Law No. 196/AN/02/4th L on Money Laundering, Confiscation and International Cooperation in Respect of Criminal Proceeds

OFFICIAL JOURNAL OF THE REPUBLIC OF DJIBOUTI Law No. 196/AN/02/4th L on Money Laundering, Confiscation and International Cooperation in Respect of Criminal Proceeds. THE NATIONAL ASSEMBLY HAS ADOPTED THE PRESIDENT OF THE REPUBLIC PROMULGATES THE LAW BELOW: VU the Constitution of 15 September 1992; VU Decree No. 2001-0053/PRE of 4 March 2001 appointing the Prime Minister; VU Decree No. 2001-0137/PRE of 4 July 2001 appointing members of the Government;

Title I: General Provisions Article 1-1–1 Definition of Money Laundering For the purposes of this Law, money laundering is considered to be: a) The conversion or transfer of property, with the aim of concealing or disguising its illicit origin or of assisting any person involved in the commission of the principal offence to evade the legal consequences of his/her acts; b) The concealment or disguise of the nature, origin, location, disposition, movement or actual ownership of property; c) The acquisition, possession or use of property and assets by a person who knows, suspects or ought to have known that such property or assets constitute proceeds of crime within the meaning of this Law. The knowledge, intention or motive required as an element of the offence may be inferred from objective factual circumstances.

Article 1-1-2 Terminology For the purposes of this Law: A. The term "proceeds of crime" refers to any property or economic benefit derived directly or indirectly from any crime or offence; This benefit may consist of property as defined in paragraph B of this Article; B. The term "property" refers to all types of assets, corporeal or incorporeal, movable or immovable, tangible or intangible, as well as legal instruments or documents evidencing ownership of such assets or rights relating thereto; C. The term "instrument" refers to all objects used or intended to be used in any manner, wholly or partly, to commit one or more criminal offences; D. The term "criminal organization" or "organized criminal activity" refers, for the purposes of this Law, to any structured association established with a view to committing crimes or offences; E. The term "confiscation" refers to the permanent deprivation of property following a decision by a court or other competent authority; F. The term "predicate offence" refers to any criminal offence, even if committed abroad, that enabled its perpetrator to obtain proceeds within the meaning of this Law; G. The term "perpetrator" refers to any person who participated in the offence, either as a principal offender, co-offender or accomplice. In order to serve as a basis for money laundering proceedings, predicate offences committed abroad must have the character of a criminal offence in the country where they were committed and under the domestic law of the Republic of Djibouti, unless otherwise provided by treaty.

Title II: Prevention of Money Laundering Chapter I: General Preventive Provisions. Article 2-1-1 Professions subject to Titles II and III of this Law Titles II and III of this Law apply to credit institutions, financial institutions and intermediaries, as well as to any natural or legal person who, in the course of their profession, carries out, controls or advises on operations involving deposits, exchanges, investments, conversions or other movements of capital. Titles II and III of this Law also apply to all their operations, to manual money changers, insurance companies, investment firms, intermediaries in the sale or lease of real estate or business premises, notaries, certified accountants, auditors, examiners, auctioneers, as well as casinos and gaming establishments.

Article 2-1-2 Limit on the use of cash, bearer securities or bearer bonds Any payment in cash or by bearer securities/bonds exceeding two million francs in total is subject to control. However, a decree may determine the cases and conditions under which an exemption from the preceding paragraph is permitted. In such case, a declaration specifying the terms of the operation and the identity of the parties must be submitted to the financial intelligence unit established in Article 3-1-1 of this Law.

Article 2-1-3 Obligation to effect fund transfers through a credit institution or financial institution Any transfer abroad or from abroad of funds, securities or assets exceeding one million francs must be effected by an authorized credit institution or financial institution, or through its intermediary.

Chapter II: Transparency in Financial Operations Article 2-2-1 General Provisions The State organizes the legal framework to ensure economic transparency, notably by ensuring that corporate law and legal mechanisms for asset protection do not allow the creation of fictitious or shell entities.

