Instruction No. 001/19-GV/DAJ on the Organization of BFM's Internal Framework for Combating Money Laundering and Terrorist Financing

INSTRUCTION No. 001/19- GV/DAJ
ON THE ORGANIZATION OF BFM'S INTERNAL FRAMEWORK FOR COMBATING MONEY LAUNDERING AND TERRORIST FINANCING

The Governor of Banky Foiben’i Madagasikara,

Having regard to Law No. 2018-043 of February 13, 2019 on the fight against money laundering and terrorist financing; Having regard to Law No. 2014-005 of July 17, 2015 against terrorism and organized transnational crime; Having regard to Law No. 2016-004 of July 29, 2016, supplemented by Law No. 2016-057 of February 2, 2017, establishing the Statutes of Banky Foiben’i Madagasikara; Having regard to Decree No. 2014-1684 of October 29, 2014 appointing the Governor of Banky Foiben’i Madagasikara; Having regard to Decree No. 2015-050 of February 3, 2015 on the National Structure and Orientation for the Fight against Terrorism (SNOLT); Having regard to Decree No. 2015-1036 of June 30, 2015 repealing Decree No. 2007-510 of June 4, 2007 on the creation, organization, and functioning of the "Malagasy Agency for the Fight against Money Laundering and Terrorist Financing" named "SAMIFIN";

DECIDES:

Statement of Purpose

Within the framework of its modernization aimed at in its 2015-2019 consolidated strategic plan, Banky Foiben’i Madagasikara (BFM) intends to clean up the Malagasy financial sector. The fight against money laundering and terrorist financing (LAB/FT) at the level of the banking sector in general and within BFM in particular is among its priorities.

Conscious that financial solidity and the harmonious life of a modern country always pass through the production of revenues from formal sectors whose resources are identifiable and sound, adopting good rules and international recommendations, given its missions and attributions, BFM adopts a policy on the fight against money laundering and terrorist financing (LAB/FT) setting out the devices to be followed in the practical implementation of the principles, processes, and procedure manual constituting the reference framework for the achievement of the fight object of this instruction.

BFM is convinced that compliance with international and national standards governing the fight against money laundering and terrorist financing (LAB/FT) constitutes an indispensable basis for underpinning its internal policy related thereto for the implementation of its own actions.

To this end, BFM adopts a risk-based approach to ensure the compliance of its internal anti-money laundering framework with international standards.

An internal control system comprising a component on the fight against money laundering is put in place to prevent, detect, block, and report any activity potentially linked to money laundering and terrorist financing.

In this capacity, BFM implements its policy on the fight against money laundering and terrorist financing (LAB/FT) recorded in a document reserved for this purpose, which is adopted with a view to:

• prescribing instructions to ground any action in compliance with current international requirements to effectively contain risks related to money laundering and terrorist financing (LAB/FT);
• preventing, detecting, and blocking the use by clients (business relationships) referred to as "BFM correspondents" of any act that could lead to money laundering and terrorist financing;
• protecting the reputation of BFM.

Chapter I: General Provisions

Section 1: Object and Scope of Application

§ 1: Object of the Instruction

Article 1:
This instruction aims to define and set up the internal framework of Banky Foiben’i Madagasikara (BFM) against money laundering, terrorist financing (LAB/FT), and the proliferation of weapons of mass destruction in order to prevent the use of economic, banking, and financial circuits for the recycling of capital or any other goods of illicit origin.

§ 2: Scope of Application

Article 2:
This instruction is applicable to any internal operation of BFM whose execution involves a deposit, making available, payment, or exchange effected by a person internal or external to BFM or involves any other movement of capital or other goods.

Section 2: Definitions

Article 3:
For the purposes of this instruction, the following terms are understood as:

"Usual Activity": the activity carried out permanently by the operational directorates of BFM to achieve the missions and attributions provided for by the law establishing its statutes.

"Occasional Activity": an activity assumed in a punctual or unusual manner.

