Decision of the Tunisian Financial Analysis Commission No. 2017-02 of March 2, 2017 establishing guidelines for financial professions on the detection and reporting of suspicious operations and transactions

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Decision of the Tunisian Financial Analysis Commission No. 2017-02 of March 2, 2017 establishing guidelines for financial professions on the detection and reporting of suspicious operations and transactions.

The Tunisian Financial Analysis Commission,
Having regard to the Organic Law No. 2015-26 of August 7, 2015 on the fight against terrorism and the repression of money laundering, Having regard to Law No. 2014-54 of August 19, 2014 establishing supplementary finance law for the 2014 fiscal year and notably Article 54, Having regard to Law No. 2016-48 of July 11, 2016 on banks and financial institutions, Having regard to Law No. 94-117 of November 14, 1994 on the reorganization of the financial market as amended and supplemented by subsequent texts, Having regard to Law No. 2005-96 of October 18, 2005 on strengthening the security of financial relations, Having regard to the Insurance Code promulgated by Law No. 92-24 of March 9, 1992 as amended and supplemented by Law No. 2008-08 of February 13, 2008, Having regard to Decree-Law No. 2011-117 of November 5, 2011 on the organization of microfinance institutions' activities as amended by Law No. 2014-46 of July 24, 2014, Having regard to Decree No. 98-1305 of June 15, 1998 establishing the National Post Office and fixing its administrative and financial organization and operating procedures, Having regard to Governmental Decree No. 2016-1098 of August 15, 2016 fixing the organization and operating procedures of the Tunisian Financial Analysis Commission, Having regard to the Minister of Finance Order of March 1, 2016 fixing the amounts provided for in Articles 100, 107, 108, 114 and 140 of Organic Law No. 2015-26 of August 7, 2015 on the fight against terrorism and money laundering repression, Having regard to Decision of the Tunisian Financial Analysis Commission No. 2017-01 of March 2, 2017 establishing guidelines relating to the reporting of suspicious operations and transactions, and after deliberation, Decides:

Article 1: The guidelines defined in the following articles establish the general framework for detection and reporting measures concerning suspicious operations and transactions that financial professions are required to implement under Organic Law No. 2015-26 of August 7, 2015 and its implementing texts. For the purposes of this decision, financial professions are defined as:

• banks and financial institutions subject to Law No. 2016-48 of July 11, 2016 on banks and financial institutions,

• stock exchange intermediaries and portfolio management companies acting for third parties subject respectively to Law No. 94-117 of November 14, 1994 on the reorganization of the financial market as amended and supplemented by subsequent texts, and to Law No. 2005-96 of October 18, 2005 on strengthening the security of financial relations,

• insurance and reinsurance companies and insurance intermediaries subject to the Insurance Code promulgated by Law No. 92-24 of March 9, 1992 as amended and supplemented by Law No. 2008-08 of February 13, 2008,

• microfinance institutions subject to Decree-Law No. 2011-117 of November 5, 2011 on the organization of microfinance institutions' activities as amended by Law No. 2014-46 of July 24, 2014; and

• the National Post Office established by Decree No. 98-1305 of June 15, 1998.
  Hereinafter referred to as "financial institutions".
  The authorities responsible for supervising financial institutions set out the operational procedures and practical measures to ensure compliance with these guidelines and their proper implementation.
  These guidelines also apply to financial operations carried out by exchange offices established in accordance with Article 54 of Law No. 2014-54 of August 19, 2014 These guidelines also apply to operations related to safe deposit box services offered by banks. In this context, banks are required, upon customer request for this service, to take the following measures:

• Ensure client identity in accordance with the provisions of this decision,
• obtain a written declaration from the customer certifying that the contents of the safe deposit box concern them personally and that they have carried out all deposits into their own box themselves. They must also commit in said declaration that their use of the safe deposit box does not violate applicable legislation in general and does not contravene the provisions of Organic Law No. 2015-26 of August 7, 2015 on the fight against terrorism and money laundering repression,
  In case of doubt and emergence of suspicion indicators that may call into question the proper use of the safe deposit box service made available to the customer, and after conducting useful investigations regarding the validity of these doubts and suspicions, the Bank must file a suspicion declaration with the Tunisian Financial Analysis Commission.

