Senegal: Scoping assessment

  • Publication date: 10 November 2022
  • Authors: Michael Barron, Moussa Gueye, Favour Ime, Tim Law

Introduction

Senegal has the opportunity to put in place a best-in-class BO disclosure regime that makes a vital contribution to preventing and combatting money laundering, terrorist financing, corruption and other illicit financial flows. Such a regime could also contribute to building trust and a more open and competitive economy. It would allow Senegal to meet international standards including the EITI Standard 2019 and FATF’s Recommendation 24.

Action to date

Since the GIABA MER in 2018, the Senegalese government has taken the following actions:

1. Incorporated UEMOA AML Directive into domestic law as Law 2018-03. This law defines a beneficial owner and a politically exposed person (PEP). However, it does not create a legal obligation on legal entities to collect or report BO information. It also does not create a legal obligation on the government to establish or maintain a BO register.

2. Adopted its national AML/CFT strategy document 2019-2024 in May 2019. The implementation of the action plan commenced with the mobilisation of stakeholders and training activities for reporting entities and supervisory authorities.

3. Issued and implemented Presidential Decree 2020- 791 in respect of BO information in the extractive sector. This decree includes:

  • A definition of a beneficial owner;
  • references to the PEP definition in Law 2018-03;
  • a legal obligation on the government to establish an electronic register of BO information of companies active in the extractive sector;
  • a legal obligation for the RCCM to collect BO information electronically;
  • a legal obligation on companies in the extractive sector to collect and submit BO information; and
  • the BO information collection form (as an annex).

4. Amended article 633 of the Tax Code though the 2021 Finance Law on 5 July 2021 (published in the Official Gazette on 9 July 2021). [6] This introduced a requirement for all legal entities to provide the Tax Authority with their BO details by 31 December 2021, which will be recorded in a register maintained by the Tax Authority. The amendments included:

  • a definition of a beneficial owner, including an ownership threshold of 25%;
  • a requirement to submit information on the identity of each beneficial owner, the nature and extent of their ownership or control and the date on which they become (and ceased to be) a beneficial owner;
  • a requirement to notify any changes within 30 days;
  • a requirement for the tax authority to retain beneficial ownership information for 10 years; and
  • a reference to Presidential Decree 2020-791.

However, the ministerial decree to implement amendments to article 633 have yet to be issued so the above provisions are yet to be operationalised.

Presidential Decree 2020-791 gives responsibility to the RCCM to collect BO information from extractive companies and make it available to the Senegal EITI (ITIE-SN). The decree states that only those with a legitimate interest may access the register, which includes a specific list of government agencies. In practice, anybody can apply to the RCCM to request access to the information and the RCCM has indicated that requests are granted automatically. Law 2018-03, PD2020-791 and 2021 Finance Law are all available on the ITIE-SN website. [7]

To capture this opportunity, Senegal will need to build on the progress made to date in promoting BOT. ITIE-SN has played an important role as an advocate for BOT and has driven much of the above progress through implementation of Requirement 2.5 from the EITI Standard 2019. [8] The EITI International Secretariat in its Validation Report on Senegal, dated 21 September 2021 [9] acknowledged the role ITIE-SN has played in advancing BOT: “Senegal EITI has played a role in centralising disparate information and improving the accessibility of both legal and beneficial ownership data for at least some companies included in the scope of EITI reporting, albeit with gaps.” [10]

Overall, the Validation Report gives a holistic picture of progress towards BOT in the extractive sector. EITI uses two phases in assessing countries’ progress towards meeting Requirement 2.5. The first phase in Senegal was conducted before 31 December 2021, and undertaken in accordance with the EITI validation framework. [11] While noting gaps in beneficial ownership reporting, the report assesses that “Senegal has fully met the requirement’s objective of enabling the public to know who ultimately owns and controls the companies operating in the country’s extractive industries and to help deter improper practices in the management of extractive resources.” All aspects of the initial criteria for Validation of Requirement 2.5 have been addressed,” [12] The next EITI Validation will assess progress against the full set of criteria in Requirement 2.5 which covers whether the BO data collected and publicly disclosed in Senegal are comprehensive and reliable. For Senegal to be positively evaluated, it has “to ensure that the beneficial ownership of all companies holding or applying for a mining, oil and gas license is comprehensively and reliably disclosed as of January 2022.” [13]