"Beneficial Owner": any natural person who ultimately owns or controls a client and/or a natural person on whose behalf an operation is carried out. This designation also includes any person who ultimately exercises effective control over a legal person or another legal structure.

"Goods": types of assets, corporeal or incorporeal, movable or immovable, tangible or intangible, fungible or non-fungible, as well as legal acts or documents attesting to the ownership of these assets or rights related thereto.

"Money Laundering": the following acts:

• the conversion or transfer of goods with the aim of concealing or disguising their illicit origin or helping any person involved in the commission of the principal offense to escape the legal consequences of their acts;
• the concealment or disguise of the nature, origin, location, disposition, movement, or true ownership of goods of illicit origin;
• the acquisition, possession, or use of goods by a person who knows that said goods constitute the proceeds of a felony or crime.

"Client": any natural or legal person who has a business relationship and/or holds one or more account(s) opened in the books of BFM, notably the Treasury and its subdivisions, credit institutions, and other institutions known internally as "correspondents." Persons who exchange banknotes at BFM counters. Persons benefiting from making available operations are also business relationships.

"Usual Client": the client holding an account opened in the books of BFM.

"Occasional Client": a person who does not hold an account opened with BFM or does not use their account opened in the books of BFM and who addresses BFM for the execution of a punctual banking operation.

"Client with a High-Risk Profile": a client whose activity, nature of operations initiated, or country of residence makes them, among other things, more exposed to money laundering.

The following are also considered high-risk clients:

• the business relationship, the correspondent who does not have sufficient information to trace the origin of funds and the beneficial owners of their operations, who does not cooperate with requests for justification of their operations;
• the occasional client, as well as the client who refuses to comply with the vigilance devices established by BFM.

"Confiscation": the permanent deprivation of goods or products derived from an offense or means used to commit it, by decision of a court or other competent entity.

"Deposit": the contract by which a person called the "depositor" hands over a movable thing to another person called the "depositary" who accepts to keep it and undertakes to return it when requested by the depositor.

"Internal Framework": the set of (i) texts and (ii) tools used by the actors constituting the mechanism for the functioning of the fight against money laundering and terrorist financing (LAB/FT).

"Exchange": the act by which a person cedes a good to another person in exchange for the handing over by the latter of another good.

"Fictitious Entity": a company in which the persons who control it apparently by presenting themselves as partners, shareholders, or in the capacity of corporate officers are in fact only nominees or accomplices of other persons, themselves partners or completely unrelated to the company, or which does not have physical existence, or which does not carry out operations. The fictitious entity is qualified as a "shell," "screen company," or "empty shell" when the created company does not appear as a screen masking the activity of another legal person, or when the partners of a subsidiary are only nominees of the parent company.

"Terrorist Financing": any act committed by a natural or legal person who, by any means whatsoever, directly or indirectly, deliberately provides or collects goods, funds, and other financial resources with the intention of using them or knowing that they will be useful, in whole or in part, for the commission of:

• one or more terrorist acts;
• one or more terrorist acts by a terrorist organization;
• one or more terrorist acts by a terrorist or a group of terrorists.

"Freezing or Seizure": the temporary prohibition of the transfer, conversion, disposition, or movement of goods, and/or the temporary assumption of custody or control of goods by decision of a court or other competent administration.

"Making Available": an act by which a person called the "ordering party" gives an instruction to another person to put in the possession of a third person called the "beneficiary" a good or a determined sum of money.

"Complex Operation": any banking operation which, although not strictly falling within the scope of a standard Suspicious Transaction Report (STR), presents the following characteristics:

• the unit amount of the operation or the total of all operations relative to the normal activity of the person is higher than the threshold fixed by current regulations, or the amount of operations usually carried out by the ordering party;
• the operation takes place under unusual conditions;
• the transaction does not appear to have an economic justification or an apparent lawful purpose.

The essential element of the complexity of the operation lies, in particular, in the inadequacy between the operation in question and the client's usual professional or economic activity, or their assets, as well as relative to the usual movements of the account.

"Sensitive Operation": any banking operation that presents risks with regard to the fight against money laundering of criminal origin or terrorist financing.

