Instruction No. 02-2018 of January 19: Exchange Rate Policy Procedures for Commercial Banks

INSTRUCTION NO. 02/2018 of January 19
SUBJECT: EXCHANGE RATE POLICY

• Procedures to be observed in the execution of exchange operations

Given the need to ensure, in the foreign exchange market in general, and more specifically in the trading of foreign currency, ethical and professional conduct by Commercial Banks, compliance with the legislation and regulations applicable to banking activity, including, among others, the Law on Combating Money Laundering and Terrorism Financing as well as the Exchange Law and regulations on exchange operations, and the efficient use of available foreign currency;

In the exercise of the competence conferred upon me by Article 51 of Law No. 16/10, of July 15 – Law of the National Bank of Angola;

I DETERMINE:

1. Ethical and Professional Conduct

1.1. Participants in the Foreign Exchange Market must act fairly and transparently in negotiations with their Clients and other market participants.

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1.1.1. Ethics
Commercial Banks must ensure the maintenance of high standards of behavior, with their Boards of Directors being responsible for promoting ethical values and behaviors, ensuring their proactive incorporation into the institution's culture.

1.1.2. Professionalism
Commercial Banks must ensure that their employees possess the necessary skills, experience, and knowledge to perform their duties, thereby maintaining a high standard of professionalism in the Foreign Exchange Market.

1.1.3. Conflicts of Interest
Commercial Banks must establish adequate and effective policies and procedures to identify, eliminate, or manage conflicts of interest that could compromise their ethical or professional judgment, in order to ensure fair treatment of their Clients and other market participants.

1.2. Commercial Banks must ensure that all their employees (including management) are aware of disciplinary actions or other consequences that may result from unethical or unprofessional behavior and unacceptable violations of their policies as well as the applicable Legislation and regulations in force for the Foreign Exchange Market.

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2. Compliance with Legislation and Efficient Use of Currency

2.1. Commercial Banks must:
i. Apply risk classification procedures and due diligence as provided for in the Law on Combating Money Laundering and Terrorism Financing and in Notice No. 22/12, of April 25.
ii. Adopt rigorous mechanisms to prevent the occurrence of irregularities of an exchange nature, as well as ensure the correct recording of operations and the archiving of related information, as regulated in Notices No. 19/12, of April 25 and No. 13/13, of August 06.

2.2. In applying the provisions of the previous paragraph, Commercial Banks must pay special attention to the following:
i. The identification of beneficial owners and corporate bodies of Clients to identify involvement in these entities of:
a) One or more members of the administrative, supervisory bodies, employees, or shareholders of the Commercial Bank, and, when applicable, proceed in accordance with the provisions of Notice No. 1/13, of April 19 regarding any conflicts of interest that may exist; b) Politically Exposed Persons (PEPs), as provided for in Notice No. 22/12, of April 25.
ii. The history of compliance with tax responsibilities;
iii. The existence of the Client's economic activity compatible with the goods to be imported (nature, quantity, and value) or services to be contracted (nature and value), per transaction and in terms of cumulative values over a specific period;
iv. The Client's financial capacity to pay for the goods to be imported or services to be contracted, especially when payment will be made at a later date under a letter of credit;

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v. The identification of the entity receiving the funds whenever it is the first transaction and one of the conditions below is met, with the objective of confirming the legitimacy of that entity and/or that the payment is not made to a company without commercial activity (fictitious), paying special attention to the company's object and activities exercised as described in its statutes:
a) The entity receiving the funds is a company constituted in a region classified as a tax haven or considered high risk; b) The geographic location of the bank receiving the funds differs from the location of the entity exporting the goods or providing the service.
vi. That payment must be ordered to a bank account held by the entity exporting the goods or providing the services, according to the invoice and/or service provision contract.

2.3. The provisions in the previous paragraphs apply equally to all Clients, including those making payments abroad with their own foreign currency funds regarding the import of goods or contracting of services.

2.4. The procedures described in paragraph 2.2, letters iii, iv, and v must be carried out at the time of opening the letter of credit or upon the Client's request for payment.

2.5. Commercial Banks must refuse the execution of exchange operations that they consider likely to constitute the crime of money laundering or terrorism financing or to be in contravention of the Exchange Law and associated regulations.

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2.6. Cases of definitive refusal to execute exchange operations must be reported to the Foreign Exchange Control Department according to terms to be defined by the BNA.

2.7. In the purchase of foreign currency in auctions organized by the BNA, Commercial Banks must prioritize the acquisition of goods or services whose internal supply does not meet demand, according to criteria indicated by the BNA at the time of the auctions.

3. Final Provisions

3.1. Commercial Banks that do not have the conditions to comply with the provisions of this Instruction must voluntarily abstain from intermediating any exchange operations for commercial purposes.

3.2. Non-compliance with the provisions of this Instruction results in the application of fines, which may culminate in the loss of authorization to conduct exchange operations, in accordance with the Law on the Basic Principles of Financial Institutions, the Exchange Law, and the Law on Combating Money Laundering and Terrorism Financing.

3.3. Any doubts and omissions will be resolved by the National Bank of Angola.

3.4. This Instruction enters into force on February 1, 2018.

PUBLISH.
Luanda, January 19, 2018.
THE GOVERNOR
JOSÉ DE LIMA MASSANO