Senegal: Scoping assessment

The beneficial ownership state of play in Senegal

Below is a short analysis of how Senegal’s disclosure regime compares against the nine topics within the OO Principles.

Principle one: Robust definitions

Principle

• Beneficial ownership should be clearly and robustly defined in law, with sufficiently low thresholds set to ensure all relevant ownership and control interests are disclosed.

Elements of Principle

• A robust BO definition should make clear that a beneficial owner can only be a natural person and should expressly cover direct and indirect ownership and control.
• There should be a single and unified definition that is set out in primary legislation and applies in all circumstances.
• As indirect ownership and control can take many forms, the definition should include a non-exhaustive list of examples but also a catch-all clause to minimise any loopholes.
• The definition should also include a threshold that is low enough to capture all material ownership or control but not so low that it creates an undue compliance and administrative burden.
• It should also make clear that intermediaries, nominees, agents and other similar persons are not beneficial ownership.

Assessment

GIABA’s Mutual Evaluation Report (MER) of Senegal published in May 2018 noted that the term “beneficial ownership” did not appear in Senegalese law, and that this lack of definition obstructed access to BO information. The MER stated that “[t]he extant Senegalese law literally omits the term “beneficial ownership”, which means there is no mechanism for collecting such information. Consequently, information on beneficial ownership of companies at a designated place in the country and the possibility of obtaining such information in a timely manner by any competent authority have not been communicated by Senegal.” [15]

However, three months prior to this, in February 2018, Senegal transposed UEMOA Directive 02/2015 on AML and CFTs into domestic law as Law 2018-03. This Directive (and therefore Senegalese law) did have a BO definition from that point onwards. The research behind the MER statement almost certainly occurred in late 2017 before the transposition of the Directive. Furthermore on 19 March 2020, the government enacted PD2020-791 on registering beneficial ownership, and amended the Tax Code in the July 2021 Finance Law. Both the decree and the Finance Law contain differing beneficial ownership definitions.

Senegal therefore currently has three BO definitions set out in law. Two definitions are set out in primary legislation: Law 2018-03 and the 2021 Finance Law, while the third is contained in a presidential decree, PD2020-791.

The three definitions have several important elements in common. These include making clear that a beneficial owner is a natural person, and reference to both direct and indirect ownership and control. They also use a cascade approach to identifying beneficial owners. The definition of control is designed to capture any form of control. The definitions also make clear that nominees cannot be considered beneficial owners.

The definition in PD2020-791 sets a threshold of 2%, while Law 2018-03 and the 2021 Finance Law have a threshold of 25%, but the latter provides an exception for the extractive industries where it maintains the 2% threshold. Law 2018-03 also provides a definition of PEPs, which includes domestic and foreign public officials, relevant categories of types of officials and their family members and close associates, as well as others deemed PEPs by a competent authority. PD2020-791 refers to this definition. The 2021 Finance Law in turn refers to PD2020-791. For ease of understanding, the three definitions are laid out in Table 1 below.

Table 1. Examining the definitions of BO in Senegal

Elements of the definition	Definition in Law 2018-03	Definition in PD2020-791	Definition in 2021 Finance Law
Natural person	Yes	Yes	Yes
Ownership and control interests	Yes	Yes	Yes
Indirect and direct interests	Yes	Yes	Yes
Disclosure threshold	25%	2%	25%
Forms of economic or control interest	Refers to “par tout autre moyen” (i.e. by all other means) and includes non-exhaustive list of examples including voting rights, control over management or the Board	Refers to control “par d’autres moyens” (i.e. by other means) and gives examples including voting rights, control over management or the Board	Refers to “par tout autre moyen” (i.e. by all other means) and includes non-exhaustive list of examples including voting rights, control over management or the Board
Mechanisms of holding interest	Includes share capital, voting rights, control over management, Board	Includes share capital, voting rights, control over management, Board	Includes share capital, voting rights, control over management, Board

