Instruction No. 01/2007/RB on the Fight Against Money Laundering within Financial Institutions

The Governor of the Central Bank of West African States (BCEAO), Having regard to the Treaty of November 14, 1973 establishing the West African Monetary Union (WAMU), particularly Article 22; Having regard to the Treaty of January 10, 1994 establishing the West African Economic and Monetary Union (UEMOA), particularly Articles 6, 7, 16, 21, 42, 43, 97, 98 and 113; Having regard to the Statutes of the Central Bank of West African States, particularly Articles 27 and 44; Having regard to Directive No. 07/2002/CM/UEMOA of September 19, 2002 on the fight against money laundering in the Member States of the West African Economic and Monetary Union (UEMOA); Having regard to the Uniform Act on the fight against money laundering in the Member States of the West African Economic and Monetary Union (UEMOA), adopted on March 20, 2003 by the Council of Ministers of the Union; Having regard to the Act on banking regulation; Having regard to the Act on the regulation of mutual or cooperative savings and credit institutions; Avenue Abdoulaye FADIGA BP 3108 – Dakar - Sénégal Tel. (221) 839 05 00 / Fax. (221) 839 05 00 www.bceao.int INSTRUCTION NO. 01/2007/RB OF JULY 2, 2007 ON THE FIGHT AGAINST MONEY LAUNDERING WITHIN FINANCIAL INSTITUTIONS

Considering the predominant role of financial institutions in the effective functioning of the money laundering fight mechanism within the Union; Considering that the use of financial institutions for money laundering risks compromising their solidity and stability as well as the reliability of the financial system in general, which would thereby lose public confidence; Considering that the establishment by financial institutions of internal control procedures and training programs in this field are complementary measures without which other measures contained in the aforementioned Uniform Act could lose their effectiveness; RESOLVES

TITLE I: GENERAL PROVISIONS
Article 1: Subject Matter
This Instruction aims to specify the implementation procedures of the Uniform Act on the fight against money laundering in the UEMOA Member States, particularly Article 13 of said Act, by financial institutions as defined in Article 3 below.

Article 2: Definition
Under Articles 2 and 3 of the Uniform Act on the fight against money laundering in the UEMOA Member States, money laundering is defined as an offense consisting of one or more of the following acts, committed intentionally:

• the conversion, transfer or manipulation of assets, knowing them to originate from a crime or offense or participation therein, with the aim of concealing or disguising their illicit origin or assisting any person involved in committing such crime or offense to evade judicial consequences;
• the concealment or disguise of the true nature, origin, location, disposition, movement or ownership of assets or related rights, knowing them to originate from a crime or offense as defined by the national legislations of UEMOA Member States or participation therein;
• the acquisition, holding or use of assets, knowing at the time of receipt that they originate from a crime or offense or participation therein.

Article 3: Scope of Application
This Instruction applies to the following financial institutions:

• banks and financial establishments;
• postal financial services, as well as Deposit and Consignment Funds or equivalent bodies;
• mutual and cooperative savings and credit institutions, as well as structures or organizations not constituted in a mutual or cooperative form and whose purpose is the collection of savings and/or granting of credit;
• manual exchange licensees.

TITLE II: PROVISIONS RELATING TO THE DUE DILIGENCE OBLIGATIONS OF FINANCIAL INSTITUTIONS
Chapter I: General Due Diligence Obligations
Article 4: Customer Identification
Financial institutions referred to in Article 3 above are required, before establishing a contractual relationship or assisting their client in preparing or executing a transaction, to verify the identity of their counterparty. To this end, they identify their customers in accordance with Chapter 2 of Title II of the Uniform Act on the fight against money laundering in UEMOA Member States, as well as with the Annex to said Uniform Act, regarding customer identification procedures for natural persons by financial institutions in remote financial operations. Customer identification must be based, on the one hand, on precise ethical rules and, on the other, on a clearly defined customer knowledge policy, to prevent financial institutions from maintaining relationships with persons of doubtful identity or whose transactions are disproportionate to the activity. To effectively safeguard against reputation and counterparty risks, financial institutions covered by this Instruction must define the types of customers they cannot accept, particularly regarding the above provisions, and refrain from establishing any relationship before satisfactorily establishing their identity, address, and the type of authorized operations with said customers. Customer knowledge procedures must apply not only to new relationships but also to existing customers, particularly those regarding whom there are doubts about the reliability of previously collected information.

Article 5: Retention of Records and Documents
Under Article 11 of the Uniform Act on the fight against money laundering in UEMOA Member States, financial institutions must retain documents relating to the identity of their regular or occasional customers for ten (10) years from account closure or cessation of relationships. They must also retain documents relating to operations performed by them for ten (10) years from the end of the financial year in which they were executed.

