Guideline No. 13/2018 of September 19

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GUIDELINE NO. 13/2018 of September 19
SUBJECT: EXCHANGE RATE POLICY

• Prevention of Money Laundering and Terrorist Financing in International Trade Operations

Considering that international trade may represent a high risk of money laundering, terrorist financing and related offences, and facilitate the illicit movement of funds abroad; And considering the current legislation covering international trade transactions, namely:

• Law No. 34/11 of December 12, regulated by Notice No. 22/2012 of April 25, which establishes preventive and repressive measures to combat money laundering and terrorist financing, complemented by Law No. 3/14 of February 10, the Law on the Criminalization of Offences Related to Money Laundering;
• Presidential Decree No. 147/13 of October 1 (Section II of Chapter IV), and the Industrial Tax Code (Article 55) which aim to ensure that tax revenues do not decrease as a result of the transfer of results between related entities;
• Presidential Decree No. 75/17 of April 7, on Administrative Procedures to be Observed in the Licensing of Imports and Exports, which considers speculative practices of declaring over-invoiced or under-invoiced prices on invoices for imported goods as offences;
  In accordance with the combined provisions of Articles 21 and 40 of Law No. 16/10 of July 15 – the Law on the National Bank of Angola, and Article 64 of Law No. 12/15 of June 17 – the Framework Law on Financial Institutions, combined with paragraph 2 of Article 28 of Law No. 5/97 of July 27 – the Exchange Rate Law, and Article 51 of the Law on the National Bank of Angola

CONTINUATION OF GUIDELINE NO. 13/2018 Page 2 of 8 I HEREBY DETERMINE:

1. Object
   This Guideline establishes the procedures that Banking Financial Institutions must observe in identifying the risk profile of clients in import and export transactions of goods, as well as the prevention measures for money laundering, terrorist financing and related offences that must be applied to clients classified as high risk.
2. Classification
   2.1 The process of assigning a risk level to clients by the Banking Financial Institution must be based on an in-depth knowledge of said clients, obtained at account opening and updated regularly through the analysis of documentation and information provided by the client regarding:
   a) The business model; b) The main counterparties and the countries where they are headquartered; c) The goods and services traded; and, d) The history and outlook for the annual volume and value of operations.
   2.2 In assessing the main counterparties of its importing clients and the countries where they are headquartered, Banking Financial Institutions must take into account that there is a higher risk of money laundering, terrorist financing and related offences associated with certain structures, namely those constituted:
   a) In countries that do not apply or insufficiently apply international requirements regarding the prevention of money laundering and terrorist financing, facilitating the concealment of illicit fund flows, and/or that facilitate the creation of special purpose vehicles (SPV) without requiring a physical structure in the country of incorporation, which are less transparent and not subject to corporate governance rules equivalent to those required in Angola under the Commercial Companies Law; and/or; b) With the characteristics of a “trading” company, namely:
   i. To act exclusively as an intermediary agent for one or a few importing companies, increasing the likelihood of being related companies and facilitating the application of transfer prices that are not aligned with market prices; and,
   ii. Not being domiciled in the country of origin of most exported products or from which the products are shipped; and/or,
   c) As limited liability companies or single-member companies, of small size without a robust corporate governance structure and lacking international reputation and exposure.
   2.3 Importers that trade with exporters having structures characterized by the preceding point of this Guideline must be classified as high risk, requiring enhanced due diligence procedures, as provided for in Law No. 34/11 of December 12 – the Law on Combating Money Laundering and Terrorist Financing.
3. Conditions and Procedures Applicable to High-Risk Importers
   3.1. Banking Financial Institutions must, following the assignment of a high risk level to an importing client:
   a) Prevent the client from using advance payments for settling their imports; and,