Recommendations

• The government should adopt a single unified BO definition that is used for all purposes in the country. This should be based on the definition in Law 2018-03, which is more detailed than the PD2020-791 and the 2021 Finance Law definitions, and is already set in primary legislation. The single unified definition should also take into account relevant recommendations given in this report.
• The single unified definition should set a general threshold less than 25% but higher than 2%, in order to be in line with international emerging good practice which is moving towards lower thresholds. A low threshold should be applied in cases where a beneficial owner is a PEP. A 2% threshold would probably cause undue administrative and compliance burden if implemented on an economy-wide basis. Beneficial ownership should be disclosed when an individual’s aggregate control of, or economic benefit from, a company reaches or exceeds 5%. The government should take a risk-based approach to setting the threshold. This may include setting different thresholds for beneficial owners from different economic sectors (e.g. a lower threshold for the extractive sector) and for different types of beneficial owners (e.g. PEPs). This practice has already been adopted in Ghana and Armenia.

Principle two: Comprehensive coverage

Principle

• Data should comprehensively cover all relevant types of legal entities and natural persons.

Elements of Principle

• All types of entities and arrangements through which ownership and control can be exercised (including, for example, state-owned enterprises (SOEs) and publicly listed companies (PLCs)) and all types of beneficial owners (including non-residents) should be included in declarations, unless reasonably exempt.
• Any exemptions from full declaration requirements should be clearly defined and justified, and reassessed on an ongoing basis.

Assessment

A BO reporting regime should cover all types of legal entities that operate in a country, including foreign entities and subsidiaries of foreign-owned entities. This should include limited liability companies, joint stock companies, partnerships, co-operatives and entities that are not for profit. There should be a minimal number of exemptions and a system for justifying and periodically reviewing such exemptions. There may also be a need to set specific reporting requirements for some types of entities that do not readily lend themselves to reporting natural persons as beneficial owners, e.g. companies listed on a stock exchange and state-owned enterprises.

The Senegalese economy attracts investment from a wide range of countries and types of commercial vehicles, including privately-held companies, publicly-listed companies and state-owned enterprises. Therefore, it is likely that there will be a wide variation in the types and complexity of ownership and control structures for companies operating in the country. These structures may include types of legal entities that are not currently recognised in Senegalese law, e.g. trusts. Nevertheless, all the BO definitions currently in place contain a catch-all clause that should capture any form of legal entity, including foreign-owned entities.

The only operational system for collecting and publicly reporting beneficial ownership is that established by PD2020-791 for the extractive sector. This only covers the companies that are within the scope for EITI reporting, i.e. those who apply for or hold licences for the exploration or extraction of oil, gas and minerals. Following the enactment of this decree, ITIE-SN published BO information from the extractive sector in its report for FY2019, published in December 2020, and the report for FY2020, published December 2021. [16]

Table 2 provides a summary of the level of coverage in both reports. For the FY2020 report, 13 of the companies have been reclassified as listed companies. For these companies, the percentage of shares listed on a stock exchange and a link to the relevant stock exchange web page is given. In both reports, the BO information is attached to the report as Annex 3.

Table 2. Summary of beneficial ownership information collection and compliance, 2019 and 2020

Level of coverage and compliance	2019	2020
Companies which provided complete BO information	16	7
Companies which provided incomplete BO information	1	1
Companies which provided no BO information	7	3
State-owned companies	2	2
Listed companies	0	13
Total	26	26

Source: ITIE-SN EITI 2019 and 2020 reports

It is worth noting that the “state-owned companies” and “listed companies” rows in the table above are described in the EITI reports as “Companies which are not required to report information on Ultimate Beneficial Owners”. [17] The definition of beneficial ownership in use in Senegal is silent on listed companies, but they appear to be treated as exempt from reporting. However, the government’s data collection form has fields related to publicly-listed companies but not for SOEs.

At the Opening Extractives stakeholder workshop on 9 June 2022, the RCCM representative reported that details of 118 beneficial owners of extractive companies had been submitted. However, it is not clear how many companies this relates to.

Recommendations

• Senegal should enact specific, stand-alone legislation to create and maintain an economy-wide BO reporting system that meets the Open Ownership Principles and is in line with international best practice.
• The government should establish a multi-disciplinary taskforce, under the remit of the Ministry of Justice and chaired by a senior official or minister, to undertake the design of the BO reporting system, advise the government, draft the necessary legislation, undertake stakeholder engagement and navigate the draft law through the legislative system. This taskforce should include representatives of the Tax Authority, Ministries of Mines, Oil and Gas as well as any other relevant government agencies.
• ITIE-SN should clarify the reporting requirements for SOEs and companies with shares listed on a stock exchange and provide additional guidance. Where exemptions exist, they should only be applied where the stock exchange has adequate ownership disclosure requirements, i.e. disclosure requirements relating to the acquisition and disposal of significant shareholdings and voting rights. [18]

Principle three: Sufficient detail

Principle

• Beneficial ownership declarations should collect sufficient detail to allow users to understand and use the data.

