency account is an account with the currency of a different country other
than that of the holder of the account. The opening of a foreign currency bank account allows
its holder to deposit funds in a different currency other than his.
In the CEMAC
zone, the opening of foreign exchange accounts is regulated by the Regulation No. 02/18/CEMAC/UMAC/CM regulating foreign
exchange in the CEMAC (hereinafter Exchange Regulation) in its Title II
(Accounts of residents and non-residents), which is accompanied by Instruction No. 005/GR/2019 on the conditions and modalities
for opening and operating foreign currency accounts for residents and
non-residents (hereinafter Instruction).
This Regulation
provides for several possibilities of opening foreign currency accounts by
CEMAC residents (persons who reside in the CEMAC zone) and by non- residents
(persons who reside outside the CEMAC zone).
According to the Exchange Regulations, foreign currency accounts may be
opened by;
- Residents opening an account outside the CEMAC zone
- Residents opening an account in the
CEMAC zone
- Non-residents opening an account in the CEMAC zone
The general
provisions for the opening of foreign currency accounts by residents and
non-residents are laid down in Articles 41 to 50 of the Exchange Regulations and
the conditions and procedures for opening such accounts are laid down in the
Instruction of the latter.
(I) OPENING OF FOREIGN CURRENCY ACCOUNTS OUTSIDE THE
CEMAC ZONE BY RESIDENTS
According to the
provisions of Article 41 to 45 of the Foreign Exchange Regulations and Articles
7 to 11 of the Instruction, the procedures for opening foreign currency
accounts by residents out of the CEMAC zone are as follows;
A. AUTHORIZATION
The opening of a
foreign currency account outside CEMAC is prohibited to resident moral persons
(except for credit institutions) except with the prior authorization of the
Central Bank. The resident legal entity shall send a request for authorization).
The opening of a
foreign currency account outside CEMAC by a resident (physical person) is
declared to the Central Bank (Article 42 of the foreign exchange regulations).
After this
request, the authorization of the Central Bank is notified to the holder.
The duration of
the authorization to open a foreign currency account by a resident outside
CEMAC is 2 years renewable.
B. CONTROL OF THE CENTRAL BANK
The Central Bank
may at any time request from the holder of the foreign currency account outside
CEMAC information relating to the account operations.
The holder of a
foreign currency account outside CEMAC shall transmit quarterly the statement
of his account to the Central Bank.
(II) OPENING OF FOREIGN CURRENCY ACCOUNTS OF RESIDENTS
IN CEMAC
According to the
provisions of Articles 41 to 45 of the Exchange Regulations and Articles 12 to
17 of the Instruction, the procedures for opening foreign currency accounts by
residents in the CEMAC zone are as follows;
A. AUTHORIZATION
Prior to the
opening of a foreign currency account in the CEMAC zone by a resident (moral person), the
credit institution (in the name of the moral entity) must send to the Central Bank
an opportunity note in addition to a request for authorization to open a
foreign currency account.
The authorization
of the Central Bank shall be notified to the credit institution.
The Central Bank
shall specify the operations that may be credited or debited to the foreign currency
account concerned and the duration.
B. CONTROL BY THE CENTRAL BANK
The foreign
currency account may not be replenished by payments in CFA Franc or shall not
be debited in FCFA.
The Central
Bank's authorization for foreign currency accounts for CEMAC residents is 2
years.
(III) OPENING OF FOREIGN CURRENCY ACCOUNTS OF
NON-RESIDENTS IN CEMAC
According to the
provisions of Articles 41 to 45 of the Exchange Regulations and Articles 18 to
21 of the Instruction, the procedures for opening foreign currency accounts by non-residents
in the CEMAC zone are as follows;
A. AUTHORIZATION
The opening of
non-resident accounts (natural or legal person) in foreign currency in the
CEMAC zone is free, subject to the provision of Exchange Regulations.
Subject to the
regulatory diligence in force, credit institutions in CEMAC may open loro
accounts (A loro account is a foreign
currency account opened by a third party in the books of a financial institution
acting as a correspondent in the said currency (their account with us). The
holder of the account in foreign currency will consider it as a nostro account
(our account for them)) to non-resident correspondents.
B. CONTROL
Credits and
debits to non-resident accounts in foreign currency are free, subject to
compliance with exchange regulations.
The credit
institution has the obligation to inform the Central Bank of the opening of a
foreign currency account by a non-resident in CEMAC within 30 days from the
opening date.
(III) SANCTIONS TO THE NON-RESPECT OF THE PROVISIONS OF THR EXCHANGE REGULATION
(III) SANCTIONS TO THE NON-RESPECT OF THE PROVISIONS OF THR EXCHANGE REGULATION
Article 157 of
the Exchange Regulation explicitly provides that failure to comply with the
provisions of this Exchange Regulations exposes offenders to administrative,
monetary and non-monetary penalties depending on the nature of the offence. To ensure
the application of theses sanctions, the Central Bank (BEAC) has issued Instruction No. 014/GR/2019 on the rules
and procedures for recording infringements of exchange regulations and the
implementation of related penalties.
CONCLUSION
From the above, it is clear that the role of the Central Bank (BEAC) as to what concerns the implementation of the Exchange Regulation has been strengthened alongside the regulatory powers of the Banking Commission of Central Africa COBAC and the National Ministries of Finance of each member State.
The Central Bank carries documentary checks to ensure and authorize the opening of foreign currency accounts. There is a strengthened Institutional integration of the CEMAC who plays a more present role in foreign exchange activities.
These measures are intended to prevent a future devaluation of the FCFA in relation to the Euro. This future devaluation which pushes many residents to open foreign currency accounts in order not to be possible victims.
Also, it was a
question of limiting money laundering, financing of
terrorism and more. In order to avoid the worst, the CEMAC needed to take strong
measures.
This Exchange Regulation, due to all new present restrictions and survey conditions seems to discourage the opening of foreign currency accounts.
This Exchange Regulation, due to all new present restrictions and survey conditions seems to discourage the opening of foreign currency accounts.
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OPENING AND FUNCTIONING OF FOREIGN CURRENCY ACCOUNTS: EXCHANGE CONTROL REGULATION 2018
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