Instruction (Historical) No. 6/2020

Instruction No. 6/2020
Official Journal No. 2/2020 2nd Supplement • 2020/03/06
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Topics
Supervision :: Money Laundering
Mod. 99999911/T – 01/14
Index
Text of the Instruction
Annex to the Instruction
Annex to the Instruction
Text of the Instruction
Subject: Amends Instruction No. 5/2019 to include in the Report on the Prevention of Money Laundering and Terrorist Financing information regarding specific procedures to comply with Regulation (EU) 2015/847.

On January 30, 2019, the Bank of Portugal Instruction No. 5/2019 (“Instruction No. 5/2019”) was published, a document that defines the information requirements to be reported periodically to the Bank of Portugal by entities subject to its supervision in matters of prevention of money laundering and terrorist financing, under the terms and for the purposes provided for in Article 73 of the Bank of Portugal Notice No. 2/2018, of September 26 (“Notice No. 2/2018”).

Since the submission of the first Report on the Prevention of Money Laundering and Terrorist Financing (“RPB”) to the Bank of Portugal coincided with the implementation phase of the new Legal Regime for Payment Services and Electronic Money, approved by Decree-Law No. 91/2018, of November 12, and since the scope of application of that Regime, to a large extent, targets entities processing fund transfers, it was decided to defer for a later moment the inclusion in the RPB of elements regarding Regulation (EU) 2015/847 of the European Parliament and of the Council, of May 20, 2015, on information accompanying transfers of funds (“Regulation (EU) 2015/847”).

This Instruction thus adds a new part to the RPB, so that it now includes information regarding the specific procedures implemented by financial entities to comply with Regulation (EU) 2015/847 and deficiencies detected in their execution, in accordance with the provisions of point (m) of paragraph 3 of Article 73 of Notice No. 2/2018.

In accordance with paragraph 1 of Article 3 of Instruction No. 5/2019, the RPB must be sent by financial entities to the Bank of Portugal by February 28 of each year, reporting on the period between January 1 and December 31 of the previous year. However, justified by the changes to be introduced in the RPB model, Article 4 of this Instruction provides for a transitional rule that derogates, for the current year, from said rule, as it stipulates that the submission of the RPB regarding the period between January 1, 2019, and December 31, 2019, must occur by April 15, 2020.

This Instruction was subject to public consultation, in accordance with Article 101 of the Code of Administrative Procedure.

Thus, in the exercise of the competence conferred upon it by Article 17 of its Organic Law, by point (c) of paragraph 2 of Article 94 and point (b) of paragraph 2 of Article 95, both of Law No. 83/2017, of August 18, and by paragraph 2 of Article 73 of Notice No. 2/2018, the Bank of Portugal determines:

Instruction No. 6/2020 Official Journal No. 2/2020 2nd Supplement • 2020/03/06 Topics Supervision :: Money Laundering
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Mod. 99999911/T – 01/14

Article 1.
Object
This Instruction amends the Bank of Portugal Instruction No. 5/2019, of January 30 (“Instruction No. 5/2019”).

Article 2.
Amendments to Instruction No. 5/2019
1 — Articles 2 and 5 of Instruction No. 5/2019 are amended, which shall henceforth read as follows:

“Article 2.
[…]

[…]
[…]
a) […] b) […] c) […] d) Part 4 – Specific procedures to comply with Regulation (EU) 2015/847 of the European Parliament and of the Council, of May 20, 2015, on information accompanying transfers of funds (“Regulation (EU) 2015/847”); e) Part 5 – Self-Assessment Questionnaire; f) [previous point (e)] g) [previous point (f)]

Article 5.
[…]

[…]
[…]
a) […] b) […] c) […] d) […] e) Self-assessment questionnaire contained in Part 5 of the RPB, to which is added the preparation of a questionnaire by the Central Box, which shall pronounce itself on the SICAM globally considered; f) […]
[…]
[…]
[…]
[…]
[…]
[…]”

2 — The Annex to Instruction No. 5/2019 is amended, with the addition of a new Part 4 entitled “Specific procedures to comply with Regulation (EU) 2015/847” and with the renumbering of the Part entitled “Self-Assessment Questionnaire”:

“Part 4 - Specific procedures to comply with Regulation (EU) 2015/847

Fund transfers in which, during the reference period, the financial entity acted as the payment service provider of the orderer

1.1 Policies and procedures
Description of the policies, procedures, and controls defined and applied under Article 67 of Notice No. 2/2018, which ensure compliance with Articles 4 to 6 of Regulation (EU) 2015/847.