Article 2-2-2 Customer identification by credit institutions and financial institutions Credit institutions and financial institutions are required to verify the identity and address of their customers before opening an account or passbook, holding securities, assets or bonds, providing a safe deposit box, or establishing any other business relationship. Verification of the identity of a natural person is carried out by presenting an original, valid official document bearing a photograph, a copy of which is taken. Verification of the address is performed by presenting a document capable of proving it. Identification of a legal entity is carried out by producing the articles of association and any document establishing that it has been legally registered and has actual existence at the time of identification. A copy is taken thereof. Managers, employees and representatives acting on behalf of others must produce, in addition to the documents specified in paragraph 2 of this Article, documents evidencing their delegated authority, as well as documents attesting to the identity and address of the beneficial owners.

Article 2-2-3 Identification of occasional customers Occasional customer identification is carried out under the conditions set forth in Article 2-2-2, for any transaction exceeding one million francs. In cases where the transaction amount is unknown at the time of the operation, customer identification is carried out as soon as the amount is known or the threshold specified in paragraph 1 is reached. Identification is required even if the transaction amount is below the fixed threshold when the lawful origin of funds is not certain. Identification must also take place in case of repeated distinct operations carried out within a limited period and for an individual amount below that specified in paragraph 1.

Article 2-2-4 Identification of the beneficial owner Where it is not certain that the customer acts for his/her own account, the credit institution or financial institution must inquire by all means about the identity of the person on whose behalf he/she acts or the ultimate beneficiary of the operation. After verification, if doubt persists regarding the identity of the true beneficial owner, the banking relationship must be terminated, without prejudice to the obligation to report suspicions if applicable. If the customer is a lawyer, public or private accountant, a private person holding delegated public authority, or an agent acting as a financial intermediary, he/she may not invoke professional secrecy to refuse communication of the identity of the true operator.

Article 2-2-5 Particular monitoring of certain operations When an operation involves a sum exceeding one million francs or is carried out under conditions of unusual or unjustified complexity, or appears to lack economic justification or lawful purpose, the credit institution or financial institution is required to inquire into the origin and destination of funds as well as the purpose of the operation and the identity of the economic actors. The credit institution or financial institution prepares a confidential written report containing all relevant information on its terms, as well as the identity of the ordering party and, where applicable, the economic actors involved. The report is retained under the conditions set forth in Article 2-2-6. Particular vigilance must be exercised regarding operations originating from financial institutions or establishments not subject to sufficient customer identification or transaction control obligations.

Article 2-2-6 Retention of documents by credit institutions and financial institutions Credit institutions and financial institutions retain and make available to the authorities listed in Article 2-2-7: a. documents relating to customer identity for at least five years after account closure or cessation of the relationship with the client; b. documents relating to operations carried out by clients and the reports specified in Article 2-2-5 for at least five years after execution of the operation.

Article 2-2-7 Communication of documents The information and documents referred to in Articles 2-2-2 to 2-2-6 shall be communicated, upon request, to judicial authorities, officials responsible for detecting and prosecuting money laundering offences acting under a judicial mandate, and the financial intelligence service established in Article 3-1-1 within its defined powers under Articles 3-1-1 to 3-1-7. In no case shall persons obligated to transmit the aforementioned information and documents, as well as any other person having knowledge thereof, communicate them to other natural or legal persons than those listed in paragraph 1, unless authorized by the aforementioned authorities.

Article 2-2-8 Internal anti-money laundering programs within credit institutions and financial institutions Credit institutions and financial institutions develop internal money laundering prevention programs. These programs include: a. centralization of information on customer identity, ordering parties, beneficiaries and proxy holders, representatives, beneficial owners, and suspicious transactions; b. designation of central management officers, branch managers, and local agency or department heads; c. continuous training of officials or employees; d. an internal control mechanism for the application and effectiveness of measures adopted for implementing this Law.