"Payment": the voluntary execution of an obligation whatever its object.

"Third Party", "Correspondent", or "Client": any person, natural or legal, with whom BFM has a business relationship by application of the provisions of its statutes and implementing texts, notably its internal correspondents, correspondent banks, and individuals.

Chapter II: Organization of the Internal Framework

Article 4:
With a view to establishing the effectiveness of the internal anti-money laundering framework, a function for the fight against money laundering and terrorist financing (LAB/FT) is created within BFM, equipped with its own organization.

A service note taken by the Governor organizes its functioning and the realization of the mission entrusted to it follows BFM's policy and procedures.

The internal framework for the fight against money laundering of criminal origin and terrorist financing within BFM is composed of the following structures:

• the Central Directorate for the Fight against Money Laundering, hereinafter referred to as "the Central Directorate";
• the directorates of BFM concerned by the operations referred to in Article 2, designated as "Corresponding Directorates for the Fight against Money Laundering";
• the Units in charge of the fight against money laundering within the Corresponding Directorates for the Fight against Money Laundering, hereinafter referred to as "LAB/FT Unit".

Section 1: The Central Directorate

Article 5:
The Central Directorate is responsible for:

• the design, implementation, and monitoring within BFM of the framework for the fight against money laundering of criminal origin and terrorist financing;
• monitoring the requests of the Corresponding Directorates for the Fight against Money Laundering regarding operations for the fight against money laundering of criminal origin and terrorist financing;
• the reception and final processing of any Suspicious Transaction Report (STR) for money laundering of criminal origin and terrorist financing emanating from the Corresponding Directorates in the execution of their operations;
• the relationship with SAMIFIN after approval by BFM Authorities;
• the processing of all requests from public powers, other subdivisions of the State or government agencies, or other BFM counterparts in this matter, including requests for information or investigations, freezing, seizure, and confiscation measures emanating from competent administrative or judicial authorities;
• the analysis and sending for centralization of information to the Directorate attributive of BFM's information centers.

Article 6:
By application of the provisions of Article 5, in collaboration with the Corresponding Directorates for the Fight against Money Laundering concerned and without the list being exhaustive, the Central Directorate is particularly responsible for:

• drafting the policy and strategy, measures, and internal procedures in matters of the fight against money laundering and terrorist financing;
• assisting the Corresponding Directorates for the Fight against Money Laundering and strengthening the capacity of BFM personnel in matters of anti-money laundering;
• receiving Suspicious Transaction Reports or reports on suspicious operations (STRs) transmitted by the Corresponding Directorates for the Fight against Money Laundering and examining their content;
• deepening and completing the analysis of accounts and operations transmitted by the Corresponding Directorates for the Fight against Money Laundering. If necessary, the Central Directorate requests the Corresponding Directorates for the Fight against Money Laundering concerned to communicate additional information that could lead to the proper handling of the file;
• consolidating and correlating information regarding Suspicious Transaction Reports communicated by different Corresponding Directorates for the Fight against Money Laundering on the same client or group of business relationships;
• transmitting to SAMIFIN the Suspicious Transaction Reports supported by supporting documents;
• carrying out an in-depth examination of any complex operation and transmitting to SAMIFIN all documents and information related thereto;
• proposing to BFM Authorities the fate of relationships with clients presenting a high-risk profile in terms of the fight against money laundering and terrorist financing;
• ensuring regular monitoring of operations and accounts of clients who have been the subject of a Suspicious Transaction Report or presenting a high-risk profile and keeping SAMIFIN informed of any significant developments recorded;
• ensuring the follow-up of Suspicious Transaction Reports made to SAMIFIN.

Article 7:
After studying the quarterly reports of the Corresponding Directorates for the Fight against Money Laundering, the Central Directorate presents to BFM Authorities a synthesis report on the functioning of the framework.

At the end of the first quarter of the year following each elapsed year, an annual report on the fight against money laundering is presented to BFM Authorities.