Paragraph 1: On client identity verification and nature of activity
Article 2: Full verification of the client's identity, activity, and address must be carried out at the inception of the relationship. To this end, a "Know Your Client - KYC" form must be completed and duly filled out by the client.
This verification must be performed:
A – When the client is a natural person, based on the national identity card or passport for Tunisians, and by passport or an ID document bearing a photo, address, and holder's activity for foreigners, recognized by the authorities of their respective states. B – When the client is a legal entity or legal structure, based on official documents attesting to:

• its establishment, trade name or corporate denomination, legal form, registered office, and activity.
• the identity and domicile of its directors and those among them who have the power to commit on behalf of and for the account of the entity.
• the identity and domicile of major shareholders or partners.
  Constant vigilance must be exercised over business relationships, and a careful review of operations and transactions carried out must be conducted throughout the duration of the business relationship.

Articles 3: The provisions of Article 2 of these guidelines apply to any occasional client who carries out:

• a financial operation with a value equal to or greater than ten thousand dinars.

• a foreign exchange operation with a value equal to or greater than the equivalent of five thousand dinars.

• a financial operation involving an electronic transfer regardless of amount.
  Operations with values below the amounts set in the preceding paragraph are exempt from the obligations under this article, except in cases of suspicion of money laundering or terrorism financing, doubt regarding the accuracy or relevance of previously obtained client identification data, or repetition of these operations by the same beneficiary or for their benefit. An occasional client, as defined in these guidelines, is any person who carries out an operation without a contractual or habitual relationship with the financial institution.

Article 4: The obligation to verify identity applies to foreign correspondents. To this end, it is necessary to:

• ensure that the correspondent is approved and subject to supervision by the competent authorities of its country of origin or where it is established.
• collect sufficient information on the correspondent to identify the nature of its activity and to assess, based on publicly accessible information, its reputation and the effectiveness of the supervision it is subject to.
• verify whether the correspondent has been subject to an investigation or intervention by a supervisory authority related to money laundering and terrorism financing.
• assess the control system to which the correspondent is subject within the framework of the fight against money laundering and terrorism financing.
• obtain the agreement of the General Management or Board of Directors before establishing relations with a new correspondent.
• define in writing the responsibilities of correspondents.
  In regard to clearing accounts, the concerned financial institution must ensure that its correspondent has applied due diligence measures to its clients having direct access to accounts opened on its books and is able to provide relevant information relating thereto upon request.

Article 5: If circumstances of the operation or transaction indicate that it is carried out or could be carried out for the benefit of a third party, verification of the beneficial owner's identity, activity, address, and the powers of the person acting on their behalf must be performed.
The verification elements for the beneficial owner's identity must be clearly indicated on the "Know Your Client - KYC" form provided for in Article 2.

Article 6: Financial institutions must take appropriate measures to apply the provisions of Article 109 of Organic Law No. 2015-26 of August 7, 2015 by profiling clients based on a risk-based approach to facilitate monitoring of their transactions and careful review of related financial operations.
To this end, financial institutions must obtain relevant information on the purpose and nature of the business relationship that allows identification of the client's activity type, transaction types and volumes, and the financial products suitable for them. Financial institutions must when establishing business relationships, respect applicable legislation to which the client may be subject regarding prohibitions on certain activities or obligations for separation between personal and professional accounts, and exercise enhanced vigilance over these business relationships. Enhanced vigilance refers to the measures financial institutions must take when money laundering and terrorism financing risks are high, namely:

 obtaining additional information on the client (e.g., profession, asset volume, data available in public databases, online, ...) and updating client and beneficial owner identification data.
 obtaining additional information on the envisaged nature of the business relationship.
 obtaining information on the origin of the client's assets.
 obtaining information on the reasons for the envisaged or carried out operations.
 obtaining authorization from General Management or the Board of Directors for entering into or continuing a business relationship.
 implementing enhanced monitoring of the business relationship by increasing the number and frequency of controls and selecting operation patterns requiring more in-depth review.

Article 7: Financial institutions must:

• have adequate systems for managing risks related to accounts of politically exposed persons.
  Politically exposed persons are defined as individuals who hold or have held high public office or representative or political missions in Tunisia or a foreign country, as well as their close relatives or persons closely associated with them.
• obtain authorization from General Management or the Board of Directors before opening such accounts.
• take all reasonable measures to identify the origin of wealth and the source of funds.
• ensure enhanced vigilance and continuous monitoring of these accounts.

Article 8: Financial institutions must pay particular attention to business relationships and other transactions with counterparties residing in countries and territories designated as non-cooperative and high-risk by the Financial Action Task Force (FATF).

Article 9: Financial institutions must refrain from carrying out any operation or transaction when the identity of the concerned persons is not indicated, incomplete, or manifestly fictitious. Financial institutions must also refrain from executing any transaction or operation justified by forged or manifestly fictitious documents.

