Instruction No. 02/2018 of January 19 – Exchange Rate Policy: Procedures for Executing Foreign Exchange Operations

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

• Procedures to be observed in the execution of foreign exchange operations

Whereas it is necessary to ensure, in the foreign exchange market in general, and more specifically in the trading of foreign currency, an 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 Foreign Exchange Law and regulations on foreign exchange operations, and the efficient use of available foreign currency; In 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 HEREBY DETERMINE:

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

CONTINUATION OF INSTRUCTION NO. 02/2018 Page 2 of 5 1.1.1.Ethics Commercial Banks must ensure the maintenance of high standards of conduct, with their Boards of Directors responsible for promoting ethical values and behaviors, proactively ensuring their 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 guaranteeing a high professional standard 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 may compromise their ethical or professional judgment, ensuring fair treatment for 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 resulting from unethical or unprofessional conduct and unacceptable breaches of their policies, as well as the applicable Legislation and regulations in force for the Foreign Exchange Market.

CONTINUATION OF INSTRUCTION NO. 02/2018 Page 3 of 5
2. Compliance with Legislation and Efficient Use of Currency
2.1. Commercial Banks must:
i. Apply risk classification and due diligence procedures as provided in the Law on Combating Money Laundering and Terrorism Financing and Notice No. 22/12, of April 25.
ii. Adopt rigorous mechanisms to prevent the occurrence of foreign exchange irregularities, as well as ensure correct recording of operations and archiving of related information, as regulated in Notices No. 19/12, of April 25 and No. 13/13, of August 6.
2.2.In applying the foregoing, 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 by:
a) One or more members of the administrative, supervisory bodies, employees, or shareholders of the Commercial Bank and, where applicable, proceed in accordance with Notice No. 1/13, of April 19 regarding any existing conflicts of interest; b) Politically Exposed Persons (PEPs), as provided in Notice No. 22/12, of April 25.
ii. The history of compliance with tax obligations;
iii. The existence of the Client's economic activity compatible with the imported goods (nature, quantity, and value) or contracted services (nature and value), per transaction and in cumulative terms over a specific period;
iv. The Client's financial capacity to pay for the imported goods or contracted services, especially when payment is made at a later date under a letter of credit;

CONTINUATION OF INSTRUCTION NO. 02/2018 Page 4 of 5
v. The identification of the fund recipient entity whenever it concerns the first transaction and one of the conditions below is met, with the objective of confirming the legitimacy of that entity and/or ensuring payment is not made to a company without commercial activity (fictitious), paying special attention in this regard to the corporate purpose and activities carried out as described in the bylaws:
a) The fund recipient entity is a company incorporated in a region classified as a tax haven or considered high-risk; b) The geographical location of the recipient bank differs from the location of the exporting entity or service provider.
vi. That payment is mandatorily directed to a bank account held by the exporting entity or service provider, as per invoice and/or service provision contract.
2.3. The provisions in the preceding numbers apply equally to all Clients, including those making payments abroad with their own foreign currency funds for the importation of goods or contracting of services.
2.4. The procedures described in number 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 payment request.
2.5. Commercial Banks must refuse foreign exchange operations they consider likely to constitute money laundering or terrorism financing crimes, or to contravene the Foreign Exchange Law and associated regulations.

CONTINUATION OF INSTRUCTION NO. 02/2018 Page 5 of 5
2.6. Cases of final refusal to execute foreign exchange operations must be reported to the Foreign Exchange Control Department as may be defined by BNA.
2.7.In purchasing foreign currency in auctions organized by BNA, Commercial Banks must prioritize the acquisition of goods or services whose domestic supply does not meet demand, according to criteria indicated by BNA at the time of the auctions.
3. Final Provisions
3.1. Commercial Banks that lack the conditions to comply with the provisions of this Instruction must voluntarily abstain from intermediating any foreign exchange operations for commercial purposes.
3.2. Non-compliance with this Instruction results in the application of fines, which may culminate in the loss of authorization to conduct foreign exchange operations, as combined by the Law on the Basic Framework of Financial Institutions, the Foreign 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.
PUBLISHED.
Luanda, January 19, 2018.
THE GOVERNOR
JOSÉ DE LIMA MASSANO