Elements of Principle

• Information should be collected about the beneficial owner, the declaring company. and the means through which ownership or control is held.
• Information should be collected in online forms with clear guidance that facilitates compliance.
• Information collected should be limited to what is necessary to achieve the policy objective.
• Where beneficial ownership is held indirectly through multiple legal entities or legal arrangements, or ownership or control are exerted formally or informally through another natural person, sufficient information should be collected to understand full ownership chains.

Assessment

This principle recommends that the information collected on beneficial ownership should be sufficient to uniquely identify each beneficial owner, the reporting company and the nature and extent of their ownership or control over that company. This should include the exact percentage share of ownership or control and details of intermediate levels of ownership or control where relevant. For example, the EU’s 4th AMLD states that the following information should be available on each beneficial owner:

• Name
• Month and year of birth
• Nationality
• Country of residence
• Nature of control
• Size interest

The EITI Standard 2019 Requirement 2.5 on beneficial ownership states that information about the identity of the beneficial owner should include the name of the beneficial owner, the nationality, and the country of residence, as well as identifying any PEPs. It is also recommended that the national identity number, date of birth, residential or service address, and means of contact are disclosed.

The extractive industry BO reporting system in Senegal collects and makes available the following information on each beneficial owner: [19]

• Full name
• Date of birth
• National identity card number (for Senegalese citizens)
• Nationality
• Country of residence
• Address
• Level of ownership
• PEP status

This data is provided in ITIE-SN’s annual reports and makes clear which company is reporting the BO information. It provides sufficient detail to uniquely identify each individual beneficial owner. However, there is currently no information collected or reported on intermediate ownership and control structures.

As noted above, the 2021 Finance Law does not specify the details to be collected on each beneficial owner in order to identify them. Therefore, it is unclear whether sufficient detail on each beneficial owner will be collected. The 2021 Finance Law does require however that the nature and extent of owners.

Recommendations

• When the Senegalese government legislates for an economy-wide BO reporting system, it should ensure that legislation and implementing regulations allow for the collection of the information listed in Table 3 below, and are based on the guidance provided by Open Ownership and the EITI. [20]

Table 3. Information to be collected

Reporting company	Each beneficial owner	Nature and extent of ownership or control
Name of reporting entity	Full name	Percentage of ownership or control
Registration number of reporting entity	Date of birth	How ownership or control exercised (e.g. shares, voting rights)
Address of reporting entity	Unique identifier number (e.g. national identity card number or passport number)	Date became beneficial owner
Type of reporting entity	Nationality	Date ceased to be beneficial owner
	Residential address
	Contact address
	PEP status
	If PEP, nature of PEP status (e.g. public office, family member), date became PEP

• Legislation for an economy-wide BO reporting system should also include specific reporting requirements for SOEs and companies with shares listed on a stock exchange. These requirements should include collection of the information listed in Table 4 below. For example, Ghana’s planned BO regulation contains specific reporting requirements on companies listed on the stock exchange, and SOEs.

Table 4.  Information to be collected on SOEs and publicly listed companies

State-owned enterprises	Companies with shares listed on a stock exchange
The percentage of ownership of each government agency	Name of the stock exchange
The name and address of each government agency that is a beneficial owner	Stock exchange jurisdiction
The nationality of each government agency	Identifying information for the listed equity securities
Country of incorporation of the SOE, if different from nationality given above	A link to the stock exchange(s) website page(s) that gives details of the company’s listing
Notarised copy of proof of ownership such as extract from the relevant corporate register	Basic information about the listed company itself (name, registered office address, company registration number, etc.)
Details of each government official who exercises control including: a. Full name and any former name b. Position and date appointed c. Nationality d. Method by which control is exercised	Any identifiers that can be used to locate both the legal entity and any related stock exchange filings

Principle four: Central register

Principle

• Data should be collated in a central register.