CONTINUATION OF GUIDELINE NO. 13/2018 Page 3 of 8 b) Apply enhanced due diligence procedures, as provided for in Law No. 34/11 of December 12 and in points 4 and 5 of this Guideline.
4. Enhanced Due Diligence Procedures
4.1 The enhanced due diligence procedures referred to in paragraph b) of point 3.1 of this Guideline must include the following elements:
a) Request for the importing client’s accounts and respective Industrial Tax Form 1 to verify the consistency between the declared sales value and the import value reflected in the accounts, as well as its reasonableness, considering the value of exchange rate operations carried out through the Banking Financial Institution (Note: after the first semester, only documents relating to the previous fiscal year may be accepted for this purpose); and, b) Identification of the beneficial owners of exporting entities classified as trading companies, which are the beneficiaries of payments, in order to:
i. verify that they are not subject to sanctions imposed by the Office of Foreign Assets Control (OFAC), United Nations Sanctions Committee and/or other equivalent entities;
ii. identify the existence of related entities with the importer; and,
iii. obtain confirmation of the submission of the Transfer Pricing Report to the General Tax Administration (AGT), in case related entities are identified, when the importer is a large taxpayer, classified as such by Dispatch No. 316/17 of July 17 from the Ministry of Finance.
4.2 Regarding import operations, Banking Financial Institutions must, when monitoring the transactions of their importing clients considered high risk, apply the procedures described below, among others, in a manner proportional to the risk the operation may represent.
4.3 Whenever an operation is settled through a letter of credit, Banking Financial Institutions must, upon opening the letter of credit:
a) Ensure that the proforma invoice includes a detailed description of the goods to be imported and the unit price; b) Assess the consistency of the description in the invoice with the description in the import license; c) Seek to assess the reasonableness of the goods' value in the invoice, by comparing it with previous invoices and/or market value, when publicly available and/or other relevant information internally or publicly available; d) Verify the economic sense of the import, namely, the correspondence between the value and volume of goods with the mode of transport and freight cost; e) Obtain justifications in cases where the goods are shipped from a country that does not traditionally produce the product being exported to Angola; f) Evaluate the consistency of the operation with the importer’s activity, namely:
i. The import value is within the normal standard of the importer;
ii. The import value is consistent with the scale of the importer’s regular business activity; and,
iii. The type of goods being imported is consistent with the importer’s regular business activity.
g) Refuse to issue letters of credit that:
i. Are transferable; and,
ii. Allow transshipments through one or more jurisdictions, unless there are sound economic reasons for doing so.

CONTINUATION OF GUIDELINE NO. 13/2018 Page 4 of 8
4.4 Banking Financial Institutions must, upon receipt of documents:
a) Assess the consistency of the supporting documents for the operation, namely:
i. That the description of the goods and other common information in the bill of lading, invoice, import license, Single Document and other documents forming part of the set of supporting documents for the operation are coherent with each other and with the letter of credit, where applicable;
ii. That the container reference numbers, referred to in the shipping manifest, were loaded onto the ship referenced in the same document, and that this ship departed and docked at the ports also referenced in the shipping manifest, by consulting the websites of shipping lines.
b) Conduct an analysis of any request for acceptance of discrepancies by the exporter, especially when these result from inconsistencies in information between the presented documents under the letter of credit or with the letter of credit itself, allowing their acceptance only if duly justified. c) In cases where the operation was confirmed by a foreign bank, the Banking Financial Institution must immediately contact that bank upon detecting indications of money laundering, terrorist financing or related offences in its analysis of the documents according to the stipulated point 4.3, so that appropriate measures can be taken as applicable.
4.5 Banking Financial Institutions must apply the aforementioned due diligence measures, with necessary adaptations, to other payment instruments used by importers at the time of requesting settlement of the operation.

CONTINUATION OF GUIDELINE NO. 13/2018 Page 5 of 8
5. Other Due Diligence Measures
5.1 Banking Financial Institutions must:
a) Obtain all necessary information to ensure the lawfulness of operations; b) Refuse to carry out operations whenever the due diligence procedures referred to in this Guideline cannot be adequately fulfilled; c) In case of suspicions of money laundering, terrorist financing or related offences, abstain from executing the operations and report them to the Financial Intelligence Unit (FIU), as provided in Directive No. 01/DSI/2012, awaiting the decision of that entity regarding the treatment to be given to the operation; and, d) Record the results of the applied due diligence measures and decisions taken, and archive them in the respective client’s file.
6. Sanctions
Violation of the rules provided for in this Guideline is punishable under Law No. 34/11 of December 12 – the Law on Combating Money Laundering and Terrorist Financing, Law No. 05/97 of June 27 – the Exchange Rate Law, and Law No. 12/15 of June 17 – the Framework Law on Financial Institutions, without prejudice to any other potentially applicable legislation.
7. Doubts and Omissions
Doubts and omissions resulting from the interpretation and application of this Guideline are resolved by the National Bank of Angola.
8. Entry into Force
This Guideline enters into force 30 (thirty) days after the date of its publication.

CONTINUATION OF GUIDELINE NO. 13/2018 Page 6 of 8 PUBLISHED.
Luanda, September 20, 2018.
THE GOVERNOR
JOSÉ DE LIMA MASSANO