Section 2: Corresponding Directorates for the Fight against Money Laundering

Article 8:
For the purposes of this instruction, Corresponding Directorates for the Fight against Money Laundering are all directorates within BFM whose usual or occasional activities consist of receiving deposits, making funds available, effecting payments or exchanges of funds operated by a third party, or managing any other movement of capital or other goods.

§ 1: Designation of Corresponding Directorates for the Fight against Money Laundering

Article 9:
The Corresponding Directorates for the Fight against Money Laundering are designated by a service note taken by the Governor of BFM.

§ 2: Attributions of Corresponding Directorates for the Fight against Money Laundering

Article 10:
The Corresponding Directorates for the Fight against Money Laundering are responsible for:

• analyzing suspicious operations identified by them;
• transmitting their motivated suspicions to the Central Directorate accompanied by all supporting documents;
• carrying out an examination of any complex operation and transmitting to the Central Directorate all documents, supporting documents, and information related thereto;
• ensuring regular monitoring of operations and accounts of clients who have been the subject of a Suspicious Transaction Report or presenting a high-risk profile and keeping the Central Directorate informed of any significant developments recorded.

Article 11:
Following a model established by the Central Directorate, the Corresponding Directorates for the Fight against Money Laundering prepare a periodic report on the activity carried out in the fight against money laundering on a quarterly basis.

In addition to the observation of facts, the report contains observations on the anti-money laundering framework put in place at the level of each Directorate and the data transmitted to the Central Directorate.

The periodic report finalized on the last working day of the end of each current calendar quarter is deliverable to the Central Directorate on the last working day of the months of April, July, and October of the current year. The declaration for the month of December of the current year is made on the last working day of the month of January of the following year.

Section 3: LAB/FT Unit

Article 12:
LAB/FT Units are all formalized subdivisions (departments, services, offices, or pools) constituting a Corresponding Directorate for the Fight against Money Laundering whose usual or occasional attributions relate to the operations defined by Article 8 above.

§ 1: Attributions of the LAB/FT Unit

Article 13:
Under the control of their respective hierarchies and Directorates, the LAB/FT Units are invested with a general mission of anti-money laundering and vigilance on the respective operations of each concerned Directorate.

Chapter III: Obligation of Vigilance

Article 14:
For the application of the provisions of Article 13, each LAB/FT Unit is, in particular, required to:

• be vigilant during the opening and functioning of an account opened with BFM as well as during the execution of operations processed daily or occasionally with customers. On this occasion, it verifies if the volume of funds in question actually corresponds to the criteria defined concerning the client;
• communicate to its Directorate information on suspicious operations and the supporting documents related thereto;
• correlate the documents and information received from clients with the elements appearing in their files.

In the framework of the realization of its attributions enumerated above, each LAB/FT Unit strictly applies the norms and procedures applicable within BFM.

Article 15:
The obligation of vigilance is of general scope. It is exercised on all categories of usual or occasional clients, natural or legal persons, account holders or agents, ordering parties, intermediaries, or beneficiaries of operations.

Article 16:
The LAB/FT Unit belonging to a Corresponding Directorate for the Fight against Money Laundering abstains from carrying out any operation with a client when the identity of the latter could not be verified or when it is incomplete or manifestly fictitious.

Section 1: Client Identification Obligation

§ 1: Client Identity

Article 17:
Whether a natural or legal person, the identification of the usual client is carried out based on all useful documents.

The documents required from each client for the opening of an account with BFM differ according to their legal status:

• it concerns administrative acts defined by way of a service note of the Governor of BFM for the Public Treasury and its subdivisions;
• it concerns the certified copy of the approval decision by the Banking and Financial Supervision Commission (CSBF) for credit institutions and assimilated financial institutions established in Madagascar;
• it concerns the certified copy of the approval decision of the regulation and supervision authority of the country of establishment for foreign credit institutions and assimilated financial institutions;
• it concerns the copies of constitution acts duly registered for other structures;
• it concerns identity documents for natural persons.

The identification of each client is carried out in conformity with the protocol established in BFM's procedure manuals and materialized in the convention governing the opening and functioning of accounts opened with BFM.

