Bank of Namibia Money Laundering Circular

Page 1 of 6 BANK OF NAMIBIA BANKING INSTITUTIONS ACT CIRCULAR – BIA 2/02 TO: ALL BANKING INSTITUTIONS DATE: 5 JUNE 2002 SUBJECT: MONEY LAUNDERING I. Background Money laundering is the conversion or transfer of money, knowingly or through negligence, with the intent of disguising or concealing the true origin of the money. Money laundering enables criminals, especially drug traffickers, to conceal or transfer the proceeds of unlawful activities and to finance future illegal -- and also legal -- activities. Money laundering is a criminal offence. Money laundering is a worldwide problem, which affects all countries and all economies regardless whether emerging, transitional, or fully developed. Sophisticated electronic technology, the increasing globisation of financial systems, and the sheer volume and speed of cross-border funds transfers facilitate money laundering. The risk is in being able to disguise the source and ownership of funds. Criminals reduce that risk by hiding behind bank secrecy laws and by operating in jurisdictions where regulations are minimal or not vigorously enforced because supervisory authority or capacity is weak. International organizations including the United Nations, the European Union and the Financial Action Task Force of G-7 countries have been working for several years to strengthen detection measures and curtail money-laundering activities. The Governments of Namibia and its neighboring countries also have placed a high priority on assuring that the region is not used as a base for money laundering activities. II. Purpose This Banking Circular has four main purposes: (1) to address the issue of money laundering on an interim basis until such time as definitive legislation is enacted; (2) to provide guidance regarding the prevention, detection and control of possible money laundering activities; and (3) to remind boards of directors and managements of financial institutions of their responsibility to establish appropriate policies and procedures and train staff to assure adequate identification of customers and their sources of funds; and (4) to complement BID 3.

Page 2 of 6 III. Substance A. Interim measures. Until such time as definitive legislation relating to money laundering activities is enacted, boards of directors of financial institutions operating in Namibia will be expected to do the following: (1) formulate and adopt written policies and procedures and also train staff to assure the effective prevention, detection and control possible money laundering activities (2) obtain and maintain proper identification of customers wishing to open accounts or make transactions whether directly or through proxy; (3) obtain and maintain adequate records regarding the sources of funds and details of transactions to i) enable the identification of unusual or suspicious transactions, and ii) reconstruct individual transactions. (4) submit to the proper authorities a report of any suspicious transactions or activities, which may indicate money laundering or other attempts to conceal the true identity of customers or ownership of assets. B. Customer identification. The following types of information will be considered the minimums acceptable for determining the true identity of customers wishing to open accounts or make transactions whether directly or through proxy: (1) for personal accounts or transactions – (a) nationality and date of birth evidenced by photo ID, national passport or national identity document or certified copy thereof; (b) verified address of current residence; (c) verified employment and/or source(s) of income; and (d) where applicable, written confirmation from customer's prior bank attesting to customer's identity and history of account relationship. (2) for corporate, partnership, sole trader, etc. accounts or transactions – (a) certified copy of A Certificate of Incorporation, Partnership Agreement, Memorandum and Articles of Association or other similar documentation evidencing legal status; (b) certified copy A Board Resolution stating authority to open accounts, transact business, and borrow funds, and designating persons having signatory authority therefore; (c) verified identity and address of the chairman of the board of directors, the managing director, and all principal shareholders for a corporation, or the general partner and at least one limited partner for partnerships, or the principal owner for sole traders, etc.; (d) audited financial statements (last full year at minimum, last three years preferred) for corporation; for partnerships, sole traders, unaudited statements may be substituted upon prior written approval of a senior management official of bank; (e) where applicable, written confirmation from customer's prior bank attesting to customer's identity and history of account relationship. (3) for minors – (a) nationality and date of birth evidenced by photo ID, national passport or national identity document or certified copy thereof; or written confirmation thereof certified as true and correct by legal parent or guardian; (b) verified address of current residence of minor and also of legal parent or guardian.

Page 3 of 6 C. Legitimacy of funds and transactions. The following types of information will be considered the minimums acceptable for determining the legitimacy of funds and transactions: (1) for large, frequent or unusual cash deposits or withdrawals - written statement from the customer confirming that the nature of his/her business activities normally and reasonably generates substantial amounts of cash; (2) for large, frequent or unusual currency exchanges - written statement from the customer confirming the reason and need for acquired currencies; (3) for multiple or nominee accounts, or similar or related transactions - written statement from the customer confirming the reason and need for multiple or nominee accounts, or similar or related transactions; (4) for large, frequent or unusual transfers or payments of funds - appropriate documentation as to the identity of the recipient (or sender) of the transferred or paid funds, and the reason underlying the transfer or payment; (5) for large or unusual investments or requests for advice or services - written statement from the customer confirming that the investments or advice or services being requested are bona fide and consistent with the goals and objectives of the customer's reasonable and normal business activities; (6) for large or unusual foreign transactions - written confirmation from the customer indicating the nature, reason and appropriate details of the foreign transactions sufficient to determine the legitimacy of such transactions. D. Suspicious activities. The following types of activities or transactions may indicate possible money laundering activities (list is not all-inclusive): (1) account activity (e.g. large, frequent or unusual deposits, withdrawals, payments or exchanges of cash, foreign currency or negotiable instruments) which is not consistent with or reasonably related to the customer's normal business activities or financial standing; (2) use of multiple or nominee accounts, or similar or related transactions which are not consistent with the customer's normal business activities, financial standing, or indicated reasons therefore; (3) consolidation of multiple smaller accounts at several institutions within same locality prior to request for onward transmission of funds elsewhere; (4) reluctance to provide reasonable information and documentation when opening an account or in connection with a requested transaction, investment or advice or service, or the providing of information which is unreasonably difficult or expensive to verify; (5) transactions or account activity, including transfers of funds abroad or use of foreign travel and trade-related instruments, where the use or involvement of funds is not consistent with the customer's normal business activities, financial standing, or indicated reasons therefore, or where the destination country is a known or suspected tax haven or drug trafficking country; (6) unusual safe deposit box activities such as placement or withdrawal of bulky or sealed packets; (7) requests by a customer to provide/arrange/participate in credit facilities where the source of the customer's contribution is unclear, not consistent with normal business activities or financial standing, or involves real property;

