“In the midst of combatting Money Laundering, Capital Flight and Finance Crime, the government has put in place strict rules in establishing finance companies in Cameroon”
Banking and Finance law in Cameroon is a broad field that encompasses the study of financial systems, the circulation of money, investments, credit, and the institutions that manage them.
Banking and Finance practice in Cameroon is quite diverse and detailed, and the plethora of instructions, regulations and circulars from the regulatory bodies involved is illustrative of this fact.
The banking and finance practice in Cameroon touches on the activities of banks, microfinance and credit institutions, financial institutions and payment service companies in Cameroon.
The legal scope of banking and finance in Cameroon is based on instructions, circulars and regulations as established by the Ministry of Finance in Cameroon, the Bank of Central African States, the Central African Banking Commission and the National Credit Council.
With the continuous interest of businessmen and clients wishing to invest in this sector in Cameroon, it is important to understand the structure under which a financial institution or company can be created.
With the increase in terrorism and capital flight in the world today, the finance sector of Cameroon is very much regulated in terms of the institution, shareholders, operations, source of income, directors, audit, and clientele.
The aspect of transparency cannot be over-emphasized as the best practice for banks, microfinance institutions, payment services and finance companies dwell on transparency.
REGULATORY FRAMEWORK FOR BANKING AND FINANCE INSTITUTIONS IN CAMEROON
- COBAC Text of 1992, which harmonizes banking regulations across the six CEMAC member states.
- COBAC Regulation R-2023/02, relating to the conditions for exercising and controlling the activity of intermediary in banking operations within CEMAC.
- COBAC Regulation No. 01/17/CEMAC/UMAC/COBAC of September 27, 2017, which sets the conditions for the exercise and control of Micro Finance activity in the CEMAC zone.
- COBAC MFI Regulation R-2017/05, which specifies the conditions and procedures for the approval of MFIs, their executives, and statutory auditors.
- Regulation No. 02/18/CEMAC/UMAC/CM of December 21, 2018, on foreign exchange regulation in CEMAC member states.
- Instruction No. 011/GR/2019 of June 10, 2019, relating to the conditions for exercising manual currency exchange activity.
- Order No. 194/MINEFI/FE of September 16, 1998 (and subsequent amendments) regarding the conditions for opening and operating manual exchange offices by private economic operators.
- Law No. 2016/014 and other regulations like COBAC Regulation R-2015/01, criminalising money laundering and terrorism financing in Cameroon
The regulatory institutions in Cameroon are as follows;
BEAC – Bank of Central African States https://www.beac.int/
COBAC – Banking Commission
MINFI – Ministry of Finance https://minfi.gov.cm/
NCC - National Credit Council https://cnefcameroun.cm/
ANIF – National Financial Investigation Agency https://anif.cm/
CORE FUNCTIONS OF BANKING AND FINANCE IN CAMEROON
- Accepting Deposits: Providing secure accounts (checking, savings, etc.) for individuals and businesses to store money in Cameroon.
- Lending Money: Providing credit and loans (mortgages, business loans, personal loans, credit cards) to enable spending and investment, earning interest as profit in Cameroon.
- Investment Services: Assisting clients with buying and selling securities (stocks and bonds), managing portfolios, and offering financial advice in Cameroon.
- Facilitating Payments: Offering services for transferring funds, paying bills, and currency exchange (e.g., wire transfers, credit/debit card services) in Cameroon.
KEY LEGAL AND REGULATORY PRINCIPLES IN THE BANKING AND FINANCE SECTOR OF CAMEROON
- Harmonized regulations: The primary legal framework in the banking and finance sector of Cameroon is the COBAC Text of 1992, which harmonizes banking regulations across the six CEMAC member states.
- Openness to foreign investment: Investment in the banking sector is open to both Cameroonian and foreign individuals and corporations in conformity with the OHADA Law, the Banking law and the Finance law.
- Supervision and compliance: COBAC (Banking Commission) ensures that banks comply with prudential regulations, such as maintaining adequate capital reserves.
- Monetary policy: BEAC (Bank of Central African States) conducts monetary policy with the aim of maintaining the currency's internal and external value.
- Licensing: Both the Ministry of Finance and COBAC are involved in the process of licensing new banks. Microfinance institutions require approval from the Ministry of Finance, with a favourable opinion from COBAC.
- Anti-money laundering: Financial institutions must comply with regulations set by ANIF to prevent money laundering and terrorist financing.