Sanctions regime

Credit institutions and other entities subject to the supervision of Bank Al-Maghrib that violate the provisions of the banking law or the regulations issued for its implementation are liable to disciplinary sanctions, without prejudice, where applicable, to the criminal penalties provided for by the banking law or by specific legislation.

In the event of an infraction, Bank Al-Maghrib sets the disciplinary sanction to be applied based on:

• the applicable regulatory framework;

• the origin, seriousness, and recurrence of the infraction;

• the responsiveness of the institution in addressing and remedying the issue.

In accordance with the banking law, Bank Al-Maghrib may impose various disciplinary sanctions, including:

1 - Financial penalties:

When an institution violates the provisions of banking law and the regulations adopted for their application, Bank Al-Maghrib is authorized to impose a financial penalty equal to no more than one-fifth (1/5) of the minimum capital to which it is subject, regardless of any warning or notice. Bank Al-Maghrib Circular No. 2/G/2007 of February 7, 2007 sets out the list of offenses liable to financial penalties and the amounts involved. These offenses concern non-compliance with:

• Accounting regulations.

• Prudential rules.

• The obligation to set up an internal control system.

• The obligation to establish mandatory reserves.

• The procedures for preparing or the deadlines for transmitting documents and information to be sent to Bank Al-Maghrib or requested by it.

• The conditions laid down by the Minister of Finance for the collection of public funds and the distribution of credit.

• The procedures laid down for informing customers.

• The obligation to contribute to the financing of the Collective Deposit Guarantee Fund.

Bank Al-Maghrib shall notify the credit institution of the financial penalty imposed on it, the reasons for the penalty, and the period within which the penalty will be enforced, which may not be less than eight (8) days from the date on which the notification is sent to the institution.  These provisions shall also apply in the event of failure by credit institutions to comply with the requirement to hold minimum reserves with Bank Al-Maghrib, as provided for by the law governing Bank Al-Maghrib.

The amounts corresponding to the financial penalties shall be debited directly from the accounts of credit institutions holding an account with Bank Al-Maghrib.

Credit institutions that do not have such an account shall pay the aforementioned sums at the counters of Bank Al-Maghrib. Furthermore, if they fail to meet the above-mentioned deadline for payment of the aforementioned sums, collection shall be ensured by the Treasury on the basis of a revenue order issued by the Minister of Finance or any person delegated by him for this purpose, under the conditions provided for by Law No. 15-97 establishing the code for the collection of public debts.

2 - Cautionary note:

When a credit institution has failed to comply with professional standards, Bank Al-Maghrib may issue a warning after giving its managers formal notice to provide explanations.

3 - The injunction:

When the management or financial situation of a credit institution does not offer sufficient guarantees in terms of solvency, liquidity, or profitability, or when its internal control system has serious shortcomings, Bank Al-Maghrib issues an injunction requiring it to remedy the situation within a specified period.

In such cases, Bank Al-Maghrib may require the institution to submit a recovery plan, supported, if it deems necessary, by a report prepared by an independent expert, specifying in particular the measures taken, the measures envisaged, and the timetable for their implementation.

4 - Warning:

Bank Al-Maghrib may, without issuing an injunction, send a warning directly to the credit institution concerned, requiring it to comply, within a period determined by Bank Al-Maghrib, with the provisions of the Banking Act and the regulations adopted for its implementation, to improve its management methods, to strengthen its financial position, or to remedy any anomalies identified in its internal control system.

5 - Referral to the Disciplinary Commission for Credit Institutions:

The Disciplinary Committee for Credit Institutions, established by Article 28 of Law No. 103-12 on credit institutions and similar organizations, is responsible for investigating disciplinary cases referred to it and proposing disciplinary sanctions to the Governor of Bank Al-Maghrib.

The opinion of the Disciplinary Committee for Credit Institutions is required when Bank Al-Maghrib must rule on:

• A representative of Bank Al-Maghrib.
  • the credit institution has not made use of its authorization within twelve months of the date of notification of the authorization decision.
  • the credit institution has not been operating for at least six months.
  • the credit institution no longer meets the conditions under which it was authorized.
  • the credit institution's situation is considered to be irretrievably compromised.
  • the warning or notice issued has had no effect.

• the appointment of a provisional administrator, in particular where it appears that:
  • the institution's decision-making, supervisory, or management bodies can no longer function normally.
  • the measures envisaged in the recovery plan are deemed insufficient to ensure the viability of the institution (regardless of whether the shareholders or members have responded to the call from the Governor of Bank Al-Maghrib).
  • the warning or notice remains without effect.

• the detailed list of offenses referred to in Article 173 of the aforementioned law, as well as the corresponding financial penalties set by circular from the Governor of Bank Al-Maghrib.

• the decisions referred to in Article 178 of the aforementioned law, taken by the Governor of Bank Al-Maghrib when the warning or notice provided for in Articles 85 and 88 of the aforementioned law have remained without effect, in particular to:
  • suspend one or more managers.
  • prohibiting or restricting the credit institution from carrying out certain operations.
  • appointing a provisional administrator.
  • revoking the authorization.

Composition and functioning of the Disciplinary Commission for Credit Institutions

Chaired by the Director General of Bank Al-Maghrib, or a representative appointed by the Governor of Bank Al-Maghrib, this commission comprises the following members:

• One representative from Bank Al-Maghrib.

• Two representatives from the Ministry of Finance.

• Two magistrates appointed by the High Council of the Judiciary.

The chair of the commission may call upon any person whose assistance is deemed useful to provide the commission with an opinion on the matter before it. Such individuals shall not take part in the commission's deliberations. Bank Al-Maghrib shall provide secretarial services for the commission.

The commission shall draw up and adopt its rules of procedure. It shall meet when convened by its chair and shall be quorate when at least four of its members are present, including a representative of Bank Al-Maghrib, a representative of the Ministry of Finance, and a magistrate. Its opinions shall be adopted by a majority of the members present and, in the event of a tie, the chair shall have the casting vote.

The commission shall summon the legal representative of the establishment involved to a hearing, at which he or she may be assisted by any person of his or her choice to defend his or her case, after having notified him or her of the complaints made against him or her and communicated all the elements of the case file. The commission may, on its own initiative or at the request of the interested party, summon the representative of the professional association concerned to hear their testimony.

The members of the commission are bound by professional secrecy in all matters brought to their attention in accordance with the provisions of Article 180 of the Banking Law.