For legal persons, identification extends to shareholders and members of the administration and management bodies of entities which effectively control the structures that have accounts opened with BFM or carry out transactions with BFM.

Each LAB/FT Unit is required to carefully examine the documents produced by the client to ensure their apparent regularity and identify any potential anomalies.

Article 18:
When executing an operation with BFM, the relevant AML/CFT Unit collects all elements allowing the identification of the occasional client by presenting the original of a valid official identity document bearing their photograph. In this regard, this refers to the national identity card for nationals, the resident identity card for foreign residents in Madagascar, and the passport for non-resident foreigners.

Article 19:
When an occasional client performs one of the operations whose nature and amount fall under those fixed by a legal or regulatory provision, the relevant AML/CFT Unit collects all documents regarding their identity, physical address, economic activity, the origin of the funds involved in the transaction, and the purpose of the operation.

Article 20:
In cases where the client does not appear to be acting for their own account, the relevant AML/CFT Unit is required to inquire about the true identity of the persons for whose benefit the account is opened or the operation is carried out. With the assistance of its hierarchy and, as necessary, the support of the Central Direction, the relevant AML/CFT Unit is required to proceed with the identification of the principals and agents involved in the operation under the same conditions provided for habitual or occasional clientele.

§ 2: Client Identification by Profession

Article 21:
In all their operations, the corresponding anti-money laundering Directions are required to know the usual profession of their clients.

Article 22:
Taking into account the usual volume of a client's activity over a considered period, the corresponding anti-money laundering Direction concerned is required to know, during an operation performed by the client, to what extent the volume of funds involved in the operation actually corresponds to the income from their activity.

Section 2: Client Profiling and Monitoring of Accounts and Operations

Article 23:
In collaboration with the Central Direction, each corresponding anti-money laundering Direction determines the profile of its habitual clients based on criteria such as their activities, the types and volume of transactions performed, the origin of the transactions, and the destination of the funds.

Article 24:
With an information system installed at BFM, relative to predefined profiles by client type, the corresponding anti-money laundering Directions are required to ensure monitoring of operations and the conditions of account functioning. This monitoring consists notably of:

• recording fund movements involving significant amounts or fund movements of insignificant amounts repeated;
• tracking the frequency of operations and the importance of fund transfers;
• verifying the origin and destination of funds.

Article 25:
In the exercise of their monitoring mission for all categories of clients and without the list being exhaustive, the corresponding anti-money laundering Directions are required to take into particular account the following alert criteria:

• "client" criteria;
• "operations and/or account functioning" criteria;
• "origins and destination of funds" criteria.
  As necessary, the criterion categories mentioned above are specified by circular note.

Article 26:
The corresponding anti-money laundering Directions concerned proceed with particular and close monitoring of sensitive operations of banking correspondents, specific activities, and financial relations with countries presenting high risk. The indicative list of these operations, clients, activities, and high-risk countries, as well as the additional monitoring measures adopted or to be adopted, are established by the Central Direction and fixed by circular note.

Article 27:
In the case where complex operations are observed, the corresponding anti-money laundering Direction collects the necessary documents and information from the client which justify the identity of the beneficiary, the purpose of the operation, and the origin and destination of the funds concerned. If the justifications provided by the client prove sufficient, the corresponding anti-money laundering Direction concerned records all information concerning the operation on a form following the model fixed by the Central Direction at the end of the examination of the complex operation. After necessary action, the form containing information on each complex operation is transmitted, without delay, to the Central Direction. In the event that the client does not provide the required information, or if the justifications communicated by the client are insufficient, the corresponding anti-money laundering Direction concerned immediately reports its suspicions to the Central Direction.

Article 28:
The corresponding anti-money laundering Directions are required to ensure particular monitoring of accounts and/or operations performed by clients presenting a high-risk profile.
To this end, it is the responsibility of the corresponding anti-money laundering Directions to require from the concerned clients the documents necessary for said monitoring.

