Guideline No. 24/2016 of November 16 on Enhanced Due Diligence Duties

GUIDELINE NO. 24/16 of November 16
SUBJECT: DUTIES OF ENHANCED DILIGENCE

Considering the development of the Angolan Financial System, which requires an increase in sensitivity to the risk of money laundering and terrorist financing associated with persons of high-risk profiles, regardless of nationality, place of residence, or jurisdiction of the exercise of functions, without prejudice to what is established in Law No. 34/11, of December 12, the Law on the Fight Against Money Laundering and Terrorist Financing;

Taking into account the identification and enhanced due diligence procedures that allow Financial Institutions to identify and mitigate the risks of money laundering and terrorist financing that their clients may represent, and considering that the degree of diligence depends on the risk assessment of each client and each transaction;

In this sense, and under the terms of the combined provisions of paragraph 1 of Article 21 and Article 51, both of Law No. 16/10, of July 15 – Law of the National Bank of Angola, and of Article 90 of Law No. 12/15, of June 17 – Law of the Bases of Financial Institutions.

I DETERMINE:

1. Object
   This Guideline establishes the duties of identification and enhanced due diligence applicable to persons of high-risk profiles, regardless of nationality, place of residence, or jurisdiction of the exercise of functions.

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2. Scope
   This Guideline is applicable to Financial Institutions under the supervision of the National Bank of Angola, under the terms and conditions provided for in the Law of the Bases of Financial Institutions, hereinafter abbreviated as Institutions.

3. Definitions
   Without prejudice to the definitions established in the Law of the Bases of Financial Institutions, for the purposes of this Guideline, the following are understood:

3.1 Beneficial owner: natural person who is the ultimate owner or holder of the final control of a client or on whose behalf an operation is carried out, which must include:
a) in the case where the client is a legal entity:
i. natural persons who, in the last instance, hold the ownership or control, direct or indirect, equal to or greater than 20% (twenty percent) of the capital of the company or of the voting rights of the legal entity, which is not a company listed on the regulated market, subject to information requirements consistent with international standards;
ii. natural persons who, in any other way, exercise control over the management of the legal entity.
b) in the case where the client is a legal entity that administers and distributes funds:
i. natural persons benefiting from at least 20% (twenty percent) of its assets, when future beneficiaries have already been determined;

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ii. the category of persons in whose main interest the legal entity was constituted or exercises its activity, when future beneficiaries have not yet been determined;
iii. natural persons who exercise control equal to or greater than 20% (twenty percent) of the assets of the legal entity.

3.2 Client: natural person, legal entity, or any other legal entity with which the Financial Institution establishes or has established a business relationship or carries out an occasional transaction.

3.3 Collaborator: any natural person who is contractually bound to the Institution through employment contracts or service provision contracts, as well as collaborators of service providers who, in the name of the Institution and under its authority or dependency, participate in the execution of any operations, acts, or procedures proper to the activity pursued by the financial institution.

3.4 Persons of high-risk profile: Identification given to a specific client based on associated risk factors (i) the client's profile, (ii) products, services, or distribution channels, (iii) geographic location, and/or (iv) who perform, performed, or may perform during the business relationship with the Institution, high-ranking positions of a political or public nature, as well as their close family members and persons who are known to have close relationships of a corporate or commercial nature with them. Whereby:
a) by close family members is understood:
i. spouse or persons with whom they are living in a de facto union;
ii. parents, children, and their respective spouses or persons with whom they are living in a de facto union.
b) by persons who are known to have relationships of a corporate or commercial nature with them is understood:

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i. any natural person who is notoriously known as a joint owner with the holder of a political or public office of a legal entity, a center of collective interests without legal personality, or who has close commercial relations with him;
ii. any natural person who is the owner of the social capital or voting rights of a legal entity or of the assets of a center of collective interests without legal personality, who is notoriously known as having the holder of the high-ranking political or public office as the sole beneficial owner.

3.5 Business relationship: a commercial or professional relationship between the entities subject to this guideline and their clients that, at the time it is established, is expected to be or is long-lasting.

3.6 Occasional transaction: any transaction carried out by the entities subject to this guideline outside the scope of an already established business relationship.

4. Duties of enhanced diligence

4.1 Institutions must apply the provisions of Article 15 of Notice No. 21/2012 and Article 12 of Notice No. 22/2012, of April 25, respectively, regarding the conditions for the exercise of identification and diligence obligations, to the scope of business relationships and occasional transactions with persons of high-risk profiles, regardless of nationality, place of residence, or jurisdiction of the exercise of functions.