Elements of Principle

• To facilitate rapid and efficient access to BO data, BO disclosures should be collated and held within a central register.

Assessment

In March 2022, FATF issued an updated version of Recommendation 24 which includes strong guidance that BO information should be collected in a central register. Previously, FATF had not been prescriptive on the mechanism that jurisdictions should use to collect and make available BO information. A central register was one of three mechanisms that jurisdictions could use. The other two are companies making the information available on request, and using existing information. The updated FATF guidance is moving closer to other international practices. The EU AMLD requires a central register, and the EITI encourages implementing countries to maintain a central BO register. A central register has several advantages over other mechanisms: it allows law enforcement and other competent authorities to access BO information without alerting companies or individuals under investigation, allows the analysis of suspicious trends, facilitates the efficient collection, verification and availability of BO information and facilitates the collection and storage of BO information in a standardised and machine-readable format.

Senegal currently has one BO register with the prospect of a second. PD2020-791 created the legal basis for a register for the extractive sector which is maintained by RCCM. Information from the register is accessible on request (see below) and is made available to ITIE-SN for its annual report. Under the General Tax Code and the 2021 Finance Law, the Tax Authority will also maintain a register of BO information on all entities registered for tax purposes. [21]

Recommendations

• The government should legislate to create a single unified central BO register which captures data in a standardised and structured format and is interoperable with databases maintained by other government agencies e.g. the Tax Authority, as well as BO registers maintained by other countries.

Principle five: Public access

Principle

• Sufficient data about the beneficial owner should be freely accessible to the public.

Elements of Principle

• The public should have access to BO data, at a minimum to a subset that is sufficient for users to understand and use the data.
• The data should be free of charge and should be available as open data: published under a specified licence which allows anyone to access, use, and share it without barriers such as identification, registration requirements, or the collection of data about users.
• A legal basis for the publication of data should be established, in line with privacy and data protection legislation and potential negative effects of the publication of data should be understood and mitigated for.
• Where information about certain classes of persons (e.g. minors) is exempt from publication, the exemption should be clearly defined, justified, and narrowly interpreted.

Assessment

There is a strong case for public access to BO information. Publicly-accessible data can be used to hold the government and companies to account, contributes to risk management and due diligence by organisations and individuals, and allows government and citizens to understand who is benefiting from economic activity in the country. There is an international trend towards public access to BO information. While FATF does not require public access, other international benchmarks do. The EU AMLD requires that BO information is made publicly available. EITI encourages implementing countries to maintain a public BO register. The EITI standard states that publicly accessible BO information should be free to access i.e. not require payment of a fee (where possible) or registration. Users should also be able to download the information in bulk for analysis and assessment.

In Senegal, BO information is not currently available to the public as a matter of course. Access is only for those who can demonstrate a legitimate interest. Where access is granted, there is a fee of XOF2,500 (approximately €4) per company. The 2021 EITI Validation Report notes that stakeholders believed this was a reasonable fee. ITIE-SN’s publication of BO information in its annual reports is the only operational mechanism for public access to BO information at present. This information is made available for free and can be downloaded as an Excel spreadsheet. There is no other method for the public to gain access to any BO information.

Recommendations

• When the Senegalese government legislates for an economy-wide BO reporting system, this should include the right for the public to access certain BO information for free and to be able to download certain BO information in bulk. The government should strike a balance between granting access to BO information and protecting the privacy of beneficial owners, e.g. certain personal information such as full date of birth and national identity card number should not be publicly available. The full data set should only be available to government agencies such as law enforcement.
• Legislation for an economy-wide BO register should also ensure that only information that is strictly necessary for identifying beneficial owners and the nature and extent of their ownership is collected.

Principle six: Structured data

Principle

• Data should be structured and interoperable.

Elements of Principle

• BO data should be available as structured data, with declarations conforming to a specified data model or template.
• BO data should be available digitally, including in a machine-readable format.
• BO data should be available in bulk, as well as on a per record basis, free of charge.