1.2. Automated mechanisms
Information on the existence of automated mechanisms that allow compliance with the provisions of paragraph 6 of Article 4 of Regulation (EU) 2015/847, with a description of their functioning.

Fund transfers in which, during the reference period, the financial entity acted as the payment service provider of the beneficiary

2.1 Policies and procedures
Description of the policies, procedures, and controls defined and applied under the provisions of Article 67 of Notice No. 2/2018, which ensure compliance with Articles 7 to 9 of Regulation (EU) 2015/847.

2.2 Messaging or payment and settlement systems
2.2.1 For the purposes of the provisions of paragraph 1 of Article 7 of Regulation (EU) 2015/847, and Article 68 of Notice No. 2/2018, indication of the following information:
a) Identification of the messaging or payment and settlement system(s) used; b) Indication of whether they comply with the provisions of point (b) of paragraph 2 of Article 68 of Notice No. 2/2018; c) If the answer to point (b) is negative, identification of the deficiencies detected and the control measures implemented for their correction.

2.3 Procedures to detect the omission or incompleteness of information on the orderer or beneficiary
2.3.1 For the purposes of the provisions of paragraph 2 of Article 7 of Regulation (EU) 2015/847 and Article 68 of Notice No. 2/2018, indication of the following information:
a) Existence or non-existence of the functionalities referred to in points (a) to (c) of paragraph 5 of Article 68 of Notice No. 2/2018; b) Identification of high-risk indicators that, in compliance with the provisions of paragraph 9 of Article 68 of Notice No. 2/2018, trigger real-time monitoring or ex post monitoring of fund transfers (including other indicators beyond those in paragraph 11 of the same article, if used); c) Indication of the number of fund transfers in which high-risk indicators were identified, with discrimination of the indicator in question; d) Deficiencies detected and control measures implemented for their correction.

2.4 Procedures for managing fund transfers where information is omitted, incomplete, or contains inadmissible characters or data
2.4.1. For the purposes of the provisions of paragraph 1 of Article 8 of Regulation (EU) 2015/847 and Article 69 of Notice No. 2/2018, indication of the following quantitative information:
a) Number of fund transfers rejected under paragraphs 2 and 3 of Article 69 of Notice No. 2/2018; b) Number of fund transfers suspended under paragraph 2 of Article 69 of Notice No. 2/2018 and which were subsequently rejected under paragraph 7 of the same article; c) Number of fund transfers suspended under paragraph 2 of Article 69 of Notice No. 2/2018 and which were subsequently executed under paragraph 7 of the same article; d) Number of fund transfers executed under paragraph 8 of Article 69 of Notice No. 2/2018, where a request for missing information was made (including fund transfers subject to ex post monitoring); e) Number of fund transfers in which each of the measures provided for in points (a) to (c) of paragraph 6 of Article 69 of Notice No. 2/2018 was applied (per measure).

2.5 Repeated non-compliance and measures
2.5.1. During the reference period, regarding payment service providers (“PSP”) subject to an internal risk procedure and treated as PSPs of repeated non-compliance, under paragraph 2 of Article 8 of Regulation (EU) 2015/847 and Article 70 of Notice No. 2/2018, indication of the following information:
a) Identification of the PSP (firm name or denomination); b) Country in which it is authorized; c) Identification of the measures adopted under paragraph 4 of Article 70 of Notice No. 2/2018; d) Indication whether the omission or incompleteness of information on the orderer or beneficiary gave rise to a suspicious transaction report, under Article 13 of Regulation (EU) 2015/847 and Article 150 of Law No. 83/2017.

Fund transfers in which, during the reference period, the financial entity acted as an intermediary payment service provider

3.1 Policies and procedures
Description of the policies, procedures, and controls defined and applied under the provisions of Article 67 of Notice No. 2/2018, which ensure compliance with Articles 10 to 13 of Regulation (EU) 2015/847.

3.2 Messaging or payment and settlement systems
3.2.1. For the purposes of the provisions of Article 10 and paragraph 1 of Article 11 of Regulation (EU) 2015/847, and Article 68 of Notice No. 2/2018, indication of the following information:
a) Identification of the messaging or payment and settlement system(s) used;

b) Indication of whether they comply with the provisions of point (b) of paragraph 2 of Article 68 of Notice No. 2/2018 and Article 71 of the same instrument. c) If the answer to point (b) is negative, identification of the deficiencies detected and the control measures implemented for their correction.

