WAEMU Tightens Currency Controls and Anti-Money Laundering Rules

(Ecofin Agency) - Adopted at the end of 2024, the new WAEMU regulation strengthens currency controls and places the fight against money laundering and the financing of terrorism at the heart of the region's economic and security priorities.

On December 20, 2024, WAEMU’s Council of Ministers passed a new rule to control the Union's foreign financial relations. This new rule replaces the one from 2010 and introduces stricter measures to track currencies, close loopholes, and protect foreign exchange reserves. The Central Bank BCEAO says the new regulation is a response to practices that have been damaging the region’s financial stability for years.

Indeed, over $25 billion is made annually from exports like cocoa, cotton, and gold, but some of this money disappears from the BCEAO’s view. This money, which is important to help keep the CFA franc stable, does not always end up in the Union’s reserves.

Between 2022 and 2023, the Central Bank noticed a shortfall of about CFA5,446 billion (around $8.8 billion) in foreign currencies. This money, which should have been sent back to the Central Bank by businesses and local banks from exports outside the WAEMU countries, never made it to the reserves.

This gap is about 40% of the Central Bank’s foreign exchange reserves, which is worrying for a region that depends heavily on shared reserves to keep its money stable. In 2023, about 14% of the export revenue that should have been repatriated, or CFA2,260 billion, was missing. This is a common issue. In 2022, the shortfall was CFA3,186 billion, or 19% of export revenue from outside the WAEMU area.

"Exporters often find ways to keep their earnings in foreign accounts instead of sending them back," said a banker, who requested anonymity. This practice is not new, but it has grown as global trade has increased. In 2023, only 74% of the export revenue from outside the Union was returned to the Central Bank.

To counter this, the new 2024 regulation sets strict rules: export earnings must be fully repatriated in two stages. First, they must be collected by an authorized intermediary (such as a local bank), then transferred to the BCEAO. Those who do not comply face sanctions outlined by the national laws of each WAEMU member state. These sanctions can include hefty fines and other administrative penalties. The goal is to ensure that repatriation commitments are followed. Authorized institutions, which also have strict obligations, risk losing their licenses for serious violations.

Another key measure is increased monitoring of foreign currency accounts held abroad. Until now, businesses and individuals could open accounts outside the WAEMU area with some level of opacity to manage their international activities. While these practices were often legal, they allowed important foreign currencies to remain outside the region. The new regulation now requires prior approval from the Ministry of Finance, after validation by the BCEAO. Every transaction must be justified and traceable...Read more on Ecofin Agency

Source: Ecofin Agency