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The Moroccan banking sector is governed by the following legislative instruments:
Regulatory provisions are included in the decisions, directives and circulars of the governor of the Moroccan central bank, BAM. These regulatory provisions are published in the Official Gazette by means of decrees of the minister of economy and finance.
A number of bilateral and multilateral instruments have effect in Morocco – in particular:
In the context of its consultation approach, BAM or the minister of economy and finance may refer to the professional association of banks in Morocco (Groupement Professionnel des Banques du Maroc) (GPBM) on any matter of interest to the banking sector.
BAM systematically submits draft regulations relating to the banking sector to the members of the GPBM.
BAM, as the central bank, is responsible for ensuring the application of legislative and regulatory provisions relating to the exercise and control of the activity of credit institutions in Morocco.
According to Law 40-17, BAM is in charge of the following, among other things:
BAM is pursuing several priorities for 2021–23, as follows:
BAM organises its strategy around the following goals:
In Morocco, there are two types of credit institutions: banks and financing companies.
Payment institutions, micro-credit associations, offshore banks, financial companies, Caisses de dépôt et de gestion and Caisses centrale de garantie are assimilated to credit institutions according to Law 103-12.
Credit institutions in Morocco should take the form of either a public limited company with fixed capital or a cooperative with variable capital.
Credit institutions established as cooperatives are not subject to the Moroccan law on cooperatives.
According to Law 103-12, payment institutions can take the form of either a public limited company or a limited liability company.
Micro-credit associations can take the form of an association constituted in respect of the provisions of Royal Decree 1-58-376 of 15 November 1958 regulating the right of association.
There are no restrictions on foreign ownership of part of the share capital of Moroccan credit institutions.
Foreign credit institutions may operate in Morocco by way of a Moroccan-authorised branch or subsidiary. This is subject to the approval of Bank-Al-Maghrib.
Before operating in Morocco, any credit institution, micro-credit association, offshore bank or payment institution should obtain the approval of the governor of Bank-Al-Maghrib (BAM) further to the opinion of the Credit Institutions Committee.
The licence obtained by an applicant may cover several activities, including:
In order to obtain a licence, the applicant must meet the following conditions:
In order to obtain a credit institution licence, the applicant should submit a licence application to BAM before commencing its activities. When examining the licence application, BAM is entitled to request any documents and information it may require.
The licence application should be completed with all documents and information specified in BAM Circular 5/W/15 relating to the documents and information required for a licence application, which include the following:
The applicant should also provide several documents to BAM, including those relating to the applicant entity, the capital contributors and the directors and managers. The applicant should also complete a questionnaire in relation to the capital providers and contributors.
BAM will notify the applicant of its decision on whether to a grant licence or a duly motivated refusal within four months of receipt of all required documents and information.
This decision may limit the approval granted to the exercise of only some of the activities that the applicant has requested in its application.
Moroccan credit institutions are generally initially funded by their capital contributors. Once operational, they are funded by funds received from the public which are collected in the form of deposits.
Credit institutions also finance themselves by means of very short-term liquidity loans on the interbank money market segment.
Credit institutions in Morocco must justify a fully paid-up capital on their balance sheet or a fully paid-up endowment, the amount of which must be at least equal to MAD 200 million.
Where a credit institution which is approved as a bank does not collect funds from the public, the minimum capital required is MAD 100 million.
Credit institutions which are approved as financing companies must justify on their balance sheet an effectively paid-up capital or a fully paid-up endowment of a minimum amount of MAD 50 million, MAD 40 million or MAD 30 million, depending on the types of transactions that are contemplated.
Bank Al-Maghrib (BAM) requires that licensed credit institutions constitute obligatory reserves with it in the form of deposits.
If the credit institution does not comply with BAM requirements, BAM is entitled to apply to the relevant institution a pecuniary sanction of up to one-fifth of the minimum capital to which it is subject, independently of any caution or warning that it may issue.
According to Law 103-12, ‘financial companies' are entities that control, exclusively or mainly, one or more credit institutions. The following requirements apply to these financial companies:
For systemically important credit institutions, the following rules apply:
The systemic importance of a credit institution in Morocco is determined with regard to its size and the extent of its interconnection with the financial markets and other institutions of the financial system.
In addition to issuing banknotes and coins in circulation, and in addition to its banking supervision function, BAM is responsible for defining and implementing monetary policy, as well as ensuring price stability.
BAM further ensures the operation and security of systems and means of payment. It also sets the ratio between the dirham and other currencies under an exchange rate regime, and ensures the parity of the dirham. Moreover, it holds and manages foreign exchange reserves.
Alongside these core functions, BAM is the financial adviser of the government and the financial agent of the Moroccan Treasury.
(a) Mortgage lending?
Royal Decree 1-14-193 promulgating Law 103-12 relating to credit institutions and similar bodies.
(b) Consumer credit?
Law 31-08 on consumer protection.
(c) Investment services?
Royal Decree 1-14-193 promulgating Law 103-12 relating to credit institutions and similar bodies.
(d) Payment services and e-money?
Credit institutions should provide Bank Al-Maghrib (BAM) with all documents and information necessary for the proper functioning of services of common interest (eg, payment incident centralisation services, irregular check centralisation services).
