Instruction No. 35/2008 on the Fight Against Money Laundering Among Approved Actors of the UMOA Regional Financial Market

UNION MONETAIRE OUEST AFRICAINE crepmf
CONSEIL REGIONAL DE L'EPARGNE PUBLIQUE ET DES MARCHES FINANCIERS

INSTRUCTION NO. 35 / 2008

ON THE FIGHT AGAINST MONEY LAUNDERING AMONG APPROVED ACTORS OF THE UMOA REGIONAL FINANCIAL MARKET

The Regional Council for Public Savings and Financial Markets,

Having regard to the Convention establishing the Regional Council for Public Savings and Financial Markets (hereinafter the "Council");

Having regard to the Annex to the Convention on the Composition, Organization, Operation and Powers of the Council;

Having regard to the General Regulation on the Organization, Operation and Supervision of the UMOA regional financial market;

Having regard to Directive No. 07/2002/CM/UEMOA of September 19, 2002 on the fight against money laundering in the Member States of the West African Economic and Monetary Union (UEMOA);

Having regard to the Uniform Act on the fight against money laundering in the Member States of the West African Economic and Monetary Union (UEMOA), adopted on March 20, 2003 by the Council of Ministers of the Union (hereinafter the "Uniform Act");

Having regard to the resolutions of the Council at its ordinary session on May 8, 2008;

Considering the role that approved actors of the UMOA financial market must play in the effective functioning of the money laundering prevention mechanism within the Union;

Considering that the use of approved actors of the financial market for money laundering is likely to compromise the stability and reliability of the financial system as a whole;

Considering that the establishment, by approved actors of the regional financial market, of internal control procedures and training programs in this field are complementary measures without which other provisions contained in the Uniform Act would lose their effectiveness;

HAS ADOPTED

Instruction No. 35 / 2008

TITLE I: GENERAL PROVISIONS

Article 1: Object

This Instruction aims to specify the implementation procedures of the Uniform Act, particularly the provisions of Article 13 of said Act, by the approved actors of the regional financial market defined in Article 3 below.

Article 2: Definition

Under the provisions of Articles 2 and 3 of the Uniform Act, money laundering is defined as an offense consisting of one or more intentional acts, namely:

• the conversion, transfer, or manipulation of assets, knowing that they originate from a crime or offense, or participation therein, with the aim of concealing or disguising their illicit origin or assisting any person involved in the commission of such crime or offense to evade judicial consequences;
• the concealment or disguise of the true nature, origin, location, disposition, movement, or ownership of assets or related rights, knowing that they originate from a crime or offense as defined by the national legislations of UMOA Member States, or participation therein;
• the acquisition, holding, or use of assets, knowing at the time of receipt that they originate from a crime, offense, or participation therein.

Article 3: Scope of Application

This Instruction applies to the following regional financial market actors:

• the Regional Securities Exchange (BRVM);
• the Central Depository/Settlement Bank (DC/BR);
• Management and Intermediation Companies (SGI);
• Wealth Management Companies (SGP);
• Collective Investment Schemes in Securities (OPCVM),
• OPCVM Management Companies;
• Account-Keeping and Conservatory Banks (BTCC);
• Business Introducers;
• Sales Representatives;
• any other natural or legal person approved by the Regional Council.

Instruction No. 35 / 2008

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

CHAPTER I: GENERAL DUE DILIGENCE OBLIGATIONS

Article 4: Customer Identification

The regional financial market actors referred to in Article 3 above are required, before establishing a contractual relationship or assisting their client in preparing or executing a transaction, to verify the identity of their counterparty. To this end, they identify their clients in accordance with Chapter 2 of Title II of the Uniform Act and its Annex, regarding customer identification procedures for natural persons by approved financial market organizations in remote financial operations.

Customer identification must be based, on the one hand, on precise ethical rules and, on the other hand, on a clearly defined customer knowledge policy, to ensure that regional financial market actors do not maintain relationships with persons of doubtful identity or whose transactions are disproportionate to their activity.

To effectively safeguard against reputation and counterparty risks, the regional financial market actors covered by this Instruction must define the types of clients they cannot accept, taking into account the aforementioned provisions, and refrain from establishing any relationship before satisfactorily establishing their identity, address, and authorized types of operations with said clients.

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

Article 5: Retention of Documents and Records

Pursuant to Article 11 of the Uniform Act, regional financial market actors must retain documents related to the identity of their regular or occasional clients for ten years from the closure of their accounts or cessation of their relationship.

They must also retain documents related to operations carried out by them for ten years from the end of the financial year in which they were performed.

Instruction No. 35 / 2008

Article 6: Detection of Suspicious Transactions

In applying the provisions of Article 26 of the Uniform Act, the internal anti-money laundering program must at all times enable the provision of precise information, particularly regarding:

• transaction amounts by clients and their frequency;
• the nature of transactions (cash deposits, transfers, etc.);
• the existence of an economic justification for transactions;
• the consistency of the economic justification for transactions;
• currencies processed during operations;
• the identity of the ultimate beneficial owner/order giver;
• the origin of transactions (geographical origin, identity of financial institutions acting as intermediaries, accounts used);
• the identity of the ultimate beneficial owner/beneficiary;
• the destination of transactions (geographical destination, identity of financial institutions acting as intermediaries, accounts used).

CHAPTER II: SPECIFIC ENHANCED DUE DILIGENCE OBLIGATIONS

Article 7: Monitoring of Atypical Transactions

Regional financial market actors must provide a transaction analysis and client profiling mechanism, enabling them to trace and particularly monitor atypical financial movements and operations.

These include in particular the following operations:

• transactions that are abnormal per se and/or abnormal relative 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 with amounts significantly higher than the client's usual transactions;
• stock exchange orders and market operations involving or entailing securities transactions at prices deviating from market rates;
• operations consisting of multiple back-and-forth movements on the stock exchange without apparent profitability, followed by a request for withdrawal of funds or securities to another financial institution located notably abroad;
• transactions carried out by persons located in countries, territories and/or jurisdictions declared non-cooperative by the Financial Action Task Force (FATF)

Instruction No. 35 / 2008

as non-cooperative and by persons subject to asset freeze measures due to their presumed links with an organized criminal entity.

Article 8: Obligations Regarding Occasional Financial Operations

Internal anti-money laundering programs must specify the verifications and procedures to be carried out for identifying occasional operations. To this end, regional financial market actors must ensure, in accordance with Articles 7 and 8 of the Uniform Act, the identity of any occasional client requesting an operation involving a sum equal to or greater than five million (5,000,000) FCFA or its FCFA equivalent.

The obligations under Article 7 of the Uniform Act apply to occasional clients who, within a short period, request multiple operations between which a link appears and whose total amount is less than five million (5,000,000) FCFA.

Article 9: Electronic Transactions

Regional financial market actors enabling the execution of transactions via internet or any other electronic means must possess an adapted monitoring system for these transactions. They are further required to centralize and analyze unusual internet or electronic support transactions.

Article 10: Enhanced Due Diligence Regarding Non-Cooperative Countries and Territories as well as Persons Subject to Asset Freeze Measures

The regional financial market actors referred to in Article 3 above are required to pay particular attention to operations conducted with countries, territories and/or jurisdictions declared non-cooperative by the FATF and persons subject to asset freeze measures due to their presumed links with an organized criminal entity. In this regard, the list of these countries/territories and jurisdictions, as well as that of persons subject to asset freeze measures, must be regularly updated and communicated to the personnel at the forefront of the fight against money laundering within the regional financial market actor.

Instruction No. 35 / 2008

TITLE III: PARTICULAR OBLIGATIONS

CHAPTER I: PROVISIONS RELATING TO SUSPICIOUS TRANSACTION REPORTING

Article 11: Obligation to Report Suspicious Transactions

The regional financial market actors referred to in Article 3 above must submit suspicious transaction reports, in accordance with Chapter 2 of Title III of the Uniform Act.

Under Article 26 of said Uniform Act, they must report to the National Financial Intelligence Unit (CENTIF), established under said Act, operations involving sums that may be part of a money laundering process, particularly:

• funds provided by clients that may originate from drug trafficking or organized criminal activities;
• operations involving sums that may originate from drug trafficking or organized criminal activities;
• any operation where the identity of the order giver or beneficiaries remains doubtful, despite executing due diligence in accordance with Articles 7 to 9 of the Uniform Act;
• operations carried out by regional financial market actors or financial institutions for their own account or on behalf of third parties with natural or legal persons, including their subsidiaries or branches, acting in the form of or on behalf of trust funds or any other asset management instrument, where the identity of the settlors or beneficiaries is unknown.

Article 12: Obligation Connected to the Suspicious Transaction Reporting Obligation

Pursuant to Article 10 of the Uniform Act, any fund remittance for the settlement of stock exchange operations, any cash or bearer instrument payment of a sum of money, carried out under normal conditions, with a unitary or total amount equal to or greater than fifty million (50,000,000) FCFA, as well as any operation involving sums with a unitary or total amount exceeding ten million (10,000,000) FCFA carried out under unusual complexity conditions and not appearing to have a lawful justification or purpose, must be recorded in a confidential register and subject to particular examination by regional financial market actors. In such cases, the latter must inquire with clients regarding the origin and destination of these funds, as well as the purpose of the transaction and the identity of the benefiting persons.

Instruction No. 35 / 2008

CHAPTER II: OTHER PROFESSIONAL OBLIGATIONS

Article 13: Establishment of Anti-Money Laundering Mechanisms

Regional financial market actors are required to establish a specific anti-money laundering structure. The anti-money laundering mechanism must be explicitly entrusted to the Internal Controller. It is responsible for implementing a monitoring system and controlling the proper functioning of established procedures, to comply with all regulatory provisions regarding the fight against money laundering.

To this end, the executive body must provide the Internal Controller with adequate and sufficient resources (human and material) and guarantee operational independence for mission execution.

The Internal Controller's duties include in particular:

• centralizing suspicions arising from staff;
• conducting internal investigations of suspicion files;
• drafting suspicious transaction reports and transmitting them to the CENTIF;
• responding to regular or ad hoc inquiries by monetary and supervisory authorities or the CENTIF.

Article 14: Staff Training and Awareness

Regional financial market actors must implement a specific information and training policy for all personnel (including, if necessary, temporary assistants and interim staff) handling operations likely to be used in a money laundering circuit, particularly client managers, traders, portfolio or OPCVM managers, as well as all categories of personnel in contact with clients.

Regarding information, regional financial market actors must inform their concerned agents about the applicable legislation and regulations.

Regarding training, personnel directly involved in fighting money laundering must, on the one hand, have up-to-date procedure manuals and, on the other hand, based on a training plan, be regularly trained in mastering these manuals and sensitized to the different typologies constituting money laundering cases.

Article 15: Internal Anti-Money Laundering Mechanism

The regional financial market actors referred to in Article 3 above are required to establish an internal mechanism defining internal procedures and rules for the prevention and detection of money laundering.

This internal mechanism must comply with legislative and regulatory provisions in force in UMOA Member States regarding the fight against money laundering, without prejudice to internal rules applicable to a financial institution due to its group membership.

The internal anti-money laundering mechanism must be documented in writing, validated by the actor's Board of Directors, and transmitted to the Regional Council before implementation.

Article 16: Control of the Internal Anti-Money Laundering Mechanism

The internal anti-money laundering mechanism must be submitted to the Statutory Auditors of the market actor. The Statutory Auditors must prepare a detailed report within their annual accounts control report for each financial year.

Article 17: Information Obligations

Regional financial market actors are required, upon transmitting the internal control annual report, to send the CREPMF a report on the implementation of the entire money laundering prevention mechanism in force in UMOA Member States. This report must particularly:

• describe the organization and resources deployed by the regional financial market actor in preventing and fighting money laundering;
• relate training and information actions carried out during the past year;
• inventory controls performed to ensure proper implementation and compliance with customer identification, data retention, detection, and reporting procedures for suspicious transactions;
• highlight investigation results, particularly weaknesses identified in procedures and their compliance, as well as statistics related to the implementation of the suspicious transaction reporting mechanism;
• report, where applicable, the nature of information transmitted to third-party institutions, including those outside the country of establishment;
• map the most common suspicious activities, indicating if necessary the nature and form of observed mutations in the field of money laundering;
• present perspectives and action programs for the upcoming period.

Regional financial market actors must be able to produce all necessary information for assessing the quality of their money laundering prevention mechanism. In this regard, written procedures and internal documentation must be available in French.

Instruction No. 35 / 2008

TITLE IV: MISCELLANEOUS AND FINAL PROVISIONS

Article 18: Entry into Force

This Instruction, which will enter into force from the date of its signature, repeals all prior contrary provisions and shall be published wherever necessary.

Done in Abidjan, on November 23, 2009

The President
(Signature)
Léné SEBGO