4.2 Institutions must also, within the aforementioned scope:
a) apply the identification and diligence procedures established by Law No. 34/2011, of December 12, the Law on the Fight Against Money Laundering and Terrorist Financing, and by this Guideline, including the additional diligence measures that, in conformity with Article 10 of Law No. 34/2011, of December 12, the Law on the Fight Against Money Laundering and Terrorist Financing, prove adequate to the concrete circumstances of the business relationship or the occasional transaction;

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b) have adequate and risk-based mechanisms that allow:
i. before establishing the business relationship or carrying out the occasional transaction, to assess the risk profile of the potential client;
ii. during the business relationship, to detect the subsequent acquisition of a high-risk profile by the client.
c) ensure the intervention, at least at the immediate hierarchical level for validation:
i. of the establishment of business relationships or the execution of occasional transactions;
ii. of the continuity of business relationships in which the change of the client's profile to a high-risk profile or the knowledge thereof by the Institution occurs subsequent to the establishment of the business relationship.
d) adopt the necessary measures to know and prove the origin of the assets and funds involved in business relationships or occasional transactions, for which purpose, it is understood by:
i. assets, the totality of assets that make up the sources of wealth of the potential client;
ii. origin of funds, the amounts or assets specifically allocated to the established business relationship or the occasional transaction carried out with the client.

e) monitor permanently and more intensively the business relationships, with a view to identifying any operations that may constitute the practice of money laundering or terrorist financing crimes.

4.3 In the establishment and execution of the mechanisms referred to in paragraph b) of the previous point, Institutions must:
a) take into account, at least, the aspects of their activity referred to in paragraph a) of point 5.2 of this Guideline; b) resort to information sources that, collectively and in light of their specific concrete operational reality, allow to permanently assess the existence or subsequent acquisition of characteristics that alter the risk profile of the potential client or client.

4.4 For compliance with the provisions of paragraph 6 of Article 10 of Law No. 34/2011, of December 12, the Law on the Fight Against Money Laundering and Terrorist Financing, Institutions must:
a) carry out periodic diligence and procedures with the objective of assessing whether their clients continue to represent, based on their profile and the nature of the operations developed before and after the cessation of the characteristics that make the application of enhanced diligence required; b) apply the procedures provided for in paragraphs a), c), d), and e) of point 4.2 of this Guideline, while the increased risk situation persists.

4.5 The periodic assessment diligence and procedures referred to in paragraph a) of the previous point must:
a) be carried out with a periodicity adequate to the concrete risk identified, which in the case of business relationships, cannot exceed 1 (one) year; b) take into account, at least:

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i. the aspects of the Institution's activity referred to in paragraph a) of point 5 of this Guideline.
ii. the type and characteristics of the position that determined the risk profile, namely the volume of income associated, the level of seniority and influence, even if informal;
iii. the existence and intensity of a potential relationship between the functions held at the time and the position referred to in the previous sub-paragraph;
iv. the levels of corruption existing in the country or jurisdiction where the client held the position referred to in sub-paragraph ii);
v. the preservation of documentation, in documentary and/or electronic form, in compliance with the provisions of point 4.9 of this Guideline.
c) Institutions must also adopt measures that allow:
i. to assess the risk profile of the potential client before establishing the business relationship or carrying out the occasional transaction, as well as the subsequent acquisition of that quality during the business relationship;
ii. to permanently identify the degree of risk associated with business relationships and occasional transactions, as well as the changes that occur to that degree during the business relationship.

4.6 For compliance with the provisions of the previous point, Institutions must establish and execute analysis procedures, based on risk, on the elements collected in compliance with the procedures and measures referred to in paragraph a) of point 4.1 of this Guideline, considering, for this purpose:
a) the aspects of their activity referred to in paragraph a) of point 5.2 of this Guideline;

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b) the type and characteristics of the political or public office, namely the level of seniority and the volume of associated income; c) the business model of the organization where that office is or was held; d) any other information that may be relevant to assess the existence or subsequent acquisition of the client's risk profile, as well as to identify an increased risk of money laundering or terrorist financing, namely those resulting from consultation with the information sources listed in paragraph b) of point 4.3 of this Guideline.

4.7 Regarding business relationships or occasional transactions in which, according to the provisions of points 4.5 and 4.6 of this Guideline, an increased risk of money laundering or terrorist financing is identified, Institutions must:
a) adopt the procedures provided for in paragraphs c), d), and e) of point 4.2 of this Guideline; b) comply with the provisions of points 4.3 and 4.4 of this Guideline.