Assessment

The usefulness of BO information is enhanced when the data is available in a standardised structured format. It makes a contribution to verification efforts (see below) by ensuring that the information collected is high-quality and can support more automatic and manual check processes. It also facilitates the use and analysis of BO information by a wider variety of users. Open Ownership has developed the Beneficial Ownership Data Standard (BODS) as a guide for the collection and sharing of BO data in a structured format. A collection of free, open source tools for reviewing, visualising and using BODS data are also available from Open Ownership.

A tripartite Memorandum of Understanding between ITIE-SN, the Ministry of Justice and the technical service provider Gaindé 2000 governs RCCM’s collection and processing of BO data. Companies which fall which are required to make a declaration provide their BO information to RCCM, which then processes the information. The information is then transmitted to ITIE-SN for publication in the EITI report, after extraction from the database. The data is not collected, stored or made available in a structured format that is consistent with BODS.

Recommendations

• The government adopts BODS when it implements an economy-wide BO reporting system.
• RCCM works with other government agencies to ensure there is a single portal through which companies submit information, RCCM staff verify the information, and it is made available to ITIE-SN and other users.

Principle seven: Verification

Principle

• Measures should be taken to verify the data.

Elements of Principle

• When data is submitted, measures should be taken to verify the beneficial owner, entity, ownership or control relationship between the beneficial owner and the entity, and the person making the declaration.
• After data has been submitted, it should be pro-actively checked to identify potential errors, inconsistencies, and outdated entries, using a risk-based approach where appropriate, requiring updates to the data where necessary.
• Mechanisms should be in place to raise red flags, both by requiring entities dealing with BO data to report discrepancies and by setting up systems to detect suspicious patterns based on experience and evidence.

Assessment

Information submitted to a BO register should be subject to verification, including verifying the identity of each beneficial owner and the nature and extent of their ownership or control. Verification should ensure that data is accurate and meets expected patterns (e.g. birth dates are in a reasonable range) and is cross-checked against other reliable databases (e.g. the national identity card database and lists of sanctioned individuals). As well as confirming the accuracy and precision of information submitted, verification should also include identifying suspicious patterns or potential criminal activity. Certain types of ownership, e.g. bearer shares (anonymous shares that confer ownership on whoever physically holds the share certificate), should be outlawed.

Access to reliable information is a vital part of a BO reporting system, and a robust verification system is essential to achieving an accurate and reliable BO registry. However, effective verification has proven to be the one of the most challenging aspects of establishing and administering a BO register. Globally, none of the currently operating public BO registers has a fully effective verification process in place. Verification is not a one-off process and does not occur at regular intervals. It is a continuous process that occurs at all stages of the BO reporting process including, data collection, data update, administration of the register and enforcement.

Senegal also faces the challenge of putting in place a robust verification process. The existing BO reporting system for extractive sector companies has only limited levels of verification. Reporting companies are required to supply documentary evidence of the identity of their beneficial owners, such as copies of national identity cards or passports. RCCM compares the consistency of the information declared with this documentary evidence. Companies reporting data are also required to declare that the information provided is accurate.

The factors that make verification challenging in Senegal include: lack of familiarity with the concept of beneficial ownership in many companies. For companies outside of the extractive sector, many will not be familiar with collecting and reporting their beneficial ownership information. The experience in other countries is that this creates difficulties in ensuring compliance with a reporting regime and collecting accurate data.), The implementation of an economy-wide BO register in Senegal will require the need to collect a large volume of data and the verification evidence from multiple sources. This will include verifying information on complex ownership and control structures. As noted above, requiring data entry and storage in a standardised and structured format makes an important contribution to verification. Ensuring that BO data is collected in a standardised and structured format will make a considerable contribution to Senegal’s verification process. Public access also plays a crucial role as public scrutiny of the data contributes to identifying errors, discrepancies and suspicious data patterns.

Recommendations

• The government should implement a robust verification process as part of the implementation of an economy-wide BO reporting system. As well as implementing the recommendations above on collecting and storing data in a standardised and structured format, this should include checks on the format and accuracy of data, cross checking the data with other government databases, a system for identifying and resolving red flags, random checks on the data, and the ability for users to report discrepancies (e.g. where a member of the public identifies an error in the BO details for a company), and for some users (e.g. banks and lawyers), an obligation to report discrepancies (e.g. where the information they are given by a client differs from that in the register).

