West African Monetary Union CREPMF Regional Council for Public Savings and Financial Markets

INSTRUCTION N°59/2019/CREPMF

RELATING TO THE FIGHT AGAINST MONEY LAUNDERING AND THE FINANCING OF TERRORISM WITHIN THE APPROVED ACTORS OF THE UMOA REGIONAL FINANCIAL MARKET

The Regional Council for Public Savings and Financial Markets,

Having regard to the Treaty of the West African Monetary Union (UMOA) of January 20, 2007, particularly Article 24 thereof;

Having regard to the Convention of July 3, 1996, establishing the Regional Council for Public Savings and Financial Markets, particularly its Annex on the composition, organization, functioning, and powers of the Regional Council for Public Savings and Financial Markets;

Having regard to the General Regulation of November 28, 1997, relating to the organization, functioning, and control of the UMOA Regional Financial Market;

Having regard to Directive n°02/2015/CM/UEMOA of July 02, 2015, relating to the fight against money laundering and the financing of terrorism in the member states of the West African Economic and Monetary Union (UEMOA);

Having regard to Decision n°26 of 02/07/2015/CM/UMOA of July 02, 2015, adopting the draft Uniform Law relating to the fight against money laundering and the financing of terrorism in the member states of the West African Monetary Union (UMOA);

Having regard to Decision N°CM/SJ/001/03/2016 of March 24, 2016, relating to the implementation of the pecuniary sanctions system applicable to the UMOA Regional Financial Market;

Having regard to Decision n° CM /DAC/04/04/2017 of April 14, 2017, of the UMOA Council of Ministers appointing the President of the Regional Council;

Having regard to the deliberations of the Regional Council at its ordinary session of July 19, 2019;

Considering the role that approved actors of the UMOA Regional Financial Market must play in the effective functioning of the system for combating money laundering and the financing of terrorism in the Union;

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Instruction n°59/2019/CREPMF

Considering that the use of approved actors of the Regional Financial Market for money laundering and the financing of terrorism is likely to compromise the stability and reliability of the financial system in general;

Considering that the variability of money laundering and terrorism financing risk requires the application of a risk-based approach, which implies evidence-based decision-making, in order to better target money laundering and terrorism financing risks likely to threaten the Union and the actors of the Regional Financial Market;

Anxious to ensure better application, by the actors of the UMOA Regional Financial Market, of the legislation of the member states of the Union regarding the fight against money laundering and the financing of terrorism;

ORDERS

TITLE I: GENERAL PROVISIONS

Article 1: Definitions

For the purposes of this Instruction, the following definitions apply:

• Regional Financial Market Actor: any legal or natural person having received the status of market structure or commercial intermediary, by approval or endorsement of the Regional Council for Public Savings and Financial Markets;

• Supervisory Authorities: the national or community authorities of UMOA and UEMOA empowered, by virtue of a law or regulation, to supervise the natural and legal persons referred to in Article 3 of this Instruction regarding the Fight Against Money Laundering and Terrorism Financing (AML/CFT);

• Money Laundering: the following acts, committed intentionally, are considered money laundering: i. the conversion or transfer of property, by any person who knows or ought to have known that such property is derived from a crime or offense or participation in a crime or offense, for the purpose of concealing or disguising the illicit origin of said property, or of assisting any person involved in such activity to evade the legal consequences of their actions; ii. the concealment or disguise of the true nature, origin, location, disposition, movement, or ownership of property or related rights, by any person who knows or ought to have known that such property is derived from a crime or offense or participation in a crime or offense; iii. the acquisition, possession, or use of property, by a person who knows or ought to have known, at the time of receipt, that such property is derived from a crime or offense or participation in a crime or offense; iv. participation in any of the acts referred to in points i), ii) and iii), association to commit such acts, attempt to commit them, aiding or abetting their commission, advising on them, or facilitating their execution.

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Money laundering exists even if the act is committed by the perpetrator of the offense that generated the property to be laundered.