3.3 Procedures to detect the omission or incompleteness of information on the orderer or beneficiary
3.3.1 For the purposes of the provisions of paragraph 2 of Article 11 of Regulation (EU) 2015/847 and Article 68 of Notice No. 2/2018, indication of the following information:
a) Existence or non-existence of the functionalities referred to in points (a) to (c) of paragraph 5 of Article 68 of Notice No. 2/2018; b) Identification of high-risk indicators that, in compliance with the provisions of paragraph 9 of Article 68 of Notice No. 2/2018, trigger real-time monitoring or ex post monitoring of fund transfers (including other indicators beyond those in paragraph 11 of the same article, if used); c) Indication of the number of fund transfers in which high-risk indicators were identified, with discrimination of the indicator in question; d) Deficiencies detected and control measures implemented for their correction.

3.4 Procedures for managing fund transfers where information is omitted, incomplete, or contains inadmissible characters or data
3.4.1. For the purposes of the provisions of paragraph 1 of Article 12 of Regulation (EU) 2015/847 and Article 69 of Notice No. 2/2018, indication of the following quantitative information:
a) Number of fund transfers rejected under paragraphs 2 and 3 of Article 69 of Notice No. 2/2018; b) Number of fund transfers suspended under paragraph 2 of Article 69 of Notice No. 2/2018 and which were subsequently rejected under paragraph 7 of the same article; c) Number of fund transfers suspended under paragraph 2 of Article 69 of Notice No. 2/2018 and which were subsequently executed under paragraph 7 of the same article; d) Number of fund transfers executed under paragraph 8 of Article 69 of Notice No. 2/2018, where a request for missing information was made (including fund transfers subject to ex post monitoring); e) Number of fund transfers in which each of the measures provided for in points (a) to (c) of paragraph 6 of Article 69 of Notice No. 2/2018 was applied (per measure).

3.5 Repeated non-compliance and measures
3.5.1. During the reference period, regarding payment service providers (“PSP”) subject to an internal risk procedure and treated as PSPs of repeated non-compliance, under paragraph 2 of Article 12 of Regulation (EU) 2015/847 and Article 70 of Notice No. 2/2018, indication of the following information:
a) Identification of the PSP (firm name or denomination); b) Country in which it is authorized; c) Identification of the measures adopted under paragraph 4 of Article 70 of Notice No. 2/2018; d) Indication whether the omission or incompleteness of information on the orderer or beneficiary gave rise to a suspicious transaction report, under Article 13 of Regulation (EU) 2015/847 and Article 150 of Law No. 83/2017.

Part 5 - Self-Assessment Questionnaire
[…]”

Article 4.
Transitional Rule
Financial entities shall send, by April 15, 2020, the Report on the Prevention of Money Laundering and Terrorist Financing regarding the period between January 1, 2019, and December 31, 2019.

Article 5.
Republication
Instruction No. 5/2019 is republished in the annex, as amended by this Instruction.

Article 6.
Entry into force
This Instruction enters into force on the day following its publication.

Annex to Instruction No. 6/2020 Official Journal No. 2/2020 2nd Supplement • 2020/03/06
Topics Supervision :: Money Laundering
..................................................................................................................................................................................................
Mod. 99999911/T – 01/14

Annex to the Instruction
ANNEX
(to which Article 5 refers)
Republication of Instruction No. 5/2019
Subject: Model for annual single reporting in matters of prevention of money laundering and terrorist financing

Law No. 83/2017, of August 18 (“Law No. 83/2017”), establishes preventive and repressive measures to combat money laundering and terrorist financing (“ML/TF”), partially transposing into the internal legal order Directive 2015/849/EU of the European Parliament and of the Council, of May 20, 2015, on the prevention of the use of the financial system for the purposes of ML/TF. It also establishes, in that instrument, the measures for implementing Regulation (EU) 2015/847 of the European Parliament and of the Council, of May 20, 2015, on information on the orderer and beneficiary that must accompany transfers of funds.

Law No. 97/2017, of August 23, regulates the application and execution of restrictive measures approved by the United Nations Organization or the European Union and establishes the sanctioning regime applicable to the violation of these measures.

Both Law No. 83/2017, in its Article 94, and Law No. 97/2017, of August 23, in its Article 27, provide for the possibility of approving sectoral regulation, essentially intended to adapt the duties and obligations provided for in those cross-sectoral legal instruments to the concrete operational realities to which they apply.

Following the legal provisions mentioned above, the Bank of Portugal Notice No. 2/2018, of September 26 (“Notice No. 2/2018”), was approved, in matters of ML/TF prevention, a regulatory instrument that, among other aspects, defined:
a) The conditions for exercising the preventive ML/TF duties provided for in Chapters IV and V of Law No. 83/2017; b) The means and mechanisms necessary for financial entities to comply with the duties provided for in Law No. 97/2017, of August 23, with a view to the application and execution of restrictive measures approved by the United Nations Organization or the European Union; c) The measures that payment service providers must adopt to detect fund transfers where information on the orderer or beneficiary is omitted or incomplete and the appropriate procedures to manage fund transfers not accompanied by the information required by Regulation (EU) 2015/847.