Section 3: Effect of Monitoring of Accounts and Operations

Article 29:
The Central Direction informs all corresponding anti-money laundering Directions of the identity of natural and legal persons with whom no banking operation can be realized and regularly reports this to the BFM Authorities.

Article 30:
The corresponding anti-money laundering Direction responsible for executing transfers to or from abroad is subject to the client identification obligations as provided by financial regulation, including Articles 17 to 20 of this Instruction, and by international standards admitted regarding information to be collected and communicated in matters of international payments and settlements.

Article 31:
In the case where the frequency of operations or account movements of the client does not correspond to their profile as established by BFM, the corresponding anti-money laundering Direction concerned proceeds with a thorough examination of their situation by collecting all necessary documents or information for monitoring. Any cash deposit made by a client to whom a request for communication of documents or information is addressed, is subject to an accounting entry in a suspense account by the corresponding anti-money laundering Direction concerned. In the event of the client's failure to provide all information likely to fully justify their operations to the corresponding anti-money laundering Direction concerned, the latter immediately communicates its suspicions to the Central Direction. In all cases, the information obtained is retained by the corresponding anti-money laundering Direction concerned.

Article 32:
In the absence of valid reasons provided by a client, the suspicious nature of an account's functioning, or of certain operations in particular, gives rise to:

• a warning to the author of the suspicious banking operations;
• the closure of the account, after opinion of the Central Direction.

Article 33:
The movements of accounts and/or operations of clients presenting high risk are subject to a quarterly report established by each corresponding anti-money laundering Direction. The report is communicated to the Central Direction. In the event of detection of a suspicious operation, the corresponding anti-money laundering Direction concerned communicates the information to the Central Direction without delay.

Article 34:
Upon receipt of a transfer, if it is observed that the information relating to the order giver or the recipient, or still the possible intermediaries in the operation, are non-existent or incomplete, or if an intervener is listed on the national and/or international blacklist in matters of combating money laundering, then, it is necessary to suspend the execution of the operation.

In the event of non-existence of information or incomplete information on the order giver, the identity of the corresponding bank domiciliary of the operation in question is required with the data concerning it.
In the case where the order giver and/or the beneficiary or still the possible intermediary in an operation is listed on the national and/or international blacklist in matters of combating money laundering, the transfer is returned to the corresponding domiciliary bank without it being received treatment by the corresponding anti-money laundering Direction concerned. The Central Direction is informed of the situation by the corresponding anti-money laundering Direction concerned, which also reports to the BFM Authorities for decision on the follow-up to be reserved for the operation.

Chapter IV: Obligation to Declare Suspicion
Section 1: Declarative Obligation of Suspicion of Corresponding Anti-Money Laundering Directions to the Central Direction

Article 35:
The corresponding anti-money laundering Directions are charged with proceeding with declarations of any suspicion to the Central Direction under the conditions fixed by this Instruction and/or, as necessary, by the Central Direction, in particular when:

• the funds or operations are suspected by the AML/CFT Units to be linked to money laundering and/or terrorist financing;
• any operation whose identity of the order giver or beneficiary, within the meaning of the conditions fixed by Article 17, is doubtful;
• information likely to modify the assessment made on a client or file during the initial suspicion declaration arises;
• suspicion declarations made to the Central Direction also concern operations whose execution is already effective.

Article 36:
The corresponding anti-money laundering Directions are required to communicate immediately to the Central Direction their suspicions regarding the cases referred to in Article 35.

Article 37:
The referral to the Central Direction must be carried out by the corresponding anti-money laundering Directions as soon as a suspicion appears and without it being necessary to justify an irrefutable beginning of proof that the sums in question or the operations mentioned are linked to one of the underlying infractions of money laundering as follows:

• drug trafficking and psychotropic substances;
• human trafficking and immigrant trafficking including child labor and unemancipated minors;
• illicit trafficking of arms and ammunition;
• corruption, extortion, influence peddling, and misappropriation of public and private assets;
• terrorism infractions;
• counterfeiting or falsification of currency or public credit instruments or other means of payment;
• tax evasion and/or customs fraud.

