BANQUE CENTRALE des COMORES

Regulatory Decision No. ...-2023/BCC/DSBR

RELATIVE AUX MESURES DE LUTTE CONTRE LE BLANCHIMENT DE CAPITAUX ET FINANCEMENT DU TERRORISME APPLICABLE AUX INSTITUTIONS VISEES PAR LA LOI N°13-003/AU ET PAR LA LOI N°20-005/AU

• Regarding the framework federal law No. 80-08 of May 3, 1980, relating to currency and the role of the Central Bank of the Comoros in the control of Banks and Financial Institutions;
• Regarding the banking law No. 13-003/AU of June 12, 2013, in its articles 26, 29, 44, 46 to 52, and the associated regulations;
• Regarding law No. 12-008/AU of June 28, 2012, on the Fight against Money Laundering and Terrorist Financing;
• Regarding law No. 20-005/AU of June 23, 2020, on payment services and Payment Service Providers;
• Regarding regulation No. 11-2015/BCC/DSBR on internal control, management, and risk management of credit institutions;
• Regarding the statutes of the Central Bank of the Comoros;

The Governor of the Central Bank of the Comoros

DECIDES

Article 1: Financial Institutions (FIs) are required to identify, assess, and measure the money laundering and terrorist financing risks to which they are exposed, taking into account risk factors such as customer profiles, countries or geographic zones, products and services marketed, transactions, typology of operations, or distribution channels. These measures must be proportionate to the nature and size of the FIs as well as to the volume of their activities.

For decentralized financial institutions belonging to a Union, this assessment must be carried out at two levels, both within the affiliated branches of the network and within the holding company.

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Article 2: The assessments referred to in Article 1 are documented using a risk map, kept up to date and made available to competent authorities, according to a periodicity defined and validated by the deliberative body.

FIs must take into consideration all relevant risk factors when assessing the risks referred to in Article 1, to define appropriate mitigation measures for the identified ML/FT risks.

They must define control policies and procedures to effectively mitigate and manage money laundering and terrorist financing risks identified at the Union level, at the member sector level, and at their own level.

These policies, procedures, and controls must be proportionate to the nature and size of the FI as well as to the volume of their activities. Controls performed by the FI must be strengthened if necessary.

The policies, procedures, and controls referred to in paragraph 3 of this article cover the elements indicated in Article 14 of law No. 12-008/AU on ML/FT, notably regarding customer due diligence, reporting, retention of documents and records, internal control, management of compliance with obligations, staff checks, and an independent audit function responsible for testing policies, procedures, and the control system.

FIs must obtain approval from the deliberative bodies and management for the policies, procedures, and controls they implement.

The ML/FT risk assessments, policies, procedures, and controls of FIs are subject to regular updates, monitoring, and reinforcement, as needed. They must be communicated to supervisory and self-regulatory authorities annually.

Article 3: Upon completion of the risk assessment, whenever there is suspicion of money laundering and terrorist financing (ML/FT) regarding a customer, a product, and/or activity, FIs are not authorized to take simplified measures.

Article 4: FIs apply a risk-based approach to allocate their resources and implement measures to prevent or mitigate ML/FT, based on their understanding of the risks to which they are exposed.

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Article 5: FIs take into account the results of the national risk assessment or any other sectoral assessment.

They integrate this information into their risk assessments.

Article 6: FIs identify and assess money laundering or terrorist financing risks likely to result from the development of new products, the extension of existing products to a category of customers, new business practices, including new distribution mechanisms, and the use of new or developing technologies linked to new or pre-existing products.

This risk assessment must be carried out prior to the launch of a new product, new activity, new business practices, and technologies, and appropriate measures must be taken to manage and mitigate these risks. It must be documented in writing. It is submitted to the deliberative body and, where applicable, to the audit committee.

A copy of this assessment report is sent to the Central Bank before the actual launch of the product, activity, and/or practices.

Article 7: FIs implement adequate and adapted procedures, based on risk, to determine whether the customer or the beneficial owner of the customer is a Politically Exposed Person (PEP).

If the FI wishes to establish and/or continue the business relationship with the customer identified in accordance with the above paragraph, prior authorization from management is required.

They put in place adequate risk management systems to ensure that the specific measures referred to in Article 8 of law No. 12-008/AU on ML/FT are applied to customers identified as PEPs and to the beneficial owners of the customer. In addition to the measures referred to in Article 8 of law No. 12-008/AU, FIs must ensure the origin of wealth and funds of the persons referred to in paragraph 1 of this article, and exercise enhanced and continuous monitoring of the business relationship with these persons.

The measures covered by this article apply to persons identified as PEPs, whether foreign, national, or persons who hold or have held a prominent public function within or on behalf of an international organization, as referred to in Article 1 of law No. 12-008/AU on ML/FT.