Principle eight: Up-to-date and auditable data

Principle

• Data should be kept up-to-date and historical records maintained.

Elements of Principle

• Initial registration and subsequent changes to beneficial ownership should be legally required to be submitted in a timely manner, with information updated within a short, defined time period after changes occur.
• Data should be confirmed as correct on at least an annual basis and all changes in beneficial ownership should be reported.
• An auditable record of the beneficial ownership of companies should be available by dating declarations, and storing and publishing historical records, including for dormant and dissolved companies.

Assessment

As well as being accurate, the other important feature of BO information is that it is up to date. There are two important elements to ensuring up to date BO information: a requirement to report any changes within a specified time and a requirement to reconfirm on an annual basis that the BO information in the register remains accurate and up to date. Also of importance, is that the register’s administrator maintains a record of changes in information and stores historical information. This information should be retained for potential use in future investigations. Open Ownership has recently issued technical guidance for implementers called Building an auditable record of beneficial ownership.

PD2020-791 includes a provision requiring that changes in BO information are notified within one month of becoming effective. There is also a requirement for an annual reconfirmation that BO information remains accurate and up to date.

The 2021 Finance Law requires that changes are notified within 15 days. It also includes a provision that data is retained for 10 years by legal entities.

Recommendations

• The legislation creating an economy-wide BO register should include provisions requiring reporting companies to notify the relevant government agency of any changes in their BO information within at most one month, and to provide annual confirmation that their information in the BO register remains accurate and up-to-date.
• The legislation should also include provisions that allow for the retention of historical information, in line with existing government information retention policies.

Principle nine: Sanctions and enforcement

Principle

• Adequate sanctions and enforcement should exist for noncompliance.

Elements of Principle

• Effective, proportionate, dissuasive, and enforceable sanctions should exist for noncompliance with disclosure requirements, including for non-submission, late submission, incomplete submission, or false submission.
• Sanctions that cover the person making the declaration, the beneficial owner, registered officers of the company, and the declaring company should be considered.
• Sanctions should include both monetary and non-monetary penalties.

Assessment

Enforcement of BO reporting requirements and sanctioning non-compliance are crucial for underpinning trust in the reliability and accuracy of information in a BO register. Open Ownership has recently published a policy briefing on this topic, laying out best practice: Designing sanctions and their enforcement for beneficial ownership disclosure.

Enforcement should be consistent, and sanctions should be proportionate and dissuasive. Also, sanctions should consist of both financial and non-financial penalties. Non-financial penalties can include measures such as cancellation of company registration, licences or contracts, barring of directors, ban on public procurement and in the most serious cases, imprisonment of individuals. Potential offences can range from minor errors in submitting information to deliberate concealment of the real owners for the purpose of corruption, money laundering or other criminal activity.

In Senegal, non-compliance with the BO reporting requirements in PD2020-791 carry financial and non-financial penalties, such as fines and exclusion from tender processes. While the information in Table 2 above suggests some level of non-compliance is already occurring, no penalties have yet been imposed. Instead, ITIE-SN and the RCCM have focussed on persuasion, building awareness of the need to report, and educating reporting entities on how to comply with the BO reporting requirements. The 2021 Finance Law provides for financial penalties for non-compliance with BO obligations which will be accordingly applied once the BO provisions are operationalised.

Recommendations

• The government should introduce a range of financial and non-financial penalties for non-compliance as part of legislation to introduce an economy-wide BO register.

Footnotes

[15] See p149, http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/GIABA-Mutual-Evaluation-Senegal-2018.pdf

[16] Both reports can be found at: https://eiti.org/countries/senegal

[17] For example see p14 of 2020 report

[18] Jack Lord and Kadie Armstrong, “Beneficial Ownership Transparency for Listed Companies”, September 2020

[19] Ministerial ruling no. 001598, 5 February 2021, concerning the form for the declaration of beneficial owners

[20] Open Ownership Form Guidance can be found here: https://openownershiporgprod-1b54.kxcdn.com/media/documents/oo-guidance-bo-declaration-forms-guide-for-regulators-and-designers-2021-03.pdf and https://eiti.org/guidance-notes/beneficial-ownership-model-declaration-form

[21] Both laws can be found at: https://itie.sn/reglementation/

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