Article 38:
To ground their suspicion, the corresponding anti-money laundering Directions must base their opinion on money laundering indicators resulting from the sensitive operations referred to in Article 26, taking particular account of the profile of the client or the concerned banking correspondent, the type of operations performed, and their respective and total amounts over a determined period.

Article 39:
The obligation of professional secrecy provided for in Article 78 of the law governing the statutes of BFM applies to its personnel for operations linked to the fight against money laundering and terrorist financing. In particular, under penalty of breach of trust, it is forbidden to bring to the knowledge of the client or third parties any information relating to suspicions, suspicion declarations, or the follow-up reserved for operations.

Section 2: Modalities of Suspicion Declaration to the Central Direction

Article 40:
The corresponding anti-money laundering Directions inform the Central Direction of their suspicions concerning any suspicious operation not yet executed or not yet resolved.
In this case, the information must be sent by the corresponding anti-money laundering Direction to the Central Direction as soon as possible, which in no case exceeds a deadline of two working days.

Article 41:
Even in the case of impossibility to suspend the execution of a determined operation or series of operations, the corresponding anti-money laundering Directions inform the Central Direction of their suspicions regarding said operation or said determined series of operations. In case of uncertainty regarding the possibility of delaying the execution of the operation or the series of suspicious operations, the corresponding anti-money laundering Direction concerned seizes the Central Direction without delay, and it is incumbent on the latter to report to the BFM Authorities.

Article 42:
The form containing information regarding suspicions is established, as the case may be, in accordance with the model fixed in Annex 1, 2, or 3.

Section 3: Suspicion Declaration to SAMIFIN

Article 43:
After analysis of declarations made by the corresponding anti-money laundering Directions, the Central Direction declares to SAMIFIN all suspicious operations detected at BFM in accordance with current legislation and the methodology related thereto. For the processing of files relating to BFM, the Central Direction establishes a collaboration mechanism with SAMIFIN to facilitate the transmission of suspicion declarations and, if necessary, ensure the fluidity of exchanges within the framework of work related to combating money laundering of criminal origin and terrorist financing. If necessary, a cooperation agreement is to be signed between the two institutions.

Chapter V: Obligation of Follow-up by the Central Direction from Declaration to SAMIFIN

Article 44:
The Central Direction sets up a permanent link with SAMIFIN for the purpose of monitoring the declaration of suspicious operations detected at BFM.
The Central Direction reports to the BFM Authorities on the legal status of files transmitted to SAMIFIN.

Chapter VI: Obligation to Update and Preserve Documents
Section 1: Obligation to Update Documents

Article 45:
At the end of its contact and during its relationship with each client or third party, each corresponding anti-money laundering Direction updates and regularly verifies the validity of the information and documents it possesses on the business relationship in its files. To this end, each corresponding anti-money laundering Direction ensures the update and renewal of documents allowing the identification of the physical person client when these elements come to expiration.

Article 46:
Each corresponding anti-money laundering Direction ensures regular updating of files based on regular control to know any changes in the identity of the person authorized to manage the account and perform operations at BFM and the financial center, the composition of the share capital of the entity (shareholding), and the distribution of voting rights within the entity and the composition of its administration, management, and control bodies. The changes thus observed are recorded on an information form to be added to the client's file.

Article 47:
The updating of documents is also required upon modification of international and national standards in force regarding client identification and upon observation of a significant change in the functioning modalities of an account.

Section 2: Obligation to Preserve Documents

Article 48:
Each corresponding anti-money laundering Direction retains during its business relationship with each client the documents allowing their identification and that of their possible agent or principal.
Without prejudice to provisions fixing longer retention periods, and even after cessation of the business relationship, each corresponding anti-money laundering Direction concerned by a determined operation retains for ten (10) years

from the date of its execution the documents relating to operations performed with its clients.
Each corresponding anti-money laundering Direction also retains, for the same duration, documents containing complete information on:

• its habitual clients from the date of closure of their accounts;
• its occasional clients from the date of cessation of the relationship;
• the order givers of operations.
  Each corresponding anti-money laundering Direction concerned sets up, for this purpose, in collaboration with the Central Direction, the Direction in charge of information preservation, and the Information Systems Direction, an automated system for document preservation and archiving allowing exact and individualized traceability of executed operations. The information system set up allows the identification of agents who executed or controlled the operations in question.