Article 8: Financial institutions apply the measures referred to in Article 8 of the ML/FT law, and to Article 7 above, to family members of all types of PEPs and to persons closely associated with them, notably:

a. implement adequate and adapted procedures, based on risk;

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b. obtain authorization from an appropriate level of hierarchy before entering into a business relationship with such customers; c. take any appropriate measures, based on risk, to establish the origin of wealth and the origin of funds involved in the business relationship or transaction; d. ensure continuous and enhanced monitoring of the business relationship.

Article 9: For the application of specific due diligence measures referred to in Article 8 of law No. 12-008/AU, the following are considered direct family members of politically exposed persons: a. The spouse(s); b. Children, as well as their spouses; c. First-degree ascendants.

Article 10: For the application of specific due diligence measures referred to in Article 8 of law No. 12-008/AU, persons closely associated with PEPs are natural persons, jointly or not, who are beneficial owners of a legal person, collective investment scheme, trust, or comparable legal arrangement under foreign law.

Article 11: Regarding life insurance contracts, FIs are required to take reasonable measures to determine if the beneficiaries of the contract and/or, where applicable, the beneficial owner of the contract beneficiary are politically exposed persons. This should occur no later than at the time of benefit payment.

When higher risks are identified, FIs inform senior management prior to the payment of the capital. They conduct a reinforced review of the entire business relationship with the policyholder and consider filing a suspicious transaction report.

Article 12: FIs specify in their internal procedures required by Article 8 of the ML/FT law, the different situations of close business links with a PEP that may be encountered, in application of Articles 7, 8, and 9 of this regulation.

Article 13: In application of Article 84 of law No. 21-004/AU on CFT/ML, FIs may resort to third parties for the execution of customer due diligence obligations.

In the case provided for in the previous paragraph, the final responsibility for the implementation of customer due diligence measures remains with the FI that engaged the third party. The FI must take appropriate measures to ensure that the third party is able to provide, upon request and without delay, a copy of all information and documents related to customer identification.

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They immediately obtain from these third parties the necessary information to identify the customer and the beneficial owner of the business relationship, as well as the elements inherent to understanding the nature of the activity of legal persons and merchant natural persons.

For the same purpose of verifying this identity, they take, where applicable, complementary measures based on a risk-based approach.

Article 14: For the application of Article 13 of this regulation, the third party, who applies the due diligence obligations, transmits without delay to the financial institutions the information relating to the identity of the customer and, where applicable, the beneficial owner, as well as those relating to the object and nature of the business relationship.

The third party communicates to them, upon first request, a copy of the customer's identification documents and, where applicable, the beneficial owner, as well as any relevant document linked to the customer due diligence duty to ensure these diligences.

A contract may be concluded in writing, between the third party and the FIs, to specify the modalities for the transmission of collected information as well as the modalities for controlling the due diligence measures implemented by the third party.

Article 15: When an FI resorts to a third party belonging to the same financial group, the obligations provided for in Articles 13 and 14 are fulfilled under the following circumstances:

• the group applies customer due diligence measures and document retention obligations compliant with law No. 12-008/AU;
• the group has anti-money laundering and counter-terrorist financing programs compliant with Article 14 of law No. 12-008/AU on ML/FT;
• any risk related to higher-risk countries is satisfactorily mitigated by the group's ML/FT policies.

Article 16: The Central Bank of the Comoros, taking into account its supervisory and sanctioning powers referred to in Articles 27, 28, and 65 of banking law No. 13-003/AU, ensures compliance by FIs with the obligations provided by this regulation. It may, where applicable, exercise sanctioning powers in case of non-compliance with these obligations.

Article 17: Without prejudice to criminal sanctions that may be taken by judicial authorities, and in addition to the sanctions provided for by other laws and regulations in force, administrative sanctions and measures are taken ex officio by the Central Bank of the Comoros, in case of serious, repeated, systematic infractions, or those presenting a combination of these characteristics, committed by FIs subject to this regulation.

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These shortcomings may be identified during document reviews, questionnaires, or on-site inspections.

The administrative sanctions and measures referred to in the first paragraph of this article include, among others and for indicative purposes:

• A prohibition on the extension of activities, opening of new agencies, branches, subsidiaries, or savings banks;
• An injunction ordering the natural or legal person to cease the behavior in question and prohibiting them from repeating it;
• A formal notice with a daily penalty, under the conditions provided for in Article 3 of regulation No. 024-2020/BCC/DSBR, dated September 10, 2020.

Article 18: This regulatory decision repeals any prior contrary provisions.

It enters into force as of the date of signature.

Moroni, July 26, 2023

The Governor Dr. Younoussa Imani

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