Circular 10/2024

Date: 19 October 2024 (1445 AH) References: Law No. 13 of 2018, Circular No. 5/2018, Circular No. 2/2021 Issuing Authority: Central Bank of Libya (CBL) Contact: www.cbl.gov.ly | SWIFT: CBLJLYLX | +218 21 4441488

1. Purpose and Scope

This circular establishes the regulatory framework for financial institutions regarding Politically Exposed Persons (PEPs) and enhanced due diligence measures, in compliance with the Anti-Money Laundering and Counter-Terrorist Financing Law No. 13 of 2018, Circular No. 5/2018, and Circular No. 2/2021.

2. Definitions

• PEP: A natural person who is or has been entrusted with prominent public functions, including heads of state, senior politicians, senior government officials, senior judicial or military officers, and executive committee members of state-owned enterprises.
• Foreign PEP: A person who holds or has held prominent public functions in a country other than Libya.
• Domestic PEP: A person who holds or has held prominent public functions in Libya.
• International Organization PEP: a senior management official of an international organization.
• Enhanced Due Diligence (EDD): A set of measures applied to mitigate higher risks associated with PEPs, including senior management approval, source of wealth/funds verification, and enhanced ongoing monitoring.

3. Risk-Based Approach

Financial institutions must adopt a risk-based approach to identify, assess, and mitigate money laundering/terrorist financing risks associated with PEPs. Institutions are required to categorize PEPs into high, medium, and low risk categories based on their public function, jurisdiction, and business relationship nature.

4. Enhanced Due Diligence Measures

Financial institutions must apply the following EDD measures when dealing with PEPs:

1. Obtain senior management approval for establishing or continuing a business relationship with the PEP.
2. Take reasonable measures to establish the source of wealth and the source of funds involved in the business relationship or occasional transactions.
3. Conduct enhanced ongoing monitoring of the business relationship, including updating customer due diligence information and ensuring transactions are consistent with the institution's knowledge of the PEP, business, and risk profile.

5. Reporting and Record Keeping

• Institutions must report suspicious transactions involving PEPs to the Financial Intelligence Unit (FIU) in accordance with applicable laws.
• All records related to PEP identification, risk assessment, EDD measures, and transactions must be retained for a minimum of five years from the date of the transaction or the end of the business relationship.
• Institutions must maintain accurate, up-to-date, and complete customer data in centralized systems to facilitate timely reporting and supervision.

6. Compliance and Supervision

• Each institution must designate a compliance officer responsible for implementing this circular, ensuring staff training, and conducting internal audits.
• Internal policies and procedures must be documented, approved by the board of directors or senior management, and regularly reviewed.
• The Central Bank will conduct periodic inspections and on-site assessments to verify compliance with this circular's provisions.
• Institutions must submit periodic reports to the CBL detailing their PEP identification, risk categorization, EDD implementation, and suspicious transaction reporting.

7. Effective Date and Transition

This circular takes effect from the date of issuance. Financial institutions have ninety (90) days from the effective date to fully comply with its provisions. Any previous circulars, guidelines, or administrative instructions that conflict with this circular are hereby superseded.

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Issued by the Central Bank of Libya, Monetary and Banking Supervision Department.