Banking & Finance

The New Banking Regulations of the West African Monetary Union (WAMU): Towards a More Stable and Transparent Financial Sector

Senegal has reached a major milestone in the modernization of its financial system with the unanimous adoption by the National Assembly of Law n° 01/2025, which has now come into force with Law n° 2025-03 of February 19, 2025, on banking regulations.

This reform reflects Senegal's commitment to harmonizing its financial system with international best practice, while supporting inclusive and sustainable economic growth. It is combined with other initiatives and relies on hydrocarbon revenues to support the country's economic ambitions.

The WAMU, defined by the adoption of a common currency, the African Financial Community Franc (F.CFA), is based on close cooperation between its member states to guarantee monetary and financial stability, while facilitating economic exchanges within the region. As a member state, Senegal has incorporated into its legal system the new banking law adopted in June 2023 by WAMU, which replaces the 2007 Banking Law.

The reform of the banking law provides significant advances aimed at reinforcing financial stability, improving transparency and governance, providing a framework for financial innovation, harmonizing banking practices and protecting consumers.

• Broadening the scope and modernizing banking rules

The Uniform Act extends its scope of application from a single category to five categories of financial institution. It now includes credit, payment and electronic money institutions, finance companies and bank holding companies. It also clarifies the rules of corporate governance, prohibiting the combination of certain functions, such as those of Chief Executive Officer and Chairman of the Board of Directors, and reinforces the role of statutory auditors. In addition, it provides a clear regulatory framework for Islamic finance and participatory financing, as well as a solid legal basis for financial technology companies, which previously operated in a legal blur.

• Strengthening supervisory powers and introducing strict measures to guarantee financial stability

It strengthens the powers of the WAMU Banking Commission, extending its supervisory and resolution powers to all financial entities, including microfinance institutions. It provides for strict sanctions in the event of non-compliance with prudential standards, such as a ban on discretionary distributions (dividends, share buy-backs) for offending institutions. In addition, it introduces derogations from OHADA general law, in particular regarding collective procedures, to protect financial stability and the interests of investors.

• Introduction of a dispute resolution system to strengthen customer confidence and protection

Finally, the new uniform law establishes a system for settling disputes between financial institutions and their customers. These include an internal mechanism for handling complaints within institutions, and mediation institutionalized within the Financial Services Quality Observatory (Observatoire de la Qualité des Services Financiers). These measures are designed to promote the amicable settlement of disputes, thereby strengthening customer trust in the financial system. This comprehensive reform contributes to greater stability, transparency and efficiency in the Senegalese and regional banking sector.