Article 10: Financial institutions must:

• implement procedures and take all other necessary measures to prevent the use of new technologies for money laundering or terrorism financing purposes.
• ensure enhanced vigilance for clients with whom they have only remote relationships.

Article 11: Financial institutions are required to:

• create a file for each client to retain copies of their official documents, certified as conforming to the original by the responsible agent.
• regularly update client-related information.
• in case of doubt regarding the accuracy or relevance of information provided on client identity, or when there is suspicion of money laundering or terrorism financing, a new identification must be performed.

Paragraph 2: On the adoption of a system for detecting suspicious operations or transactions
Article 12: Financial institutions must implement a system for detecting suspicious operations or transactions.
By suspicious operation or transaction, it is understood in particular:

• the operation or transaction that appears unrelated to the nature of the client's activity.

• the operation or transaction for which documents or information showing its purpose have not been produced.

• the operation or transaction that lacks any apparent economic or lawful justification.
  They must to this end develop an internal procedures manual to assist in decision-making regarding the reporting of operations or transactions potentially linked to money laundering or terrorism financing. A copy of this procedures manual must be provided to agents responsible for detecting these operations or transactions.

Article 13: Financial institutions must designate among their directors or agents holding at least the rank of director, or equivalent, a correspondent to the Tunisian Financial Analysis Commission responsible for examining suspicious operations or transactions and, where applicable, reporting them to the Commission.
They must also designate an alternate correspondent meeting the same condition.
Financial institutions must communicate to the General Secretariat of the Tunisian Financial Analysis Commission the decision designating the correspondent and their alternate, indicating their status, function, as well as contact details and email addresses. The correspondent and their alternate must attend periodic meetings of correspondents with the Commission whenever summoned. The correspondent or their alternate must provide, as soon as possible, all documents and information requested by the Commission.

Article 14: Financial institutions must establish internal control rules to evaluate the effectiveness of the implemented system in accordance with conditions set by supervisory authorities.
Furthermore, they must ensure that their foreign branches and subsidiaries have identification and vigilance procedures at least equivalent to their own.

Article 15: Financial institutions must develop continuous training programs for their agents, in coordination with the Tunisian Financial Analysis Commission.

Article 16: Financial institutions must pay particular attention to any unusual operation or transaction.
By unusual operation or transaction, it is understood in particular:

• the operation or transaction that has a complex character;
• the operation or transaction involving an abnormally high amount.
  Financial institutions must, as far as possible, examine the framework in which said operations or transactions are carried out and their purpose, record the results of this examination in writing, and make them available to supervisory authorities and auditors.

Paragraph 3: On the reporting of suspicious operations or transactions
Article 17: When examination reveals suspicion regarding an operation or transaction, financial institutions must:

• immediately report the operation or transaction to the Tunisian Financial Analysis Commission in accordance with the model provided by Commission Decision No. 2017-01 of March 2, 2017.

• freeze, if ordered by the Tunisian Financial Analysis Commission, the funds subject to the report and deposit them in a suspense account.

• inform the Tunisian Financial Analysis Commission of all new information concerning the person subject to the report that may confirm or refute the grounds for suspicion indicated in the report.
  Financial institutions must refrain from informing the concerned person about the report made regarding them and the resulting measures.
  When the time limit for freezing ordered by the Tunisian Financial Analysis Commission has expired, as well as the time limit for freezing ordered by the Public Prosecutor of Tunis, the reporting institution is able to inform the client before the competent court regarding the outcome of the transaction. In all cases, the reporting institution informs the client about the outcome of the transaction as soon as it becomes aware of judicial proceedings against the client.

Paragraph 4: On document retention.
Article 18: Financial institutions must retain the client file and documents relating to their identity for at least ten years from the date of termination of the relationship.
They must retain documents and information relating to operations and transactions carried out by them on electronic or paper media for at least 10 years from the date of their execution, taking into account the possibility of consultation upon request.

Article 19: The following decisions are hereby repealed: the Tunisian Financial Analysis Commission Decision No. 2006-02 of April 20, 2006 establishing general directives for credit institutions, non-resident banks, and the National Post Office regarding detection and reporting of suspicious operations or transactions; and the Tunisian Financial Analysis Commission Decision No. 2007-03 of March 22, 2007 establishing general directives for the financial market regarding detection and reporting of suspicious operations or transactions.

Article 20: This decision enters into force as of March 15, 2017.