IDEffective Insolvency and Creditor Rights Systems
According to the World Bank's 2003 assessment of Morocco's insolvency and creditor rights systems, the country has achieved progress in achieving compliance with the Principles and Guidelines for Effective Insolvency & Creditor Rights Systems developed by the World Bank. Specifically, creditor rights and enforcement procedures, and the legal framework for corporate insolvency were assessed as "largely observant" of the World Bank's Principles. However, requirements pertaining to courts were found to fall between "largely observant" and "materially observant," and the requirements pertaining to insolvency practitioners were found to fall between "materially non-observant" or "non observant." Nonetheless, the report did note that the system's efficiency was found to be seriously impaired by insufficient enforcement. Following the assessment, Moroccan authorities sat down with World Bank representatives to discuss possible technical assistance from the Bank. The website of the World Bank Global Insolvency Law Database discloses that Morocco's authorities are attempting to address some of the shortcomings identified during the 2003 evaluation. However, there is no recent information disclosing what, if any, progress has been achieved to date.
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NCInternational Financial Reporting Standards
According to the assessment of accounting and auditing practices conducted by the World Bank in 2002, Moroccan generally accepted accounting standards (GAAP) are conceptually different from International Accounting Standards (now renamed International Financial Reporting Standards or IFRSs). The World Bank concluded that, since the establishment of the National Accounting Council (CNC) in 1989, Moroccan accounting standards have improved significantly, but that inadequate enforcement and flawed standards-setting process impeded further progress. In line with the World Bank's recommendations, Moroccan authorities and other stakeholders developed an action plan to improve the financial reporting framework. According to Deloitte IAS Plus website, starting January 1, 2008 the Central Bank of Morocco will require all banks and similar financial institutions to use IFRSs. The website further points out that the Moroccan Law on Stock Exchanges allows all companies listed on the Casablanca Stock Exchange, other than banks and similar financial institutions, to choose between IFRSs and Moroccan GAAP. An IMF 2008 Article IV report confirmed that credit institutions in Morocco implemented IFRSs in January 2008. However, as far as Moroccan GAAP is concerned, in a 2007 sself-assessment prepared for the International Federation of Accountants, the Certified Public Accountants Association stated that the CNC, as the accounting standard setter in the country, has not established convergence as a formal objective.
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IDPrinciples of Corporate Governance
The World Bank conducted an assessment of Morocco's corporate governance in 2001 and concluded that at the time significant progress had been made in improving the legislations for corporate governance. In a 2007 International Monetary Fund Working Paper, Tahari et al. state that corporate governance in Morocco has improved over the last few years, especially with respect to higher standards for managerial accountability and shareholders' rights. However, the World Bank assessment and Tahari et al. concurred that the limited power of securities regulators, especially the Securities Commission (CDVM), to address corporate governance issues at large remained a barrier to the effective application of these laws. In addition, a 2007 International Finance Corporation press release commented that the country's corporate governance framework was "not in accordance with global standards" and that a national corporate governance code to complement existing Moroccan laws and regulations as well as the creation of an Institute of Directors of Moroccan corporations was needed. Following these recommendations progress has been made bringing Morocco closer towards a functioning corporate governance system. The CDVM law was amended in 2004 to strengthen its powers; the 2006 Law on Credit Institutions reinforced the role of the CDVM, and established a commission for the coordination of institutions in charge of financial sector supervision; and the Moroccan Code of Good Corporate Governance Practices, based on the "comply or explain" principle, was published in 2008.