Money laundering also exists even if the activities that generated the property to be laundered are carried out in the territory of another member state or a third state.

Knowledge or intent, as elements of the aforementioned activities, may be inferred from objective factual circumstances.

• Assets: assets of any kind, tangible or intangible, movable or immovable, tangible or intangible, fungible or non-fungible, as well as legal documents or instruments in any form whatsoever, including electronic or digital, attesting to the ownership of such assets or related rights, as well as interests in said assets, namely credits, traveler's checks, checks, money orders, shares, securities, bonds, drafts or letters of credit, as well as any interests, dividends or other income or values derived from such assets, or generated by such assets;

• Beneficial Owner or Economic Right Holder: the natural person(s) who ultimately own or control a client and/or the natural person on whose behalf an operation is carried out. This definition also includes persons who ultimately exercise effective control over a legal entity or legal arrangement;

• Legal Arrangements: express trusts or similar legal arrangements;

• Freezing: a) regarding confiscation and provisional measures, the prohibition of the transfer, conversion, disposition, or movement of any property, equipment, or instrument following a measure taken by a competent authority or court within the framework of a freezing mechanism, for the duration of said measure, or until a confiscation decision is taken by a competent authority; b) for the purposes of recommendations for the implementation of targeted financial sanctions, the prohibition of the transfer, conversion, disposition, or movement of all funds and other assets held or controlled by designated persons or entities following a measure taken by the United Nations Security Council or a competent authority or court in accordance with applicable Security Council resolutions, for the duration of said measure.

• Occasional Client: any person who approaches a Regional Financial Market actor, with the exclusive aim of preparing or carrying out a one-off operation or being assisted in the preparation or carrying out of such an operation, whether it is carried out in a single operation or in several operations appearing to be linked to each other;

• CENTIF: the National Financial Intelligence Processing Unit;

• CIMA: Inter-African Conference on Insurance Markets;

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• Proliferation Financing: the financing of the proliferation of weapons of mass destruction, namely nuclear, chemical, bacteriological, or biological weapons, through acts prohibited by Resolution 1540 (2004) and successive United Nations Security Council resolutions relating to the prevention, suppression, and interruption of the proliferation of weapons of mass destruction and its financing;

• Terrorism Financing: any act committed by a natural or legal person, an individual terrorist, or a terrorist organization who, by any means whatsoever, directly or indirectly, has deliberately provided property, funds, and other financial resources with the intention of using them or knowing that they will be used, in whole or in part: a) for the commission of: i) one or more terrorist acts; ii) one or more terrorist acts by a terrorist organization; iii) one or more terrorist acts, by a terrorist or a group of terrorists; b) for any purpose whatsoever, in connection with terrorism, including knowing that they will be used to finance travel by persons who travel to a state other than their state of residence or of which they are nationals, with the aim of participating in the commission, organization, or preparation of terrorist acts or of providing or receiving terrorist training; c) to deliberately organize the travel of persons who travel to a state other than their state of residence or of which they are nationals, with the aim of participating in the commission, organization, or preparation of terrorist acts or of providing or receiving terrorist training, or of participating in other activities that facilitate such acts, including recruitment;

• Trusts: an operation by which one or more settlors transfer assets, rights, or securities, or a set of present or future assets, rights, or securities, to one or more trustees who, keeping them separate from their own patrimony, act for a specific purpose for the benefit of one or more beneficiaries;

• FATF: Financial Action Task Force;

• Financial Institution: any person or entity that carries out, on a commercial basis, one or more of the following activities or operations on behalf and for the account of a client: a) acceptance of deposits and other repayable funds from the public; b) loans, including consumer credit, mortgage credit, factoring with or without recourse, financing of commercial transactions; c) financial leasing, with the exception of financial leasing relating to consumer products; d) money or value transfer; e) issuance and management of payment instruments; f) granting of guarantees and underwriting of commitments; g) trading in:

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• money market instruments;

• foreign exchange market;

• currency, interest rate, and index instruments;

• securities;