Article 2-2-9 Manual money changing and fund transfer For the purposes of this Law, a manual money changing operation consists of the immediate exchange of banknotes or currencies denominated in different foreign currencies and the delivery of cash against settlement by another payment method denominated in a different currency. Natural or legal persons who habitually engage in manual money changing operations are required: a. to submit, before commencing their activity, an activity declaration to the Central Bank of Djibouti in order to obtain the authorization for establishment and operation provided by current national legislation, and to justify, within this declaration, the lawful origin of funds necessary for the establishment's creation. b. to verify customer identity by presenting an original, valid official document bearing a photograph, a copy of which is taken, before any transaction exceeding one million francs or for any transaction carried out under unusual or unjustified complexity conditions. c. to record, in chronological order, all operations, their nature and amount with the first and last names of the client, as well as the document number presented, in a bound and initialled register by the competent administrative authority, and to retain said register for at least five years after the last recorded operation. The same obligations apply to natural or legal persons who habitually engage in fund transfer operations.

Article 2-2-10 Casinos and gaming establishments Casinos and gaming establishments are required: a. to submit, before commencing their activity, an activity declaration to the Ministry of the Interior in order to obtain the authorization for establishment and operation provided by current national legislation, and to justify, within this declaration, the lawful origin of funds necessary for the establishment's creation. b. to maintain regular accounting and retain it for at least five years. The accounting principles defined by national legislation apply to casinos and gaming clubs. c. to verify, by presenting a valid official document bearing a photograph, a copy of which is taken, the identity of players who purchase, bring in or exchange chips or tokens for a sum exceeding five hundred thousand francs. d. to record, in chronological order, all operations referred to paragraph C of this Article, their nature and amount with the first and last names of players, as well as the document number presented, in a bound and initialled register by the competent administrative authority, and to retain said register for at least five years after the last recorded operation. e. to record, in chronological order, all fund transfers carried out between these casinos and gaming clubs in a bound and initialled register by the competent administrative authority, and to retain said register for at least five years after the last recorded operation. In cases where a gaming establishment is operated by a legal entity possessing multiple subsidiaries, the chips must allow identification of the subsidiary through which they are issued. In no case may chips issued by one subsidiary be redeemed in another subsidiary, including abroad.

Title III: Detection of Money Laundering Chapter I: Collaboration with authorities responsible for combating money laundering Section 1. The Financial Intelligence Service Article 3-1-1 General Provisions A Financial Intelligence Service, organized under conditions set by a decree, is responsible for receiving, analyzing and processing declarations to which persons and organizations referred to in Article 2-1-1 are subject. It also receives all other useful information, notably those communicated by judicial authorities. Its agents are bound by confidentiality regarding the collected information, which may only be used for purposes provided by the relevant texts. The composition and powers of the Service, conditions to ensure or strengthen its independence, as well as the content and transmission procedures for declarations submitted to it are fixed by an implementing decree.

Article 3-1-2 Access to information The Service may also, upon request, obtain from any public authority and any natural or legal person referred to in Article 2-1-1, the communication of information and documents in accordance with Article 2-2-7, within the framework of investigations following a suspicion report. It may also exchange information with authorities responsible for applying disciplinary sanctions provided in Article 4-2-4. It may, upon request, access public authority databases. In all cases, the use of information thus obtained is strictly limited to the purposes pursued by this Law.

Article 3-1-3 Relations with foreign financial intelligence services The Service may, subject to reciprocity, exchange information with foreign services responsible for receiving and processing suspicion reports, provided they are subject to analogous confidentiality obligations regardless of the nature of these services. To this end, it may conclude cooperation agreements with these services. When seized of a request for information or transmission by a foreign homologous service processing a suspicion report, it responds within the framework of its powers conferred by this Law to handle such declarations.