Article 49:
The transmission of information made by each corresponding anti-money laundering Direction to the Central Direction is carried out according to the modalities fixed by the latter.
The information indicated above is transmitted by the Central Direction to the Documentation and Information Central Direction.

Chapter VII: Control of the Internal Framework
Section 1: Control by the Central Direction

Article 50:
For the proper functioning of BFM's internal AML/CFT framework, the Central Direction proceeds monthly with the legal control of the entire system to verify the coherence of the system, the conformity, and the adequacy between the AML/CFT management policy, the process, and the procedure manual established for this purpose. The Central Direction controls the different levels of compliance in terms of AML/CFT within each corresponding anti-money laundering Direction. The associated risk is materialized by a money laundering and terrorist financing risk map. At the end of each periodic control, the Central Direction formulates recommendations to the BFM Authorities for validation.

Article 51:
The recommendations having received validation from the BFM Authorities are transmitted by the Central Direction to the corresponding anti-money laundering Directions for implementation.

Section 2: Control by the Risk and Compliance Control Direction (DCC)

Article 52:
In application of the general principles of BFM's internal control as adopted by the Board of Directors, the Risk and Compliance Control Direction (DCC) verifies to what extent the operations of the Central Direction, the corresponding anti-money laundering Directions with their respective AML Units are in compliance.

Article 53:
Referring to the AML/CFT risk management policy and the general principles of BFM's internal control, the DCC issues observations and recommendations to the Central Direction following its control and verifies their application.

Section 3: External Control of BFM's Internal AML/CFT Framework

Article 54:
At the request of BFM, its internal AML/CFT framework may be subject to external control by a specialized organization in this matter.

Article 55:
Following the audit mission requested by BFM, the specialized organization required to proceed with the control of its internal AML/CFT framework formulates opinions so that the functioning of the entire system contributes exactly to the realization of the policy adopted on the management of said framework.

Chapter VIII: Amendment of BFM's Internal AML/CFT Framework

Article 56:
If necessary, following the controls object of Chapter VII above, BFM's internal AML/CFT framework is amended annually.

Chapter IX: Report to the Board of Directors

Article 57:
BFM's internal AML/CFT framework is subject to a periodic report from the Audit Committee to the Board of Directors according to the policy and procedure established for this purpose.

Chapter X: Sanctions and Disciplinary Measures

Article 58:
Without prejudice to the application of Law No. 2018-043 of February 13, 2019 on the fight against money laundering and terrorist financing and Law No. 2014-005 of July 17, 2014 against terrorism and organized transnational crime, any breach of the provisions of this Instruction exposes its author to professional sanctions provided for by the personnel statute and the internal regulations of BFM.

Article 59:
AML/CFT interveners and BFM personnel may request, at any time, through their respective Directions, opinions from the Central Direction on a specific subject relating to AML/CFT.

Chapter XI: Diverse Provisions

Article 60:
Depending on the needs of the corresponding anti-money laundering Directions, awareness and capacity-building actions regarding the fight against money laundering and terrorist financing are organized within BFM at the request of the Central Direction. The corresponding anti-money laundering Directions submit their training needs to the Central Direction. The Central Direction assesses the request to determine the follow-up to be given.

Article 61:
As necessary, service notes and circular notes are taken in application of this Instruction.

Article 62:
For the proper functioning of the internal AML/CFT framework, the interveners designated by Article 4 above conform to the procedure manual established for this purpose.

Chapter XII: Final Provisions

Article 63:
The provisions of this Instruction enter into force as of the date of its signature.
Antananarivo, May 2, 2019
THE GOVERNOR
ALAIN H. RASOLOFONDRAIBE