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IDInternational Standards on Auditing
In 2002, the World Bank conducted an assessment of accounting and auditing frameworks in Morocco in order to evaluate their strengths and weaknesses and propose an action plan to improve existing practices. International Standards on Auditing (ISAs) were used as a benchmark for the evaluation of Moroccan auditing requirements. The World Bank concluded that Moroccan auditing standards, promulgated by the Certified Public Accountants Association (OEC) in 1998, are "largely consistent" with ISAs existing at the time of issuance of the Moroccan standards. However, they fail to incorporate certain ISA requirements, are less detailed, and do not cover all essential auditing topics. Moreover, the World Bank observed that the majority of chartered accountants do not follow existing Moroccan standards because of the lack of quality assurance mechanisms, regular professional training, and implementation guidelines. The World Bank recommended, among other things, full adoption of ISAs, complemented by standards specific for Morocco. On July 27, 2005 an EU-Morocco Action Plan was adopted pursuant to the EU Neighborhood Policy as a means to deepen the economic ties, which included gradual adoption of ISAs. In 2006, a subsequent European Commission Progress Report found that there had been little progress achieved in regards to building a modern legal and regulatory framework for auditing that would comport with EU Company Law. In a 2007 self-assessment prepared for the International Federation of Accountants, the OEC pointed out that although convergence of Moroccan auditing standards with ISAs has not been implemented, adoption of ISAs has been established as an objective and is expected to be implemented in the near future. A 2008 African Development Bank Appraisal Report noted that efforts had been made towards the preparation of an audit manual that complies with international auditing standards, although no further details were provided.
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IDAnti-Money Laundering/Combating Terrorist Financing Standard
In early 2007, the Middle East and North Africa Financial Action Task Force (MENAFATF) conducted a mutual evaluation of Morocco's anti money laundering (AML) and combating the financing of terrorism (CFT) regime and published its report in November 2007. The evaluators assessed Morocco's AML/CFT regime against the Financial Action Task Force's (FATF) forty recommendations and nine special recommendations. The 2007 MENAFATF report notes that since the passing of the AML Law in May of 2007 the country has entered the first stage in developing its AML/CFT framework. The mutual evaluation noted that, as of 2007, Morocco either did not comply or only partially complied with an overwhelming majority of the FATF's 40+9 recommendations. The 2007 AML Law, the evaluation notes, conforms "to some extent" with international conventions on the criminalization of money laundering. The report states that with regards to the country's AML regime "no practical measures for the setting [up] of regulatory frameworks have been undertaken." Financial institutes and designated non financial business and professions have no preventive measures in place. Overall, the assessors note that Morocco's AML/CFT regime is still at a very nascent stage and there is much room for further development. The FATF, in its 2007-2008 Annual Report names Morocco as one of the jurisdictions that has undertaken to implement the FATF's 40+9 recommendations.
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IICore Principles for Systemically Important Payment Systems
Although there is descriptive information of the payment systems in Morocco, none of the reports on the issue address the country's actual compliance with the Committee on Payment and Settlement Systems' (CPSS) Core Principles for Systemically Important Payment Systems. In 2003, when the IMF assessed Morocco's payment system it observed that there were no payment systems in the country that met the CPSS' definition for systemically important payment systems. Nevertheless, the 2003 IMF assessment noted that there were significant deficiencies in terms of the technical and legal aspects of the payment system structure. Moreover, risks were not clearly defined to participants, and the BAM's roles and responsibilities over payment systems were not clearly identifiable. A 2008 Update of the 2003 IMF assessment notes that a "substantial modernization of the payment system" in Morocco has occurred since 2003, which includes the creation of a real-time gross settlement system, the Morocco Gross Settlements System (SRBM), in 2006. A 2007 paper by A. Tahari et al. states that the SRBM is expected to "reduce the settlement risk on transactions, ensure their security, shorten the lag time for fund transfers, and facilitate the implementation of monetary policy." The 2008 IMF report mentions that Morocco was recently evaluated by the Arab Payments and Securities Settlements Initiative, which concluded that "the system still relied heavily on cash transactions, and required a more complete legal framework." The IMF recommends that the BAM "promulgate a legal framework governing payments and supervision of the payment system" and "actively continue the campaign to recruit and train specialists in payment system supervision." In addition to the SRBM, there are three other payment systems in Morocco, the Moroccan Interbank Remote Clearing System (SIMT), Card Payment Center (CMI), and the Central Depository (MAROCLEAR).
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