Section 2. The Suspicion Report Article 3-1-4 Obligations to report suspicious operations Any natural or legal person referred to in Article 2-1-1 is required to report to the Financial Intelligence Service, operations specified in Article 2-1-1 when they involve funds suspected of money laundering or relating to the financing of terrorist activities. The aforementioned persons are obligated to report operations carried out even if it was impossible to postpone their execution or if it subsequently appeared that the operation involved suspicious funds. They are also required to promptly report any information tending to strengthen or refute the suspicion.

Article 3-1-5 Transmission to the Financial Intelligence Service Suspicion reports are transmitted to the Financial Intelligence Service by all means, including telefax or any other written means. Declarations made via telephone lines must be confirmed by any written means within the shortest possible timeframes. These declarations indicate, as applicable:

1. the reasons why the operation has already been executed;
2. the timeframe within which the suspicious operation must be executed. Upon receipt, the Service acknowledges receipt of the declaration.

Article 3-1-6 Objection to the execution of operations If, due to the gravity or urgency of the matter, the Service deems it necessary, it may object to the execution of the operation before the expiration of the execution timeframe mentioned by the declarant. This objection is notified to the latter immediately and by any written means. The objection prevents the execution of the operation for a duration not exceeding 48 hours. The President of the Djibouti Court of First Instance, petitioned by the Financial Intelligence Service, may order the sequestration of funds, accounts, securities or assets for an additional duration not exceeding eight days.

Article 3-1-7 Follow-up to declarations As soon as serious indications appear constituting the elements of the money laundering offence, the Service transmits a report on the facts, accompanied by its opinion, to the competent judicial authority which determines the follow-up. This report is accompanied by all useful documents, with the exception of the suspicion reports themselves. The identity of the declarant must not appear in the report.

Chapter II: Exemption from Liability Article 3-2-1 Exemption from liability due to good faith suspicion reports No proceedings for violation of professional secrecy may be brought against persons or the directors and employees of organizations designated in Article 2-1-1, who, in good faith, have transmitted information or made declarations provided by the provisions of this Law. No civil, criminal or professional liability action may be brought, nor any professional sanction pronounced against persons or the directors and employees of organizations designated in Article 2-1-1, who, in good faith, have transmitted information or made declarations provided by the provisions of this Law, even if investigations or judicial decisions result in no conviction. No civil, criminal or professional liability action may be brought against persons or the directors and employees of organizations designated in Article 2-1-1 due to material and/or immaterial damages that may result from the blocking of an operation under the provisions of Article 3-1-6.

Article 3-2-2 Exemption from liability due to the execution of operations When a suspicious operation has been executed, and except in cases of fraudulent collusion with the money launderer(s), no criminal proceedings for money laundering may be brought against any of the persons referred to in Article 2-1-1, their directors or employees, if the suspicion report was made under the conditions provided by Articles 3-1-4 to 3-1-6. It is the same when a person subject to this Law carried out an operation at the request of investigation services acting under the conditions provided in Article 3-3-2.

Chapter III: Investigation Techniques Article 3-3-1 Particular investigation techniques In order to obtain proof of the predicate offence and proof of offences provided by this Law, judicial authorities may order, for a fixed duration: a. the monitoring of bank accounts and accounts assimilated to bank accounts; b. access to systems, networks and computer servers; c. the monitoring or wiretapping of telephone lines, fax machines or electronic transmission/communication means; d. audio and video recording of facts, actions and conversations; e. the communication of authentic instruments and private deeds, and all documents including banking, financial and commercial records. They may also order the seizure of the aforementioned acts or documents as well as all accounts. However, these operations are only possible when serious indications allow suspecting that these accounts, telephone lines, computer systems and networks or documents are used or may be used by persons suspected of participating in the offences referred to in paragraph 1 of this Article.

Article 3-3-2 Undercover operations and controlled deliveries Competent officials responsible for establishing predicate and money laundering offences are not punishable if, solely to obtain evidence relating to the offences covered by this Law and under the conditions defined in the following paragraph, they commit acts that could be interpreted as elements of one of the offences referred to in Articles 1-1-1,