The Governor of the Central Bank announced last March that his services had set up a commission with the assistance of the banks to find an explanation for the spectacular surge in transfers from MREs since the outbreak of the Covid crisis. Asked on Tuesday, June 22 by our colleague Mustapha Azougah of SNRTnews about the conclusions of this work, Abdellatif Jouahri replied that the commission had not yet completed its mission. He took the opportunity to warn of a major threat to MREs and their fund transfer operations.
“Some European countries, including one in particular, are starting to take tough stances on MRE transfers. We also fear that there will be EU regulations that will make the operations of our banks more complex vis-à-vis their MRE customers, ”revealed Abdellatif Jouahri. He announced at the same time that the Central Bank and the GPBM were working on a note that they intend to send to the Ministry of Foreign Affairs in order to inform it of this threat and provide it with all the data to put this point on the table. negotiations with the EU.
“It’s not just about Morocco’s financial interest in this subject, but about the defense of the interests of our fellow citizens residing abroad”explained Jouahri.
Who are these countries that want to put a spoke in the wheel for MREs and Moroccan banks? And why ? We tried to find out more by contacting a leading banking source, as well as a European expert on the subject. And their responses are astounding.
Europe wants to implement a kind of European-style FATCA
“There is an idea in Europe, which is not official, which is to make a sort of FATCA to monitor assets held abroad by Europeans and particularly foreign residents at home. We see this hardening on a daily basis with fairly extensive requests for information on our MRE clients, on their assets, the nature of their transfers… They want to know everything, even the tax status of these assets,” our banking source tells us.
The FATCA (Foreign Account Tax Compliance Act) is a law that was passed in the United States in 2010. It is intended to identify “United States persons” who use foreign accounts to avoid payment of US tax. Under FATCA, non-US financial institutions must report to the US tax authorities (IRS) all relevant information about financial accounts held by a customer identified as a US person. In the event that a non-US financial institution fails to comply with FATCA, the IRS may impose a 30% withholding tax on payments from US sources made to that financial institution or its customers.
If Europe moves towards the same regulation, it will be a game-changer for the Moroccan diaspora and its financial institutions.
This pressure comes according to our source from three countries: France, Belgium and the Netherlands, three countries with a very large Moroccan diaspora. But French banks are particularly very virulentsays our banking source.
This at a time when nothing obliges Moroccan banks to exchange this type of information requested by European banks. Because despite the OECD convention on the exchange of banking data of which Morocco is a part, this agreement has not yet been ratified by Morocco and has not yet been implemented for technical reasons, explains our source. .
“Purely political vexatious measures”
Our source describes what is happening as a great aberration: “We can understand that an MRE who brings cash into his pocket can be likened to a tax evader, but a transfer from one bank to another is totally transparent. The original bank executing the transfer is supposed to have done all the due diligence on this money deposited with them in principle. We do not understand the usefulness of this tightening of controls. And we don’t see any logic in all this,” our banker is alarmed.
The case of France is particularly worrying.t, because the country launched in 2021 a kind of witch hunt for accounts and assets held abroad by its citizens, including MRE, with heavy penalties for anyone who does not declare to the tax authorities what he holds as assets in his country of origin. A measure that our source finds incomprehensible.
“France wants to change the rule along the way. There are already double taxation agreements between our two countries. The money transferred from France to Morocco is supposed to have already been taxed in France and to have undergone all the compliance required by French banks. And even if a MRE has rental, agricultural or financial income in Morocco, this does not concern France, because it falls under the double taxation agreement since this income is taxed in principle in Morocco”, clarifies our source.
There is no economic justification for all this, she says, but it is simply a question of “vexatious measures”.
“When we analyze the subject, we conclude that all this does not make sense. It’s like the history of visas. These are vexatious measures. It’s all political. And has nothing to do with economic or financial logic,” thunders our source.
And to add: “In Europe, there is the principle of free movement of capital. If a native Frenchman wants to buy a property in Morocco, no one is stopping him. But if it’s an MRE, we’re starting to put a spoke in its wheels. We have to be very careful about all this. This goes first of all in the interest of our fellow citizens and the importance of their transfers for the country’s economy, ”concludes our source.
European banks undermine trust in Bank Al Maghrib
Professor of Fintech at Chicago University and founder of Remesas.org, an organization specializing in the study and research on global remittances, Inigo Moré confirms the aberrant character of what is happening in Europe with regard to transfers from the diasporas.
“It’s a very political subject. Politicians are talking about it a lot lately. In France particularly where it was one of the topics of the campaign during the last elections. And that concerns all political currents, from the extreme right to the left. Even in government, there is a tendency to limit remittances from the diaspora under the pretext of fighting money laundering,” our expert tells us.
He gives us the example of Spain which, in addition to the identification of the client making the transfer, now requires what is called “the legitimate origin of the funds”. A requirement that applies to everyone, explains Ingo Moré, who transfers more than 3,000 euros per quarter.
“These kinds of controls in Spain, as in Europe, are becoming more and more strict, under the guise of combating money laundering. It’s totally ridiculous to talk about money laundering for a poor worker who sends small sums to his family, when we never talk about casinos, real estate transactions…”, adds Mr. Moré.
And European banks are not content to tighten control over MREs but make things more complex also for Moroccan banksagain under the pretext of anti-money laundering laws.
“If a Moroccan bank engages in a transfer operation, it is subject to anti-money laundering control by the corresponding bank, which may demand to see its accounts certified, know its shareholders, ask for a lot of certificates to be provided by from the central bank… It’s exaggerated,” the founder of Remesas.org tells us.
For him, this is not simply an economic or financial issue, but a question of trust.
“There is a minimum of trust to be had. Moroccan banks are controlled by Bank Al Maghrib. Morocco is a very serious country, and its central bank is credible and reliable. To require an anti-money laundering control for each transfer transaction is not to trust the country and its central bank. It’s abnormal, ”explains Inigo Moré.