Article 6: Detection of Suspicious Operations
In applying Article 26 of the Uniform Act on the fight against money laundering in UEMOA Member States, the internal anti-money laundering program must at all times be able to provide precise information on:

• the amounts of operations performed by customers and their frequency;
• the nature of operations (cash deposits, transfers, etc.);
• the existence of economic justification for operations;
• the consistency of economic justification;
• currencies processed during operations;
• the identity of the true ordering party;
• the origin of operations (geographical origin, identity of financial institutions acting as intermediaries, accounts used);
• the identity of the true beneficiary;
• the destination of operations (geographical destination, identity of financial institutions acting as intermediaries, accounts used).

Chapter II: Specific Enhanced Due Diligence Obligations
Article 7: Monitoring of Atypical Operations
Financial institutions must provide a transaction and customer profile analysis mechanism, enabling them to trace and monitor atypical financial movements and operations in particular. These include in particular the following operations:

• abnormal transactions per se and/or abnormal relative to a client (e.g., dormant accounts suddenly becoming active, multiple-endorsement checks, fund transfers to numbered accounts, purchase or sale of large quantities of precious metals);
• credit operations with acceptance by the client of abnormally high rates, proposal of guarantees consisting of funds of unknown origin or incompatible with the apparent standard of living of the client, or proposal of early repayment with funds of unknown or implausible origin;
• foreign trade operations with prices of underlying goods under- or over-valued relative to market price, or complex structures involving multiple entities without satisfactory technical or economic justification;
• operations with amounts substantially higher than the client's usual transactions;
• stock market and exchange operations with deposits at abnormally high rates, or involving securities transactions at prices offset from market rates;
• operations consisting of multiple securities round-trips without apparent profitability, followed by fund withdrawals to another financial institution located notably abroad;
• transactions with counterparties situated in countries, territories and/or jurisdictions declared by the Financial Action Task Force (FATF) as non-cooperative, and persons subject to asset freeze measures due to their presumed links with an organized criminal entity.

Article 8: Obligations Regarding Occasional Financial Operations
Internal anti-money laundering programs must specify the checks and procedures to be carried out for identifying occasional operations. To this end, financial institutions must ensure, in accordance with Articles 7 and 8 of the Uniform Act, the identity of any occasional customer requesting an operation involving a sum equal to or greater than five million (5,000,000) FCFA or whose FCFA equivalent equals or exceeds this amount. The obligations under Article 7 of the Uniform Act apply to occasional customers requesting safe deposit box rentals and those who, within a short period, request multiple operations between which a link appears to exist and whose total amount is less than five million (5,000,000) FCFA.

Article 9: Electronic Operations
Financial institutions allowing transaction execution via the internet or any other electronic means must have a suitable monitoring system for these transactions. Furthermore, they are required to centralize and analyze unusual transactions via the internet or any other electronic medium.

Article 10: Enhanced Due Diligence Regarding Non-Cooperative Countries and Territories, as well as Persons Subject to Asset Freeze Measures
Financial institutions referred to in Article 3 above are required to pay particular attention to operations conducted with countries, territories and/or jurisdictions declared by the FATF as non-cooperative, and to persons subject to asset freeze measures due to their presumed links with an organized criminal entity. In this regard, the list of these countries/territories and jurisdictions, as well as that of persons subject to asset freeze measures, must be regularly updated and communicated to personnel at the forefront of the fight against money laundering within the financial institution.

TITLE III: PARTICULAR OBLIGATIONS
Chapter I: Obligations Regarding Suspicious Transaction Reporting
Article 11: Obligation to Report Suspicious Transactions
Financial institutions referred to in Article 3 above must submit suspicious transaction reports, in accordance with Chapter 2 of Title III of the Uniform Act on the fight against money laundering in UEMOA Member States. Under Article 26 of said Uniform Act, they must report to the National Financial Intelligence Unit (CENTIF), established under this Act, operations involving sums that may be part of a money laundering process, including:

• sums recorded in their books that may originate from drug trafficking or organized criminal activities;
• operations involving sums that may originate from drug trafficking or organized criminal activities;
• any operation where the identity of the ordering party or beneficiaries remains doubtful, despite carrying out due diligence in accordance with Articles 7 to 9 of the Uniform Act;
• operations performed by financial institutions for their own account or on behalf of third parties with natural or legal persons, including subsidiaries or establishments, acting in the form of or on behalf of trust funds or any other asset allocation instrument, where the identity of the settlors or beneficiaries is unknown.