• options and commodity futures markets. h) participation in securities issues and provision of related financial services; i) individual and collective wealth management; j) custody and administration of securities, in cash or liquid form, on behalf of others; k) other investment, administration, or fund management operations or money on behalf of others; l) underwriting and placement of life and non-life insurance products and other insurance-linked investment products; m) manual currency exchange; n) any other activities or operations determined by a financial sector regulatory authority of UMOA;

• PEP: Politically Exposed Persons: ✓ Foreign PEPs: natural persons who hold or have held important public functions in another member state or a third state, namely: a) Heads of State or Government, Ministers, Deputy Ministers, and Secretaries of State; b) members of royal families; c) Directors General of ministries; d) parliamentarians; e) members of Supreme Courts, Constitutional Courts, or other high judicial bodies whose decisions are not subject to appeal, except in exceptional circumstances; f) members of Courts of Auditors or Boards or Directorates of Central Banks; g) ambassadors, chargés d'affaires, and senior officers of the armed forces; h) members of the administrative, management, or supervisory bodies of public enterprises; i) senior officials of political parties; j) family members of a PEP, namely: spouse, any partner considered equivalent to a spouse, children and their spouses or partners, other relatives; k) persons known to be closely associated with a PEP; l) any other person designated by the competent authority. ✓ National PEPs: natural persons who hold or have held important public functions in a member state of the Union, including the natural persons referred to in a) to i) above;

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✓ PEPs of international organizations: persons who hold or have held important functions within, or on behalf of, an international organization, including senior management members, in particular, directors, deputy directors, and members of the Board of Directors and all persons exercising equivalent functions.

The concept of PEP does not cover persons of middle or lower rank falling within the above categories.

• UEMOA: West African Economic and Monetary Union;
• UMOA: West African Monetary Union;
• Union: West African Economic and Monetary Union or West African Monetary Union.

Article 2: Purpose

The purpose of this Instruction is to specify the modalities of application, by the actors of the UMOA Regional Financial Market referred to in Article 3 below, of the Uniform Law relating to the fight against money laundering and the financing of terrorism as well as the financing of the proliferation of weapons of mass destruction in the member states of UMOA.

Article 3: Scope of Application

This Instruction applies to the following actors of the Regional Financial Market:

• the Regional Stock Exchange (BRVM);
• the Central Depository/Settlement Bank (DC/BR);
• Management and Intermediation Companies (SGI);
• Wealth Management Companies (SGP);
• Undertakings for Collective Investment in Transferable Securities (UCITS);
• UCITS Management Companies;
• Account Holding and Custodian Banks (BTCC);
• Business Introducers;
• Stock Market Investment Advisors;
• Door-to-door Salespersons;
• Management Companies of Securitization Funds (FCTC);
• Guarantors;
• Rating Agencies;
• Listing Sponsors;
• any other natural or legal person approved or endorsed by the Regional Council.

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TITLE II: PROVISIONS RELATING TO THE DUE DILIGENCE OBLIGATIONS OF REGIONAL FINANCIAL MARKET ACTORS

CHAPTER I: GENERAL DUE DILIGENCE OBLIGATIONS

Article 4: Client Identification

The actors of the Regional Financial Market referred to in Article 3 above are required, before entering into a contractual relationship or assisting their clients in the preparation or execution of a transaction, to ascertain the exact identity of their co-contractors and/or their clients. To this end, they proceed with the identification of their clients and/or their co-contractors, or beneficial owners, in accordance with the provisions of Section II of Chapter III of Title II of the Uniform Law relating to the fight against money laundering and the financing of terrorism in the member states of UMOA, particularly Articles 26 to 31.

Client identification must be based, on the one hand, on precise ethical rules and, on the other hand, on a clearly defined client knowledge policy, in order to prevent Regional Financial Market actors from maintaining relationships with persons whose identity is doubtful or whose transactions are disproportionate to the activity.