4.8 The provisions of number 4 of this Guideline are equally applicable to business relationships and occasional transactions in which a person of high-risk profile is a representative of the Institution's clients or assumes the quality of beneficial owners.

4.9 Compliance with the provisions of number 4 of this Guideline must be documentally supported, with Institutions obliged to preserve the respective support for a minimum period of 10 (ten) years, as provided for in Article 12 of Law No. 34/2011, of December 12, the Law on the Fight Against Money Laundering and Terrorist Financing.

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5. Assessment of inherent risks

5.1 In defining the identity verification procedures and diligence measures, under the terms of Article 8 of Law No. 34/2011, of December 12, the Law on the Fight Against Money Laundering and Terrorist Financing, Institutions must carry out within the framework and in conformity with the risk management model for money laundering and terrorist financing internally defined by each Institution based on its specific profile.

5.2 For the definition and execution of their respective risk management model for money laundering and terrorist financing, Institutions must:
a) identify the concrete risks of money laundering and terrorist financing existing in the context of their specific operational reality, taking into account, at least, the following aspects:
i. client risk profiles;
ii. forms and means of communication used in contact with clients;
iii. nature of transactions and products and services provided;
iv. nature of business areas developed;
v. nature, size, and complexity of the Institution's activity;
vi. distribution channels for products and services;
vii. degrees of risk associated with the countries and geographic areas of the Institution's operation.
b) assess the identified risks and determine their degree of probability and financial or reputational impact, taking into account, for this purpose, all relevant variables in the context of their specific operational reality, without prejudice to the fact that the following aspects must always be considered, at least:

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i. the objective of the business relationship, occasional transaction, or operation in general;
ii. the volume of assets to be deposited by a client or the volume of operations carried out;
iii. the regularity or duration of the business relationship.
c) define, parameterize, and implement control means and procedures that, given the size and organizational structure of the Institution, prove adequate for the mitigation of specific identified and assessed risks; d) permanently evaluate the sufficiency and effectiveness of the instituted control means and procedures.

5.3 For the identification of specific risk factors associated with persons of high-risk profiles, Institutions must take into account, at least, the following indicators:
a) the person of high-risk profile seeks to hide their identity to not be identified as such; b) suspicious behaviors, such as: the person of high-risk profile questions the Institution's money laundering and terrorist financing policy; avoids providing information about their sources of wealth or about the origin of their funds; the information they provide is inconsistent or incomplete when compared with their income declarations and makes fund transfers to other countries with which they do not appear to have a connection; c) regarding position: the person of high-risk profile has access or control over state assets, funds, policies, or operations, including the granting of licenses and concessions; does not reveal the nature of their current functions or functions they have previously held; has control or influence over government institutions. d) regarding the sector of activity: arms trade and defense industry; financial sector; public contracting; construction and public works; public health; mining and extractive sector; privatizations; public services; other types of government assistance. e) regarding transactions: deposits, withdrawals, or use of checks of high amounts; difficult distinction between personal or professional assets; financial activity is inconsistent with legitimate or expected activity; use of several bank accounts. f) regarding products and services: private banking; anonymous transactions; high-value business with foreigners; fiduciary services; correspondent accounts; precious metals and stones; luxury vehicles; high-segment real estate developments. g) regarding the country: countries classified with a high level of corruption; countries without legislation on the prevention of money laundering and terrorist financing; countries that have not signed or ratified anti-corruption agreements; countries that depend on the export of illicit goods; countries identified as having high levels of organized crime; sanctioned countries.

5.4 Institutions must review, at least on an annual basis, the currency and adequacy of their risk management model, so that it reflects any changes recorded in the Institution's operational reality.

5.5 The internal policies and/or procedures of Institutions regarding the management of money laundering and terrorist financing risks must be contained in a document or written record, which must detail:
a) the risks inherent to the specific activity of the Institution and how it identified and assessed them; b) the control means and procedures instituted and the adequacy of the same for the mitigation of existing risks;

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c) how the Institution monitors the adequacy and effectiveness of the implemented controls.

6. Sanctions
   Non-compliance with the mandatory norms established in this Guideline constitutes an offense punishable under the terms of the Law of the Bases of Financial Institutions and the Law on the Fight Against Money Laundering and Terrorist Financing.

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 its publication.

PUBLISH-
Luanda, November 16, 2016

THE GOVERNOR
VALTER FILIPE DUARTE DA SILVA