Page 4 of 6 (8) matching of cash deposits/withdrawals with payments or transfers out/in; (9) deposits of large third-party cheques endorsed in favour of customer; (10) large or unusual activity in dormant/inactive accounts. E. Reporting suspicious activities or transactions. If the board of directors, management or staff of a financial institution become aware of suspicious activities or transactions which indicate possible money laundering activities, the board shall ensure that a Suspicious Activities or Transactions Report (SATR) is submitted to the Bank of Namibia, Bank Supervision Department, [and the criminal prosecuting authority] within five (5) business days. The report shall provide sufficient details regarding the activities or transactions so that regulatory authorities can properly investigate and, if warranted, prosecute the activities. [A form for reporting suspicious activities/transactions is attached to this Circular. Annexure C in BID-3 is replaced by Form SATR and therefore does not need to be submitted.] F. Confidentiality of information. Banking institutions which obtain or become aware of information which is suspicious or indicates possible money laundering activities shall not disclose such information except to report it to the proper authorities as required at paragraph A (4) above. G. Disclaimer. While the Bank of Namibia, through this Banking Circular, has attempted to provide appropriate guidance relative to the prevention, detection and control of money laundering activities, it remains the primary responsibility of a financial institution's board of directors and management to assure proper identification of customers and their sources of funds. The Bank of Namibia shall not be liable for any loss, which results from a failure on the part of any financial institution to prevent, detect, or control money-laundering activities. Further, efforts to adopt and implement the substance of this Banking Circular shall in no way relieve a financial institution, its directors, officers or staff from prosecution, penalty or financial responsibility for losses suffered by any person as a result of criminal money laundering activities. E I MERORO SENIOR MANAGER Attachment: Suspicious Activities or Transactions Report (SATR) Suspicious Activities or Transactions Report (SATR) 1 Submit to: BANK of NAMIBIA, Bank Supervision Department Always complete entire report; attach additional pages if necessary to explain situation fully.

1. Tick appropriate box: a.
   Initial Report b.
   Corrected Report c.
   Supplemental Report Part I Information About Financial Institution Submitting This Report

Page 5 of 6 2. Name of Financial Institution 3. Address of Head Office 4. Address of Branch(es) where activity/transactions occurred 5. Total assets of Financial Institution (most recent quarter-end) 6. If Institution closed or placed under statutory management, indicate date (DDMMYY): ____ / ____ / ____ 7. Account number(s) affected, if any: Part II Information About Person or Entity Engaging In Suspicious Activities or Transactions 8. Surname (or Name of Entity) 9. First Name 10. MI 11. Address 12. Date of Birth / Incorporation (DDMMYY): ___ / ___ / ___ 13. Nat'l Identity No. 14. Occupation or Business: 15. Identity verified by: a.
Passport b.
National ID Card c.
Other ______________________________ d. Number ________________________ e. Date & Place Issued__________________________ 16. Relationship to this Financial Institution: (tick all that apply) a.
Accountant d.
Attorney g.
Depositor j.
Officer b.
Agent e.
Borrower h.
Director k.
Shareholder c.
Appraiser f.
Broker i.
Employee l.
Other ________________ 17. Is suspected affiliated with this institution? a.
Yes b.
No. If no, specify: c.
Resigned d.
Suspended e.
Terminated 18. Date of Resignation, Suspension, Termination (DDMMYY) ___ / ___ / ___ 19. Admission/Confession: a.
Yes b.
No Part III Information About Suspicious Activity or Transaction 20. Date of suspicious activity or transaction (DDMMYY) ___ / ___ / ___ 21. Amount Involved N$ ____________________ 22. General description of suspicious activity or transaction: a.
Large cash deposit(s) e.
Large deposit from abroad b.
Large cash exchange(s) f.
Large transfer to abroad c.
Large cash payment(s) g.
Large transfer to domestic bank d.
Large cash withdrawal(s) h.
Large transfer from domestic bank 23. Has suspicious activity or transaction had material impact on or otherwise adverselly affected the financial soundness of this instituion? a.
Yes b.
No If yes, describe impact: 24. Has financial institution's insuror or bonding company been notified? a.
Yes b.
No If yes, when & how? 25. Has any law enforcement authority already been notified in any manner? If so, indicate following: a. Authority____________________________________ b. Specific person notified: ___________________________ c. How notified ________________________________ d. Details provided:___________________________________ Part IV Information About Witness(es) to Suspicious Activity or Transaction 26. Surname 27. First Name 28. MI 29. Address 30. Date of Birth (DDMMYY): ___ / ___ / ___ 31. Nat'l Identity No.

Page 6 of 6 32. Position or title in this institution: 33. Interviewed: a.
Yes b.
No Part V Who Prepared this Report? 2 34. Surname 35. First Name 36. MI 37. Position or title in this institution: 38. Signature 39. Date (DDMMYY) Part VI Who to Contact? (if different from Preparer Information in Part V) 40. Surname 41. First Name 42. MI 43. Position or title 44. Agency 45. Phone No. Use space below for additional information or details: