REPUBLIC OF GUINEA

CENTRAL BANK

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Conakry, JUNE 29, 2018

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BCRG INSTRUCTION NO. I/DGSIF/DSIMF 07/2018

ON THE ANTI-MONEY LAUNDERING AND COUNTER-TERRORIST FINANCING (AML/CFT)
STANDARDS APPLICABLE TO INCLUSIVE FINANCIAL INSTITUTIONS (IFI)

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The Governor

Having regard to Ordinance No. D/2009/046/CNDD of February 7, 2009, establishing the statute of the Central Bank of the Republic of Guinea;
Having regard to Decree No. D/2010/010/PRG/SGG of December 27, 2010, appointing the Governor of the Central Bank of the Republic of Guinea;
Having regard to Law No. L/2017/031/AN of July 4, 2017, concerning inclusive financial institutions in the Republic of Guinea, particularly Article 93.

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DECIDES

Article 1: Object and Scope

This instruction applies to Microfinance Institutions (hereinafter, "MFI"), Electronic Money Establishments (hereinafter, "EME"), and Postal Financial Services (hereinafter, "PFS").

Its purpose is to specify the implementation procedures for legislation concerning anti-money laundering and counter-terrorist financing.

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Article 2: Definitions

• AGENT: Non-salaried intermediaries acting on behalf of IFIs
• BCRG: Central Bank of the Republic of Guinea
• CENTIF: National Financial Intelligence Unit
• IFI: Inclusive Financial Institution
• AML/CFT: Anti-Money Laundering and Counter-Terrorist Financing
• PEP: Politically Exposed Person: a person who holds or has held important public functions in Guinea, another State, or an International Organization; for example, Head of State, Head of Government, Member of Government, Politician (non-politician), Senior Politician, High-ranking Civil Servant, Judiciary or Armed Forces official, Director of a Public Enterprise, or Senior Executive of a Political Party. Members of the family of a PEP, as well as persons closely associated with them, are also considered PEPs.
• PTNC: Non-Cooperative Countries and Territories

Money Laundering: The offense consisting of one or more of the following acts, committed intentionally:

• The conversion or transfer of property, by any person knowing or ought to know that such property is the proceeds of a crime or offense, or participation in such crime, with the aim of concealing or disguising the illicit origin of said property or assisting any person involved in the commission of the principal offense to evade judicial consequences;
• The concealment, disguise, or camouflaging of the nature, origin, location, disposal, movement, or true ownership of property or related rights by any person

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knowing or who should know that said property is the proceeds of a crime or offense; and

• The acquisition, possession, or use of property by any person knowing or having good reasons to suspect, at the time of receipt, that said property is the proceeds of a crime or offense.

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SECTION 1: DUE DILIGENCE OBLIGATIONS REGARDING CUSTOMERS

Article 3: Due Diligence Obligations

IFIs adopt procedures regarding due diligence obligations, particularly concerning:

• Procedures for accepting new customers;
• Procedures for accepting transactions with occasional customers;
• Diligence to be performed regarding customer identification, and where applicable, the beneficial owner;
• The elements necessary for adequate knowledge of the business relationship, and where applicable, the beneficial owner, as well as the frequency of their updates.

Article 4: Customer Identification

Before establishing a contractual relationship or assisting their customer in preparing or executing a transaction, IFIs ensure the identity of their counterparty. To this end, they identify their customers in accordance with prevailing legislation.

Unless otherwise provided in this instruction, verification of customer identity upon opening business relationships or for a one-off transaction is carried out by recording the national ID card, biometric voter card, or passport, with a copy taken on paper or digital media.

To effectively safeguard against reputation and counterparty risks, IFIs define the types of customers they cannot accept, based on the aforementioned provisions, and refrain from establishing any relationship before satisfactorily establishing their identity, address, and the types of authorized operations with said customers.

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Article 5: Customer Knowledge in Business Relationships

Customer knowledge procedures apply to new and existing customers, particularly those on whom doubts weigh regarding the reliability of previously collected information.

They are based on precise ethical rules for customer selection and treatment and include the collection of information, particularly regarding:

• Customer activity / sector of activity,
• Assets/wealth,
• Income flows,
• Expected benefits of the business relationship,
• Family ties.

They aim to profile customers and prevent IFIs from maintaining relationships with persons whose identity is doubtful or whose transactions are disproportionate to their activity.

Article 6: Retention of Documents and Transactions

IFIs keep, for ten (10) years from the closure of their accounts or cessation of relationships, documents related to the identity of their regular or occasional customers.

They also keep documents related to operations performed by them for ten (10) years from the end of the financial year in which they were executed.

Documents and information are securely stored so that they are protected from destruction or falsification, and quickly accessible upon request at the IFI's management level.

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Internal procedures of IFIs describe the information to be collected and retained, as well as the methods for retaining collected information.

Article 7: Minor Customers

Unemancipated minors may hold an electronic money or deposit account, subject to duly established authorization from a parent or guardian holding a valid official identification document.

Article 8: Detection of Suspicious Transactions

The IFI's internal AML/CFT program allows, at any time, to provide precise information particularly on:

• Amounts of transactions performed by customers and their frequency;
• Nature of transactions (cash deposits, transfers, etc.);
• Existence of economic justification for transactions;
• Consistency of the economic justification for transactions;
• Currencies processed during transactions;
• Identity of the true ordering party;
• Origin of transactions (geographical origin, identity of financial institutions acting as intermediaries, accounts used);
• Identity of the true beneficiary;
• Destination of transactions (geographical destination, identity of financial institutions acting as intermediaries, accounts used).

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SECTION 2: ENHANCED OR MODULATED SURVEILLANCE BASED ON RISKS

Article 9: Surveillance of Customers and Transactions Based on Risks

IFIs establish monitoring and analysis mechanisms for their business relationships, based on customer knowledge, enabling the detection of transactions that constitute anomalies relative to the profile

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of business relationships and that may be subject to enhanced review. They modulate the surveillance of their customers and operations according to the AML/CFT risk level of the customer and transaction.

They implement particular surveillance for:

• PEPs,
• Electronic transactions,
• Payment operations,
• Non-residents,
• Cross-border and international operations,
• Operations performed remotely or via AGENTS.

Article 10: Monitoring of Atypical Transactions

IFIs provide a transaction and customer profile analysis mechanism, enabling the tracking and monitoring of atypical financial movements and operations. These include:

• Transactions that are abnormal in themselves and/or abnormal relative to a customer (e.g., dormant accounts suddenly becoming active, multiple-endorsement checks, transfer of funds to numbered accounts, purchase or sale of large quantities of precious metals);
• Credit operations with customer acceptance of abnormally high interest rates, proposal of guarantees constituted by assets of unknown origin or incompatible with the customer's apparent standard of living, or proposal for early repayment with funds of unknown or implausible origin;
• Foreign trade operations with prices of underlying goods under- or over-valued relative to market price, or complex structures involving multiple entities without satisfactory technical or economic justification;

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• Operations with amounts significantly higher than the customer's usual transactions;
• Transactions conducted with counterparties located in countries, territories, and/or jurisdictions declared non-cooperative by the Financial Action Task Force (FATF) and persons subject to asset freeze measures due to their presumed links with an organized criminal entity.

Article 11: Occasional Customers and Transactions

IFIs identify occasional customers in the same manner as customers with a business relationship.

However, customer profiling is not required.

Article 12: Enhanced Due Diligence Regarding PTNCs

IFIs pay particular attention to operations conducted with countries, territories, and/or jurisdictions declared non-cooperative by the FATF. In this regard, the list of these countries/territories and jurisdictions is regularly updated and communicated to staff at the forefront of AML/CFT within the IFI.

Article 13: Customers under EMBARGO (& Asset Freezes)

IFIs do not conduct operations or maintain business relationships with persons subject to embargo or asset freeze measures due to their presumed links with an organized criminal entity.

In this regard, the lists of these persons and organizations are regularly updated and implemented in an automated filtering system within the SIG.

The detection of such a person or organization gives rise to a suspicious transaction report (STR) submitted to the CENTIF.

Article 14: Surveillance of Institutional Business Relationships

IFIs monitor their institutional business relationships by any appropriate means to ensure they do not maintain relationships with entities

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presenting AML/CFT risks. The surveillance mechanism distinguishes the following cases:

• Approved and regulated financial partners,
• Unregulated financial partners or those from a PTNC,
• Trusts & other fictitious entities, for which any relationship is prohibited,
• Cross-border correspondents,
• Non-financial for-profit partners such as NGOs, associations, foundations, charitable organizations, etc.

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SECTION 3: SPECIFIC STANDARDS RELATING TO ELECTRONIC MONEY ACCOUNTS AND REMOTE BANKING

Article 15: Electronic Transactions

Financial institutions enabling transactions via internet, mobile telephony, or any other electronic means, possess an adapted monitoring system for these transactions. Furthermore, they centralize and analyze all transactions to ensure a global view of unusual transactions.

Article 16: Specific Standards for Customers Holding an EM Account

Customers holding an electronic money account are identified upon account opening by the digital recording of the ID document and photograph taken by the AGENT or agency employee, and stored in a centralized manner.

For customers subject to the electronic support ceiling amount, no additional knowledge elements are required. However, the IFI is required to perform necessary filtering of persons on EMBARGO or PEP lists.

A customer may hold only one electronic money account per IFI. By derogation, an IFI may open multiple electronic money accounts for the same person or with the same identity justification, provided:

• The ceiling amount of funds across different accounts and transactions does not exceed that provided for a single account,
• The IFI possesses the technological and procedural means to perform global ceiling management.

Articles 17: Ceilings Related to EM Accounts

Unless express authorization from the BCRG, the value of electronic money incorporated in instruments issued by IFIs as well as monthly payment ceilings do not exceed at any time:

• Fifteen million Guinean francs for account balance,
• Seventy-five million Guinean francs for cash reloads,
• Seventy-five million Guinean francs for sending or receiving,

The unceiling authorization is granted by the BCRG for certain specific users for whom knowledge is enhanced, particularly:

• Members of the issuer's distribution network,
• Guinean private legal entities for which due diligence has been performed in accordance with banking industry standards (with the IFI collecting proof of registration, statutes, precise identification of beneficial owners, certified financial statements, any other relevant element, and precise information on the nature and reasons for the business relationship and unceiling request)
• Guinean public legal entities

The authorization is granted globally by the BCRG based on the issuer's unceiling policy. The report sent annually by the issuer to the BCRG includes as an annex the list of each unceiled customer, their

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individual ceiling amount, and any explanation regarding the enhanced monitoring mechanism for these customers.

Transaction restrictions do not prevent higher amounts from being paid periodically to ceilinged customers, originating from entities or public administrations. The IFI must ensure that the account balance returns below the regulatory ceiling within 15 calendar days.

Ceiling amounts are reviewed annually by the BCRG to be adjusted for inflation.

Article 18: Specific AML/CFT Standards Regarding AGENTS in Guinea

IFIs conduct enhanced identification and knowledge of their distribution network, namely their main distributors and AGENTS.

IFIs integrate their distribution network into their transaction monitoring and AML/CFT system, including within the scope of internal audit.

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SECTION 4: INSTITUTIONAL PROVISIONS

Article 19: Internal AML/CFT Mechanism

IFIs implement an internal program based on a mechanism defining internal procedures and rules for the prevention and detection of money laundering and terrorist financing, and notably in detecting operations, transfers, or management of all funds potentially linked to illegal activities, and communicating to the Central Bank any information concerning these funds.

This internal program must comply with prevailing legislative and regulatory provisions on AML/CFT, without prejudice to additional internal rules applicable to an IFI due to its membership in a group. The internal AML/CFT program is documented in writing and validated by the IFI's deliberative body before implementation.

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Article 20: Training and Awareness of Human Resources

IFIs implement a specific information and training policy for all personnel (including, if necessary, temporary assistants and interim staff) as well as, where applicable, the distribution network including AGENTS, responsible for operations that may be used in a money laundering or terrorist financing circuit, and notably all categories of personnel and AGENTS in contact with customers.

They ensure that personnel whose activity is exposed to money laundering and terrorist financing risks are able to demonstrate vigilance adapted to these risks. To this end, they ensure that the training and information of these personnel are adapted to their activities.

In particular, operational structures directly involved in AML/CFT:

• Possess up-to-date procedure manuals, and
• Are regularly trained on mastering these manuals based on a training plan, and made aware of different types of money laundering or terrorist financing.

Article 21: Appointment, Positioning, Missions, and Responsibilities of the AML/CFT Officer

IFIs establish a specific AML/CFT structure. The AML/CFT mechanism is explicitly entrusted to an ad hoc structure, which cannot be the internal audit department.

This structure is adapted to the organization, nature, and volume of IFI activities. It is responsible for implementing a surveillance system and controlling the proper functioning of established procedures, to satisfy all regulatory provisions regarding AML/CFT.

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To this end, the executive body provides the AML/CFT officer with adequate and sufficient means (human and material) and guarantees operational independence for the execution of their mission.

The structure's attributions include:

• Centralization of suspicions from staff or alerts issued by computerized tools;
• Internal processing of suspicion files;
• Drafting suspicious transaction reports and transmitting them to the CENTIF;
• Responding to regular or ad hoc investigations by monetary and supervisory authorities or the CENTIF.
• Permanent control of the anti-money laundering and counter-terrorist financing mechanism as part of the compliance control system. The Compliance Officer ensures that AML/CFT-purpose devices and procedures are appropriate.

Article 22: Audit of the AML/CFT Mechanism

The internal anti-money laundering program is subject to the scope and investigation of internal audit. Internal audit periodically reports its controls on this matter to the appropriate deliberative body.

Article 23: Annual Report

IFIs submit to the BCRG, within two (2) months from the end of the financial year, a report on the implementation of the entire AML/CFT mechanism in force. In particular, this report:

• Describes the organization and resources of the IFI regarding money laundering and terrorist financing prevention;
• Relates training and information actions carried out during the past year;

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• Inventories controls performed to ensure proper implementation and compliance with customer identification procedures, data retention, detection, and reporting of suspicious transactions;
• Highlights investigation results, particularly regarding weaknesses identified in procedures and their compliance, as well as statistics related to the implementation of the reporting mechanism;
• Reports, where applicable, the nature of information transmitted to third-party institutions, including those outside the country of establishment;
• Maps the most common suspicious activities, indicating if necessary the nature and form of observed mutations, in the field of money laundering or terrorist financing;
• Presents perspectives and action programs for the upcoming period.

Within the framework of BCRG controls, IFIs are able to produce all necessary information for assessing the quality of their money laundering and terrorist financing prevention mechanism.

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SECTION 5: TRANSITIONAL AND FINAL PROVISIONS

Article 24: Implementation of EMBARGO LISTS in MFIs' SIG Systems Not Performing Payment Operations for Their Own Account

Microfinance Institutions not performing payment operations for their own account implement an automated filtering system for EMBARGO lists by December 31, 2019 at latest, for all their customer base.

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Article 25: Establishment of the IFU (Unique Financial Identifier)

From the implementation of the Unique Financial Identifier (IFU), IFIs will use it as a complementary customer identification tool and ensure its implementation in the SIG.

Article 26: Final Provisions

This Instruction enters into force as of its signature date.

Dr Louncény Nabé