To effectively protect themselves against reputational and counterparty risks, the Regional Financial Market actors covered by this Instruction must define the types of clients they cannot accept, particularly in light of the prescriptions of the above paragraphs, and refrain from entering into any relationship before having satisfactorily established their identity, address, and the type of authorized operations with said clients. Regional Financial Market actors must ascertain the purpose and intended nature of the business relationship.

Client knowledge procedures must apply not only to new relationships but also to existing clients, particularly those about whom doubts exist regarding the reliability of previously collected information.

Article 5: Retention of Records and Documents

By virtue of the provisions of Article 35 of the Uniform Law relating to the fight against money laundering and the financing of terrorism in the member states of UMOA, Regional Financial Market actors must retain, for ten (10) years from the closing of their accounts or the termination of their relationship, documents relating to the identity of their regular or occasional clients. They must also retain records and documents relating to operations carried out, including account books and commercial correspondence, for ten (10) years after the execution of the operation.

Article 6: Specific Monitoring of Certain Operations

Within the framework of applying the provisions of Article 32 of the Uniform Law, the internal program for combating money laundering and terrorism financing must, at all times, allow for the provision of precise information on:

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• any payment in cash or by bearer instrument of a sum of money, made under normal conditions, whose unit or total amount is equal to or greater than fifty million (50,000,000) CFA francs;
• any operation involving a sum equal to or greater than ten million (10,000,000) CFA francs, carried out under unusual conditions of complexity, unjustified or appearing to have no economic justification or lawful purpose.

These operations must be recorded in a confidential register and be subject to particular examination by the Regional Financial Market actors.

The aforementioned information in the first paragraph of this article relates, in particular, to:

• the origin and destination of funds (geographical origin, identity of financial institutions acting as intermediaries, accounts used);
• the purpose and modalities of operations;
• the amounts of operations carried out and their frequency;
• the nature of operations (cash deposits, transfers, etc.);
• the existence of an economic justification for operations;
• the consistency of the economic justification for operations;
• the currencies processed during operations;
• the identity of the real instructing party;
• the identity of the beneficial owner.

CHAPTER II: SPECIFIC ENHANCED DUE DILIGENCE OBLIGATIONS

Article 7: Monitoring of Atypical Operations

Regional Financial Market actors must provide for a system for analyzing transactions and client profiles, allowing for the tracing and particular monitoring of atypical financial movements and operations.

These include, in particular, the following operations:

• transactions abnormal in themselves and/or transactions abnormal in relation to a client (e.g., dormant securities accounts suddenly becoming active, multiple endorsement checks, transfer of funds or securities to numbered accounts, purchase or sale of large quantities of securities);
• operations of an amount significantly higher than the client's usual transactions;
• stock market orders and market operations targeting or involving securities transactions at prices out of line with market prices;
• operations consisting of multiple back-and-forth movements on the stock market without apparent concern for profitability, followed by a request for funds or securities to be transferred to another financial institution located, in particular, abroad;

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• transactions involving persons located in countries, territories, and/or jurisdictions declared by the Financial Action Task Force (FATF) as non-cooperative and persons subject to asset freezing measures for their presumed links with an organized criminal entity.

Article 8: Obligations Relating to Occasional Financial Operations

Regional Financial Market actors must ensure, in accordance with the provisions of Article 29 of the Uniform Law, the identity of any occasional client.

To this end, internal programs for combating money laundering and terrorism financing must specify the verifications and steps to be taken for the identification of occasional operations, in the following cases:

• when the amount of the operation or related operations exceeds ten million (10,000,000) CFA francs, for persons other than approved manual currency exchange operators or legal representatives and responsible directors of gaming operators;
• when the amount of the operation or related operations exceeds five million (5,000,000) CFA francs, for approved manual currency exchange operators;
• when the amount of the operation or related operations exceeds one million (1,000,000) CFA francs for legal representatives and responsible directors of gaming operators;
• in case of repeated separate operations for an individual amount lower than that indicated in the second and third indents of this article or when the lawful origin of the capital is not certain.

Regional Financial Market actors proceed with the identification of their client