Notice No. 2/2018 also revoked the following instruments:

Notice No. 5/2013, of December 18;

Notice No. 9/2012, of May 29;
Instruction No. 46/2012, of December 17;
Instruction No. 9/2017, of July 3.

Among the listed instruments, Notice No. 9/2012 of the Bank of Portugal, of May 29, stands out, which approved the Report on the Prevention of Money Laundering and Terrorist Financing (“RPB”) and Instruction No. 46/2012, of December 17, which approved the Self-Assessment Questionnaire (“QAA”), with their annual completion and submission to the Bank of Portugal through the BPnet system being established.

In the exercise of its regulatory and supervisory functions, it is the responsibility of the Bank of Portugal to ensure that supervised entities have solid ML/TF prevention systems, so that through the submission of periodic reports, it is intended to obtain systematic information on the tools and procedures implemented by supervised entities in matters of ML/TF prevention.

The RPB and QAA now give way to a single report, designated as the “Report on the Prevention of Money Laundering and Terrorist Financing”, which will bring together information that was previously transmitted to the Bank of Portugal through two distinct mandatory reports.

In the reformulation of the report in question, it was sought, on the one hand, to adjust the content of this instrument to the assessment of compliance with the new legal and regulatory framework applicable, and, on the other hand, to collect uniform and quantitative information suitable for comparative analyses between sectors and subsectors subject to the supervision of the Bank of Portugal.

The Bank of Portugal also had the concern of guiding the design of this Instruction in conformity with the principles of proportionality, adequacy, and risk-based supervision.

Financial entities will thus be obliged, under point (d) of paragraph 2 of Article 53 of Law No. 83/2017, to comply with the periodic communication duty established in this Instruction, under penalty of incurring non-compliance provided for and punishable by Chapter XII of Law No. 83/2017.

It should be noted that this Instruction was subject to public consultation, in accordance with Article 101 of the Code of Administrative Procedure, and several of the contributions presented were accepted in the final text of this regulatory instrument.

Thus, in the exercise of the competence conferred upon it by Article 17 of its Organic Law, by point (c) of paragraph 2 of Article 94 and point (b) of paragraph 2 of Article 95, both of Law No. 83/2017, and by paragraph 2 of Article 73 of Notice No. 2/2018, the Bank of Portugal determines the following:

Article 1.
Object and scope of application

This Instruction defines the information requirements to be reported periodically to the Bank of Portugal by entities subject to its supervision in matters of ML/TF prevention.
The addressees of the provisions of this Instruction are the financial entities provided for in Article 3 of Law No. 83/2017, provided they are subject to the supervision of the Bank of Portugal in accordance with the provisions of Articles 86 and 88 of the same legal instrument.

Article 2.
Report on the Prevention of Money Laundering and Terrorist Financing

Financial entities must annually send to the Bank of Portugal a specific report on their internal control system for the prevention of money laundering and terrorist financing, hereinafter designated as “RPB”, containing the information provided for in the Annex to this Instruction.
The RPB is composed of:
a) Part 1 – Main body; b) Part 2 – Payment Institutions and Electronic Money Institutions with headquarters in Portugal; c) Part 3 – Payment Institutions and Electronic Money Institutions with headquarters abroad; d) Part 4 – Specific procedures to comply with Regulation (EU) 2015/847 of the European Parliament and of the Council, of May 20, 2015, on information accompanying transfers of funds (“Regulation (EU) 2015/847”); e) Part 5 – Self-Assessment Questionnaire; f) Annex I – Global opinion of the administrative body of the financial entity; g) Annex II – Opinion of the supervisory body.

Article 3.
Submission of the RPB

The RPB must be sent to the Bank of Portugal by February 28 of each year, reporting on the period between January 1 and December 31 of the previous year.
The submission of the RPB must be carried out through the BPnet system, regulated by Instruction No. 5/2016, published in the Official Journal No. 4/2016, of April 15, 2016, by completing the corresponding electronic form.
In cases of force majeure or technical unavailability of the BPnet system, institutions may exceptionally use email to send the RPB, for which they must:
a) Previously request the Bank of Portugal to make the corresponding file available, through a message of cor

Instruction (Historical) No. 6/2020

Lineage: Superseded

Timeline