Credit institutions should also submit to BAM all accounting documents and annexed statements that will allow it to carry out its control of credit institutions.
The governance and organisational obligations of credit institutions include the following:
Credit institutions should have an appropriate internal control system aimed at identifying, measuring and monitoring all of the risks they incur; and should set up systems that enable them to measure the profitability of their operations.
In addition, credit institutions should set up:
The requirements regarding internal audits include the following:
Credit institutions must also appoint two external auditors, subject to the approval of BAM. These auditors have the following missions:
The key obligations of the management bodies of a credit institution include the following:
The following applies to credit institutions that take the form of a public limited company or société anonyme.
The directors and senior executives of credit institutions are vested with the broadest powers to act in all circumstances on behalf and for the good of the credit institution.
To the best of our knowledge, there are no provisions under Moroccan law relating to the compensation of the directors and senior executives of credit institutions. However, public limited company law provides, for example, that the compensation of the chairman of the board of directors is determined by the board of directors.
The assets and liabilities of credit institutions can be transferred through a merger of credit institutions or through the acquisition of a credit institution by another credit institution. Such mergers and acquisitions are subject to Bank Al-Maghrib (BAM) approval.
Any change of control of a credit institution requires the issue of a new licence by BAM.
Moroccan banking law defines a ‘change of control' as any of the following:
The requirements that credit institutions must comply with to protect consumers include the following:
Under Moroccan banking law, a collective deposit guarantee fund (fonds collectif de garantie des dépôts) has been established with the aim of protecting the deposits of consumers should those deposits become unavailable.
The guarantee fund covers all deposits and other repayable amounts collected by credit institutions, with certain exceptions (eg, amounts received from other credit institutions or subsidiaries of the credit institution).
In terms of personal data protection, the regulations that apply in Morocco include:
The specific implications of these regulations are that a credit institution is required in particular to guarantee its customers the right to access and rectify their personal data. In addition, the credit institution should implement technical and organisational measures and data protection policies to ensure the lawfulness of data processing and ensure a level of data security.
As regards cybersecurity in Morocco, the applicable regulations are mainly provided by the following instruments:
The implications for credit institutions include obligations:
In Morocco, the provisions on money laundering are mainly set out in Royal Decree 1-07-79 promulgating Law 43-05 relating to the fight against money laundering. Provisions on money laundering are also set out in Bank-al-Maghrib circulars – for example, according to Circular 5/W/2017 on the due diligence obligations of credit institutions, credit institutions are subject to the following obligations, among others:
Banking secrecy applies in Morocco and is governed by the provisions of Law 103-12.
Anyone who, in any capacity whatsoever, participates in the administration, direction or management of a credit institution or who is employed by it, and anyone called upon in any capacity whatsoever to know or use information relating to a credit institution, is strictly bound by professional secrecy for all matters of which he or she has knowledge, subject to certain exceptions provided by law.
An internal study conducted by Bank Al-Maghrib (BAM) which analysed banking competition in Morocco revealed that:
Moroccan banking law provides for the following measures in relation to competition:
Where it appears that the deliberative, supervisory or management bodies of a credit institution can no longer operate normally, the governor of Bank Al-Maghrib (BAM) will appoint a provisional administrator. This provisional administrator may propose:
If BAM considers that a credit institution does not offer sufficient guarantees in terms of solvency, it may issue an injunction to remedy the situation within a specified period.
In addition, BAM may call upon shareholders or members with a stake equal to or greater than 5% of the capital to provide the credit institution with the financial support it needs.
Any credit institution whose licence has been withdrawn must enter into liquidation. The licence withdrawal may occur either:
In these cases, the liquidator or liquidators will be appointed by the governor of BAM.
During the liquidation period, the institution remains subject to the control of BAM and may carry out only those operations that are strictly necessary for its liquidation; and may refer to itself as a credit institution only together with a statement that it is in liquidation.
Any legal action against a credit institution that is likely to lead to the pronouncement of a judgment opening a judicial liquidation must be brought to the attention of BAM by the president of the court seized.
While the ongoing COVID-19 pandemic has led to an increase in the cost of credit, credit institutions remain resilient in terms of solvency and liquidity, as evidenced by:
In terms of developments, Bank Al-Maghrib (BAM) will continue to transpose the prudential rules of the Basel Committee to Moroccan credit institutions. Moreover, and in the near future, the development of the legislative and regulatory framework to reflect the presence of new players in the banking and para-banking markets, such as fintech companies, is expected to occur.
No regulations on cryptocurrencies exist to date and there have been no legislative developments with respect to fintech in Morocco.
On 21 November 2017 the Capital Markets Authority, together with BAM and the Ministry of Economy and Finance, issued a press release on the use of virtual currencies in Morocco. The press release aimed to warn the public against the use of virtual currencies.
The press release highlighted that the use of virtual currencies is a non-regulated activity under Moroccan law and the main risks relating to the use of virtual currencies, which include:
The position of BAM as detailed in the press release remains unchanged today.
Moroccan law does not yet expressly regulate several emerging areas, such as virtual currencies, and the law in those areas could thus be described as subject to a high degree of legal uncertainty.
Thus, due to the lack of regulations and the absence of a clear regulatory framework, banking entities should seek the opinion of Bank Al-Maghrib in relation to subjects on which there are no legal provisions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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