In March 2020, Presidential Decree 2020-791 (PD2020-791) created an obligation on companies active in the extractive sector to report their beneficial owners to the RCCM. This information is then made available to ITIE-SN for publication in its annual EITI report. This is currently the only public BO reporting system in place in the country.

On 30 June 2022, Senegal passed another milestone on its journey towards BOT with the national launch of the Opening Extractives programme in the country. [14] At the launch, the government reiterated its commitment to BOT. The launch followed the stakeholder consultation workshop which formed part of the research for this scoping report.

The importance of BOT for Senegal’s economy

BOT is important in building trust and confidence in the integrity of the whole economy, for citizens, government, the private sector and providers of finance, both domestic and international. The demands for increased transparency from international investors, finance providers and other stakeholders are growing. At the same time, there is more focus on the beneficial ownership of companies and assets globally, as governments seek to build trust and clamp down on tax evasion, corruption and money laundering.

As Senegal continues to attract international investment and financing, it will want to meet these expectations of transparency. Senegal has been, and will continue to be, in competition with other countries to attract foreign investment, and countries that offer higher levels of transparency are likely to be more successful in doing so, especially in the post-Covid financial environment.

Scope

This scoping assessment report examines the implications of BOT for the whole of Senegal’s economy. It considers what is required to implement an effective economy-wide BO reporting system, and to publish high-quality and usable BO data. It assesses the current measures relevant to BOT that are in place in Senegal, especially the BO reporting system established by PD2020-791 and the 2021 Finance Law. It also considers the implications of other relevant legislation such as Senegal’s AML law, Law 2018-03.

Objectives

The overall objective of this scoping assessment report is to provide vital inputs into Senegal’s participation in the Opening Extractives programme and provide concrete recommendations to advance the implementation of effective BOT in the country.

This scoping assessment report:

  • identifies significant stakeholders;
  • documenting stakeholders’ perspectives on BOT;
  • delivers analysis of the policy and legal environment; and
  • assesses the country’s current BOT status, as well as identifies opportunities and challenges for the enhancement of Senegal´s BOT regime.

Methodology

The methodology consisted of:

  • stakeholder engagement based on established stakeholder mapping and engagement methodology. A total of 14 stakeholders from 6 organisations were interviewed and a list is provided at Appendix 1. In addition, a stakeholder consultation workshop was held on 9 June 2022. It was attended by 26 individuals and the Opening Extractives staff;
  • a desktop review of relevant documents including legislation, EITI reports, FATF reports and other third-party reports. A list of documents is provided at Appendix 2;
  • the completion of Open Ownership’s scoping assessment questionnaire for countries enrolled on the Opening Extractives programme.

This assessment uses the Open Ownership Principles as a framework for identifying the challenges and opportunities for Senegal in implementing a robust BO reporting system on an economy-wide basis. There are nine principles which cover all aspects of a BO reporting system, from defining beneficial ownership, to ensuring data is available in a structured format, to sanctions and enforcement

Footnotes

[6] https://itie.sn/?offshore_dl=7608

[7] Ibid

[8] https://eiti.org/collections/eiti-standard

[9] https://eiti.org/sites/default/files/attachments/eiti_validation_of_senegal_2021_-_final_validation_report_september_2021_en.pdf

[10] Validation Report, p28

[11] See https://eiti.org/sites/default/files/attachments/assessing_implementation_of_eitis_beneficial_ownership_requirement.pdf

[12] Validation Report p29

[13] Validation Report p30

[14] See https://eiti.org/blog-post/launch-opening-extractives-senegal

Next page: The beneficial ownership state of play in Senegal