Article 12: Obligation Related to Suspicious Transaction Reporting
Under Article 10 of the Uniform Act on the fight against money laundering in UEMOA Member States, any cash or bearer instrument payment of a sum of money, made under normal conditions, with an individual or total amount equal to or greater than fifty million (50,000,000) FCFA, as well as any significant operation involving sums with an individual or total amount exceeding ten million (10,000,000) FCFA, which, without falling under Article 26's reporting obligation, presents unusual complexity and appears to lack justification or lawful purpose, must be recorded in a confidential register and subject to particular examination by financial institutions. In such cases, the latter inquire with clients regarding the origin and destination of these sums, as well as the purpose of the transaction and the identity of the benefiting persons.

Chapter II: Other Professional Obligations
Article 13: Establishment of an Anti-Money Laundering Unit
Financial institutions are required to establish a specific money laundering fight structure. The anti-money laundering mechanism must be explicitly entrusted to an ad hoc structure, which may be the internal control or audit body. This structure must be adapted to the organization, nature, and volume of the financial institution's activities. It is responsible for implementing a monitoring system and controlling the proper functioning of established procedures to comply with all regulations regarding the fight against money laundering. To this end, the executive body must provide the head of the anti-money laundering mechanism with adequate and sufficient resources (human and material) and guarantee operational independence for mission execution. The structure shall have in particular the following functions:

• centralization of suspicions from staff;
• internal processing of suspicion files;
• drafting of suspicious transaction reports and their submission to the CENTIF;
• responding to regular or ad hoc investigations by monetary and supervisory authorities or the CENTIF.

Article 14: Staff Training and Awareness
Financial institutions must implement a specific information and training policy for all staff (including, as necessary, temporary and interim assistants) handling operations that may be used in a money laundering circuit, including all categories of customer-facing personnel. Regarding information, financial institutions must inform their relevant agents about the applicable legislation and regulations. Regarding training, operational structures directly involved in the fight against money laundering must, on the one hand, have up-to-date procedure manuals and, on the other, based on a training plan, be regularly trained in mastering these manuals and made aware of the different typologies constituting money laundering cases.

Article 15: Internal Anti-Money Laundering Program
Financial institutions referred to in Article 3 above are required to establish an internal program based on a mechanism defining internal prevention and detection procedures and rules for money laundering. This internal program must comply with the legislative and regulatory provisions in force in UEMOA Member States regarding money laundering, without prejudice to internal rules applicable to a financial institution due to its group membership. The internal anti-money laundering program must be documented in writing and approved by the deliberative body of the financial institution before implementation.

Article 16: Supervision of the Internal Anti-Money Laundering Program
The internal anti-money laundering program must be subject to the competence and investigation scope of a structure or body independent of that responsible for its implementation. This structure or body is required to periodically report its controls in this matter to the deliberative body.

TITLE IV: MISCELLANEOUS AND FINAL PROVISIONS
Chapter I: Miscellaneous Provisions
Article 17: Specific Provisions for Banks and Financial Establishments
Banks and financial establishments are required, within two (2) months from the end of the financial year, to submit to the BCEAO and the Banking Commission a report on the implementation of the entire money laundering fight mechanism in force in UEMOA Member States. This report must in particular:

• describe the organization and resources of the establishment regarding money laundering prevention and fight;
• relate training and information actions conducted during the past year;
• inventory controls performed to ensure proper implementation and compliance with customer identification, data retention, detection, and reporting procedures for suspicious transactions;
• highlight investigation results, particularly regarding weaknesses identified in procedures and their compliance, as well as statistics related to the implementation of the suspicious transaction reporting mechanism;
• report, where applicable, the nature of information transmitted to third-party institutions, including those outside the country of establishment;
• prepare a map of the most common suspicious activities, indicating if necessary the nature and form of observed mutations in the field of money laundering;
• present prospects and action programs for the upcoming period.
  Within the framework of controls provided for in Article 46 of the Act on banking regulation, banks and financial establishments must be able to produce all necessary information for assessing the quality of their money laundering prevention mechanism. In this regard, written procedures and internal documentation must be available in French.

Article 18: Provisions Applicable to Financial Institutions Other Than Banks and Financial Establishments
Financial institutions other than banks and financial establishments, referred to in Article 3 of this Instruction, must submit to the BCEAO, within one (1) month from the end of the financial year, their anti-money laundering unit report.

Chapter II: Final Provisions
Article 19: Entry into Force
This Instruction enters into force from its signing date. It will be published where necessary.
Done at Dakar, July 2, 2007
The Governor Damo Justin BARO